Over the last three years, the acquisition process has been bogged down by everything the Modi government has vowed to fix in India’s defence industry.
New Delhi: A six-year attempt at purchasing over 40,000 close quarter battle (CQB) carbines and over 30 million rounds of ammunition – crucial weaponry needed if the Indian army were to engage in conventional warfare with Pakistan or initiate counter-insurgency operations – has ended in failure, according to people with direct knowledge of the matter.
Industry sources say that the tender will be scrapped and a new request for proposal, this time modified to hopefully avoid a single-vendor outcome, will be floated by by next March.
“The whole contract has dragged on for way too long and is embarrassing at this stage to be honest. A new empowered committee within the [defence] ministry will monitor the new RFP and hopefully have a decision by next December,” a senior government official told The Wire.
What went wrong?
In 2010, a tender was issued by the army for 44,618 close quarter carbines and over 30 million rounds of ammunition. The purchase was aimed at replacing the army’s severely outdated submachine guns.
However, over the last three years, the acquisition process has been marked by everything the Modi government has vowed to fix in India’s defence industry: allegations of favouritism towards specific vendors, flawed qualitative requirements, bureaucratic delays and poorly defined product specifications.
The initial problems that cropped could be traced back to the tender’s product specification details, which divided members of the army’s acquisition wing and later defence ministry officials as well.
“After the RFP was given out in 2010, four major companies seriously responded. During the technical trials stage in 2013 the number was whittled down to two companies and then finally just one vender, because of the specifications on night, reflex and laser sights for the guns. The final vendor standing was Israel Weapons Industries… a single vendor situation,” an industry source, declining to be identified, told The Wire.
“This divided the army acquisition wing, because depending on how you look at it, some of the specifications could easily be overly strict or could be simply poorly thought out,” the source added.
A single-vendor outcome at the end of the technical evaluation stage for defence contracts has haunted previous governments: the infamous AgustaWestland chopper scandal, for instance, too had tender specifications that resulted in only one vendor (AgustaWestland) at the end of trials. Defence experts The Wire spoke to pointed out that while a single-vendor outcome doesn’t necessarily point to wrongdoing, it has become a big no-no in defence circles and is something that the Modi government has campaigned against.
A final vendor for the carbine contract was never chosen after the 2012-14 trials because at this point, a number of allegations started doing the rounds.
“There were issues raised with the way the trials were conducted. Some of the bidders presented that they were unfairly dealt with. It was felt that for example, the trial methodology was slightly biased to suit specific vendors,” a senior executive of an Indian defence company, which did not bid for the contract, said.
At the time, two bidders complained that a number of the tender’s specifications were not “very clearly” laid out, specifically with regard to the night sights and reflex sights. Other criteria that ruled out bidders other than IWI was the type of batteries (standard AAA or proprietary, specialised batteries) that would be ideal; two sources said this aspect was not made clear in the initial tender.
These allegations prompted a number of informal and formal inquiries, according to sources. The most recent probe, conducted last September, was headed by Air Marshal P.P. Reddy (retd) and found no major deviations in the acquisition process.
Breaking down the contract
The safest thing to do, however, to ensure that the single-vendor outcome wasn’t fixed by vested interests would be to either push for retrials or modify the contract in a way that would lead to better competition. The most logical modification, which has now been accepted by defence minister Parikkar, would be to de-link the sights component (reflex, night, laser) from the actual gun. The laser and reflex sights could be manufactured by Bharat Electronics through a separate contract. Going ahead with either of these options would have avoided a single vendor outcome.
These two options, as media reports pointed out at the time, were brought up by former minister of state for defence Rao Inderjit Singh. In a number of letters, starting from the beginning of 2015 to two weeks before he was removed from his position during July’s cabinet reshuffle, Singh allegedly requested a CBI inquiry and pushed for another round of technical trials.
The cancellation of the carbine tender comes a year after a similar tender for assault rifles was scrapped and represents, according to experts, the Indian army and the defence ministry’s poor procurement processes and inability to formulate general qualitative requirements.
“The bottomline is that Parikkar and defence ministry officials knew by the end of 2014 that a decision had to be taken. The tender and contract could not be retroactively modified halfway, so the natural course would be to issue a new tender. This has taken two years for the defence ministry and the army to do, while soldiers go without carbines,” a senior defence analyst said.
Defence ministry officials and other defence experts, on the other hand, emphasise that it takes takes time to build a case for scrapping a tender and in ensuring that protocol is followed. One former defence ministry official pointed out that “it was far better to have some delays rather than going ahead with a flawed tender”.
“It is likely that the outcome of this tender was a combination of flawed specifications and some foul play, even if it wasn’t something as major as outright corruption or kickbacks. In that event, it’s good that the tender has been scrapped for now,” the official said.
Roland Berger partner Rahul Gangal also pointed out that the decision to go ahead with a new tender was a welcome step. “While the provisioning of the carbines has been delayed, the decision to re-issue a tender is a welcome step,” Gangal told The Wire.