New Delhi: In keeping with Prime Minister Narendra Modi’s Atmanirbhar Bharat initiative and to encourage Make in India in the defence sector, Defence Minister Rajnath Singh on September 28 unveiled the Defence Acquisition Procedure (DAP) – 2020 prepared by the Main Review Committee (MRC) chaired by Director General (Acquisition) Apurva Chandra.
The Committee was set up in August last year to prepare the report after consulting a wide range of stakeholders and the report was prepared incorporating their suggestions.
DAP 2020 has been aligned with the vision of the Government of Atmanirbhar Bharat and empowering Indian domestic industry through Make in India initiative with the ultimate aim of turning India into a global manufacturing hub. With the new Foreign Direct Investment policy announced, DAP 2020 has adequately included provisions to encourage FDI to establish manufacturing hubs both for import substitution and exports while protecting interests of Indian domestic industry.
The DAP has included specific reforms enunciated in Atmanirbhar Bharat Abhiyan, which have been incorporated which include the notification of a list of weapons and platforms for ban on import with the relevant details incorporated in the DAP to ensure that no equipment as mentioned in the list is procured ex import post timelines notified.
It has been formulated post interactions over a year, and is an enabler and industry friendly procedure aligned with Government’s vision of Atmanirbhar Bharat and impetus to Make in India. DAP 2020 document has been chalked out to instill a confidence and meet aspirations of stakeholders across the spectrum.
The DAP-2020 has also focussed on indigenisation of imported spares, and at the stage of Request for Information (RFI) explores willingness of the prospective foreign vendors to progressively undertake manufacture and setup an indigenous eco system at the spares and sub component level.
In the New Category of Buy (Global – Manufacture in India), it incorporates ‘manufacture of either the entire or part of the equipment or spares, assemblies, sub-assemblies, Maintenance, Repair and Overhaul (MRO) facility for the equipment, through its subsidiary in India.
The DAP-2020 focusses on co-production through Inter-Governmental Agreement (IGA) which enables establishment of co-production facilities through IGA achieving ‘Import Substitution’ and reduce Life Cycle Cost.
According to the DAP-2020, the Contractual Enablement lays down the Buyer’s Right to optimise Life Cycle Support costs and system enhancements through incorporation of indigenous eco system.
With the announcement of new Foreign Direct Investment (FDI) Policy, suitable provisions have been incorporated like new category ‘Buy (Global – Manufacture in India)’ done to encourage foreign Original Equipment Manufacturers (OEMs) to setup ‘manufacturing and maintenance entities’ through its subsidiary in India while enabling requisite protections to domestic industry.
It has laid down a time bound Defence Procurement Process and faster decision making. As part of the Defence Reforms announced in the Atmanirbhar Abhiyan, setting up of a Project Management Unit (PMU) has been mandated to support contract management. The PMU will facilitate obtaining advisory and consultancy support in specified areas to streamline acquisition process.
The DAP 2020 has also emphasised on the realistic setting General Staff Qualitative Requirements (GSQRs) of weapons and platforms. The process of formulation of SQRs has been further refined with greater emphasis on identifying verifiable parameters based on analysis of ‘Comparative’ equipment available in the world and domestic markets.
It emphasises the need to conduct trials with an objective to nurture competition based on the principles of transparency, fairness and equal opportunities to all and not as a process of elimination.
One of the key focus areas of the review was to implement ‘Ease of Doing Business’ with emphasis on simplification, delegation and making the process industry friendly with certain specific provisions.
The DAP 2020 has also spelt out procedural changes which include single stage accord of Acceptance of Necessity (AoN) in all cases up to Rs 500 crores thereby reducing time. Fast Track Procurement (FTP) cases, post accord of AoN, will be progressed as per delegated powers thereby reducing the procurement cycle considerably.
In Planning Process, Long Term Integrated Perspective Plan (LTIPP) has been re-designated as Integrated Capability Development Plan (ICDP) covering planning period of 10 years instead of 15 years.
Certain measures to provide clarity and alignment of requirements as also enabling provisions have been incorporated in the RFP and SCD in terms of Flow Chart driven guidelines, provision of in-storage preservation and termination of contracts in cases where projects are not progressing as per pre–defined milestones.
Among the salient features of DAP 2020 are the reservation in categories for Indian Vendors.
The categories of Buy (Indian-IDDM), Make I, Make II, Production Agency in Design & Development, OFB/DPSU and SP model will be exclusively reserved for Indian Vendors meeting the criteria of Ownership and Control by resident Indian Citizens with FDI not more than 49 per cent. This reservation will provide exclusivity in participation to domestic Indian industry.
A simple and practical verification process has been instituted and IC will now be calculated on ‘Base Contract Price’ i.e. Total Contract Price less taxes and duties.
The DAP 2020 focusses on promoting use of indigenous military material with provisions for examination of platforms and other equipment and systems and reward for vendors for using indigenous raw material.
It has included provision for exploring options for operating base applications like Fire Control System, Radars, Encryption, Communications etc on indigenous software in Buy (Indian-IDDM) & Buy (Indian) cases.
It has also included rationalisation of trial and testing procedures with the testing equipment based on its employability and for other conditions appropriate certifications confirming functional effectiveness may be obtained.
Under the DAP 2020, the Scope of Trials will be restricted to physical evaluation of core operational parameters, other parameters may be evaluated based on vendor certification, certification by accredited laboratories, computer simulations of parameters.
In order to avoid duplication of trials and waiver will be granted based on Certificates of Conformance. Ensure simultaneity of various Trials and wherever feasible, entire trials be conducted by a Combine Trial Team in order to save time.
It said requisite opportunity will be afforded to participating vendors to rectify shortcomings and faults during the Trials with permission to carry out repairs.
The Request For Proposal will apprise vendors to submit draft Acceptance Test Procedure (ATP), to be finalised by QA agency during Technical Trials itself. Sample size for destructive tests including the aspect of cost to be borne by seller will be stated upfront in the RFP for vendor.
It said that no repetition of inspections will be done especially during acceptance of equipment. Third Party Inspections will also be carried out.
Under the Make and Innovation category, the DAP 2020 states that under Make I (government funded up to 70 per cent), there will be a cap of Rs 250 crore and DA and selection of DAs based on bidding criteria.
In Make II (Industry Funded) for production of indigenously designed and developed weapons/equipment/systems/platforms along with sub components/assemblies.
In Make III (Indigenously Manufactured) category for manufacture of equipment/platforms or spares/assemblies/sub-assemblies for enabling import substitution.
It has facilitated procurement of prototypes developed through ‘Innovation’ under various initiatives like iDEX, Technology Development Fund and Internal Services Organisations.
A separate dedicated chapter has been incorporated in the DAP 2020 for acquisition of systems Designed and Developed by DRDO/DPSUs/OFB. A simplified procedure with Integrated Single Stage Trials to reduce timelines and laying greater emphasis on evaluation through certification and simulation. Aspects of Spiral Development have been incorporated.
The policy has for the first time introduced the category of Leasing to enable operating of assets without owning thereby, substitute huge initial capital outlays.
A new procedure has been included as a new chapter in DAP and structured as an enabling provision for Services to procure essential items through Capital Budget under a simplified procedure in a time bound manner.
Price Variation Clause has been incorporated for large and protracted contracts in order to avert inflated initial quotes by vendors and arriving at a realistic price of the project.
The DAP 2020 has incorporated suitable provisions like parallel processing of documents by SHQ/ PCDA through digital verification, within laid down timelines, has been included to ensure timely payment to vendors. Payments to Indian industry have been aligned with foreign industry.
The Offset guidelines have been revised, wherein preference will be given to manufacture of complete defence products over components and various multipliers have been added to give incentivisation in discharge of Offsets.
