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CAG picks holes in defence buys

Comptroller and Auditor General VN Kaul talked of how delays plagued major defence buys, reports Rahul Singh.

india Updated: Nov 16, 2006 02:49 IST

Comptroller and Auditor General VN Kaul on Wednesday minced no words while exposing the rot in the country’s defence procurement.

Addressing defence planners and financial managers from 26 countries on the concluding day of the International Seminar on Defence Finance and Economics, Kaul talked on a wide range of subjects including long acquisition cycles, unutilised funds, quality deficiencies and the need to re-emphasise accountability of domestic R&D organisations.

Kaul talked of how delays plagued major defence buys and regretted that the time gap between the assessment and the receipt of goods was alarmingly long, even decades in many cases.

He said such delays had serious repercussions — the threat perception, users' requirements and even the technology changes over time. The CAG said a further fallout of such delay was that unutilised funds lapse if the items are not bought during the specified financial year.

Poor project and contact management also came in for criticism. Kaul said, "There are recurring instances of poor contract and vendor management and weak vendor development, all recorded in audits. A major area of weakness is that of contact building and negotiations."

The CAG said that defence R&D with an outlay of Rs 5,000 crore was an area where accountability often took shelter under the policy of self-reliance, and indigenisation became a reason for delay. Kaul said, "Their accountability needs to be re-emphasised to enable better assessment of return from investment. The lack of clarity on "make" versus "buy" decisions has its origins in organisational conflicts of interest which prove costly in the long run."

Prescribing a formula for improving accountability, Kaul; said there was an urgent need to clearly define responsibility of acquisition authorities separately from oversight authorities. He also highlighted the need to develop acquisition expertise both at the defence ministry level and in the armed forces. "A cursory review of audit findings indicates the need for a serious re-examination of our approach to defence planning, budgeting and particularly acquisition."

Email: rahulsingh@hindustantimes.com