Tuesday, 22 May 2007

Learning from Lord Curzon

by Ajai Shukla
Business Standard, 22nd May 2007

There are few indicators of a country’s strategic temper as reliable as the way it treats its frontiers. British regents like Lord Curzon, acutely sensitive to the vulnerabilities of their borders, employed a variety of devices to keep those areas trouble-free and their inhabitants neutral, if not favourably disposed towards the centre. From granting some border areas the status of “excluded area” (in the case of the Naga Hills) to protecting the identity of border people by restricting access by outsiders (the Inner Line, that still exists in the north-eastern states) the British protected their most sensitive borders less with hard power than with a careful mix of political autonomy, cultural respect and a clearly stated assurance of protection.

India’s approach is markedly different. Forced, partially through political and strategic miscalculations, into deploying large numbers of soldiers for the physical protection of its borders, first in J&K and then on the border with China, New Delhi has been far less sensitive than its Curzonian predecessor. The Indian Frontier Administrative Service, a specially selected cadre of frontier administrators that was steeped in local tradition and sensitivities, merged in the mid-1970s with the IAS. Unsurprisingly, administration moved from local tradition and sensitivity to the rulebooks and power tantrums of New Delhi.

Take the ongoing trouble in Leh, the capital of Ladakh, India’s strategically vital chunk of the Tibetan plateau, where a Deputy Commissioner’s personal feud with a well-respected local NGO threatens to snowball into widespread resentment. In the cross hairs of the DC, Mr MK Dwivedi, is the Students’ Educational and Cultural Movement of Ladakh (SECMOL) and its Director, Sonam Wangchuk. SECMOL has done remarkable work in bringing up education in the interiors of Leh, since kicking off “Operation New Hope” in 1994 through a tripartite MoU with the government and the local community. Over the last decade, SECMOL has trained 3,567 village teachers, VEC members, panchayat leaders, village headmen and women leaders, bringing up pass percentages in Leh district from 5% in 1994 to 55% today. SECMOL’s next phase of Operation New Hope was to be the Ladakh model of Sarva Shiksha Abhiyan; it was inaugurated by President APJ Abdul Kalam in June 2006, setting a pass percentage target of 90% by 2010.

The Director of SECMOL, Sonam Wangchuk, has received the J&K Governor’s medal for educational reform. Since 2004, he has been a member of the National Governing Council for the Sarva Shiksha Abhiyan. President Abdul Kalam’s address to the nation on Independence Day last year mentioned SECMOL as one of the initiatives that formed the model for a Knowledge Society in India by 2020.

Leh’s DC, MK Dwivedi, clearly doesn’t agree with the President. He has issued a notice declaring SECMOL “a significant threat to the administration and peace of the region” and an illegal occupant of government land. Sonam Wangchuk has been notified as guilty of having “anti-national connections” in China and other foreign countries. SECMOL is guilty of “threatening Council and District Administration officials”. Behind the crackdown: Sonam Wangchuk made the cardinal error of speaking publicly about the administration’s neglect of education.

SECMOL has denied the allegations. Sonam Wangchuk has stated that his only connection with China was a pilgrimage he made with his mother (like many other Buddhists from Leh) to Lhasa six years ago. Intending to clarify its position to the people of Ladakh, SECMOL prepared a CD clarifying its position. The DC struck back this March by invoking Section 144 of the Cr.PC, imposing a ban on circulation of material by Sonam Wangchuk, or any other member of SECMOL. Public protests were also prohibited by that order, which still remains operative. All employees of the Education Department have been instructed to suspend cooperation with SECMOL.

The J&K government, worried by events, dispatched the Divisional Commissioner to Ladakh in August 2006. After meeting everyone concerned, the Commissioner brokered a compromise. Mr Dwivedi agreed to withdraw his notices and orders against SECMOL. But after the Divisional Commissioner returned to Srinagar, the Leh DC went back on his promise.
Mr MK Diwedi is evidently enjoying the power he wields, apparently issuing notices against SECMOL based on pure hearsay. Explaining to a local newspaper, he said, “I received some complaints against him from the locals. Teachers association complained against him for unnecessarily interfering in their working while some other people alleged that he has some odd connections with Tibet and China.”

Dwivedi is also at loggerheads with the local tourism industry. The administration has promulgated notices laying down hotel rates, much to the resentment of local hoteliers. Pinto Narbu, the MLA from Nubra, who runs a local hotel fumes, “he’s an old-style bureaucrat who wants to control things. Hotels are not essential services. Who is he to try and lay down hotel rooms, which are governed by market forces all over the world.”

Insensitive administration is not new to India. But Ladakh, which has remained comparatively free of anti-India resentment even through the turmoil that has plagued J&K, is a special place that must be administered by special people. This is equally true of other border areas, inhabited by people who need to be won over to the idea of India. Arrogance, like Mr Dwivedi’s, is an indulgence that India cannot afford.

CAG on defence purchases: the Tehelka syndrome

(Concluding part of a three-part series on the CAG's report on defence procurement)

by Ajai Shukla
Business Standard: 21st May 2007

It is no longer a secret that thousands of crores from the MoD budget have been surrendered over the 10th Defence Plan (2002-2007) because of slow defence procurement procedures. Former Defence Minister George Fernandes has openly declared that was because of the “Tehelka syndrome”, or the MoD bureaucracy’s reluctance to conclude contracts for fear of victimisation by “the three Cs”. That’s the CBI, the CVC and the CAG.

Now, the CAG, in a performance audit of MoD’s capital acquisitions between 2003 and 2006, has also examined the reasons for the MoD’s surrender of over Rs 3500 crores between 2003 and 2006. (Rs 600 crores were additionally surrendered on 31st March 2007). In a nutshell, the CAG has concluded that the structure of the defence acquisition organisation is inefficient, ignorant and ineffective and unable to expend what it is allotted. The unstated corollary is that more monetary surrenders are inevitable.

Explaining to the CAG why it has surrendered such large amounts (32% of the capital acquisition budget in 2002-03, the largest surrender) the MoD said, “due to the complexities involved in the acquisition process, sometimes the cases could not be finalised due to various factors such as delays in equipment trial evaluation, commercial negotiation and approvals.”

The CAG has dismissed that explanation outright. Its report points to an unimplemented Group of Ministers (GoM) report in April 2000, set up in the wake of the Kargil Review Committee’s report. The GoM recommended creating a separate and dedicated institutional structure to undertake “the entire gamut of procurement functions”, which would ensure closer participation of Armed Forces in decision-making, higher operational efficiency and cost effectiveness.

The CAG points out that defence acquisition is “a cross-disciplinary activity requiring expertise in technology, military, finance, quality assurance, market research, contract management, project management, administration and policy making”. It concludes that the existing system of acquisition being handled by unspecialized personnel posted for three-year tenures is simply not adequate.

The CAG has reinforced the GoM’s recommendations, fleshing it out with the following specific recommendations:

  • An integrated defence acquisition organisation be set up, incorporating all the specialisations involved in defence procurement under one head.
  • A special cadre of Acquisition Managers be developed by training suitable people in the different areas of acquisition.
  • Stability of tenure be ensured so that officials have the time to develop expertise in the acquisition functions they are performing.
  • An integrated electronic information system, connecting all branches of defence procurement, should be put in place to support the acquisition process.

Presently, the MoD’s procurement structures and systems, that were set up in October 2001 to deal with capital acquisitions includes an overarching Defence Acquisition Council (DAC) under the defence minister, and a Defence Procurement Board under the Defence Secretary, overseeing the procurement being carried out by a plethora of different offices, staffed by short-tenure officers, untrained in procurement, many of them conducting procurement in addition to other responsibilities.

The CAG report points out, “Thirteen different agencies, each reporting to different functional heads, are involved in the processing of procurement…. Even for post-contract management four different agencies were involved with very little co-ordination among them.”

The MoD responded to the CAG’s recommendations, stating that a Committee had been constituted to look into the re-structuring of the acquisition wing of Defence.

More cost-conscious defence organisations, such as the British MoD, have long ago handed over procurement functions to integrated and specialised procurement organisations. In the UK, the Defence Procurement Agency’s 4300 staff members buy $12 billion worth of military equipment each year, using Integrated Project Teams and a methodology they call Smart Acquisition. The DPA manages more than 13,000 contracts a year, ranging from the purchase of submarines to small parts for a field radio.

CAG: Army isn't clear about what it needs

(Part 2 of a three-part series on the CAG's report on defence procurement)

by Ajai Shukla
Business Standard: 20th May 2007

The CAG, in its latest report on foreign defence deals, has sharply criticised the army for a plethora of shortcomings in its structure and procedures for buying military arms and equipment from foreign vendors. The CAG report No 4 of 2007, which minutely examines 37 separate defence acquisitions between the period 2003 and 2006, is particularly critical about the way the army takes the very first step towards buying military equipment: deciding exactly what it needs.

Any householder buying an expensive item first decides what she needs. If the purchase is a refrigerator, she chooses a size that fits the number of family members and the space she has to install the refrigerator. Functions like frost-free and bottle space depend on household usage. And, importantly, there's the element of opportunity cost; choosing a fancy model with an ice dispenser means having to go without that blender she also needs.

The military's Defence Procurement Procedure (DPP) is supposed to start with an identical process, identifying precise requirements for the equipment proposed to be purchased. Laying down those requirements in the form of General Staff Qualitative Requirements (GSQR) is the first, and the most vital, part of any procurement. According to the CAG, the army goes wrong from this very first step.

The CAG report, in unusually blunt terms, points out that GSQRs have been wrongly formulated, reflecting neither the army's own requirements, nor the reality of the market. In the GSQRs for 11 purchases that were scrutinised, the CAG found that four spelt out requirements that were unavailable anywhere in the world. In four cases, the requirements "were unrealistic with respect to the actual requirements on the ground," which means that they did not meet the army's operational needs. And in seven cases, there was no way of testing whether the equipment met the parameters specified in the GSQRs.

The CAB observed that unrealistic GSQRs meant that, "in 66% of the cases, only a single vendor was pre-qualified." In "single-vendor" cases, the vendor's monopoly means that he can virtually dictate his own price. Even more serious was the CAG's observation that GSQRs were formulated "sometimes merely on the basis of manufacturer's brochure." Global vendors, admittedly with vested interests, have long alleged that Indian GSQRs are formulated to favour particular vendors. The CAG comes close to confirming that.

The MoD admits that its procurement regulations lay down that in single-vendor situations, the GSQRs are supposed to be reformulated and fresh tenders issued. This procedure, however, was not observed in a single case under audit.

The CAG's report also illustrates that GSQRs did not differentiate between essential and inessential requirements in a piece of equipment. Amongst several examples provided by the CAG is the purchase of High Resolution (HR) Binoculars, procured to keep a watch on Pakistani and militant activities across the LoC. Indian suppliers, Bharat Electronics Limited (BEL) and Ordnance Factories Board (OFB), lost out to a foreign vendor, despite their HR Binoculars meeting all the GSQRs during user trials, and having proved themselves superior to the foreign suppliers in the three vital aspects of clarity, resolution, and magnification. Ignoring those important aspects, (and, in fact, incorrectly citing "good resolution and clarity" and "better magnification" as reasons for buying the foreign binoculars) the contract was awarded to the foreign company on the grounds of extraneous reasons like "eye-piece movement" and "minimum focusing distance", which barely figured in the GSQRs.

This was just one of many such cases in which, "parameters were specified which were unimportant, unverifiable and non-measurable. There was no grading of the parameters as critical and non-critical and nor was there an inter-se priority or weightage of the parameters."

The CAG also criticises the army's tendency to place orders piece-meal, without first determining the quantities it needs, disqualifying itself from economies of scale. In one example cited in the report, the army's 9th Plan included the procurement of 4700 rocket launchers (RL Mk III). The army eventually bought rocket launchers in three separate contracts for smaller amounts, in a space of just ten months, incurring a loss of almost Rs 10 crores.

Saturday, 19 May 2007

CAG criticises army`s purchase procedures

(Part 1 of a three-part series on the CAG's report on defence procurement)

by Ajai Shukla
Business Standard: 19th May 2007

Considering that the military, in survey after survey, has been voted India's most honest institution, it is a paradox that the public consciousness also sees defence deals as murky, opaque and possibly corrupt transactions.

This popular perception could be reinforced by a Comptroller and Auditor General (CAG) audit into defence procurement, Report No 4 of 2007, that was tabled in Parliament on Monday.

In what is termed a "performance audit", the CAG has closely scrutinised 37 purchases of equipment from foreign vendors, worth Rs 3,201 crores, to reach conclusions on how the overall defence procurement system is working. The contracts were all signed between January 2003 and March 2006, and relate to equipment only for the army.

The CAG's performance audit reaches sharply critical conclusions about an acquisition process that functions on an unplanned basis, creates prolonged delays, does little to fulfil the army's expectations, formulates its equipment requirements poorly, chooses its purchases improperly, and confines its custom to a small number of vendors who consequently have the leverage to demand higher prices.

The reason for all this, concludes the CAG, is the MoD's failure to implement a Group of Ministers' instructions to put in place a functionally specialised acquisition organisation that can efficiently handle a task that is beyond the capabilities of the current organisation.

Take just one of the many acquisitions it has examined, the procurement of the Integrated Oxygen/Communications Mask Helmet (IOCMH). This is worn by helicopter pilots when flying high altitudes, allowing them to talk on the radio and simultaneously breathe pure oxygen from an onboard cylinder.

The army took ten years to go through the procurement process and eventually paid four times the price that the Indian Air Force (IAF) paid, a whopping Rs 3.75 lakh extra per mask.

While the IAF purchased the IOCMHs from an Indian company, the army (which flies the same helicopters in the same areas around Siachen) insisted that they needed oxygen at higher pressures and so time-consuming trials for foreign equipment were necessary.

The CAG points out that while the army insisted on meeting the specifications on higher oxygen pressure, it subjectively let other parameters fall by the wayside. While conducting IOCHMs trials in Leh, the temperature parameters spelt out in the tender (that the mask should function from -40 degrees to +50 degree Centigrade) were not insisted upon. Instead the army tested the equipment only up to +35 degrees.

Questioned by the CAG about why it chose a foreign supplier for the army IOCHMs when the IAF was using cheaper, Indian made masks, the MoD replied that the equipment was urgently required and the Indian supplier needed time to modify the IOCHM to army requirements.

That reason was rejected by the CAG, who observed that MoD was aware about the Indian supplier 3½ years before the contract was signed and so adequate time was available for making modifications.

The CAG termed it a clear case of discrimination against an indigenous supplier. The CAG also pointed out that another Indian firm had introduced itself as a supplier of IOCHM as far back as 1998.

The delays and lack of coordination that the CAG points out around each acquisition merely reflects the disarray that exists at the highest level. The audit report points out that the defence services’ 15-year Long Term Integrated Procurement Plan (LTIPP), which lays down procurement schedules from 2002-2017, was only finalised in 2006, four years after it was supposed to have commenced.

The five-year Services Capital Acquisition Plan for the period 2002-2007 had not been approved while the CAG audit continued. Little has changed now. The 11th Defence Plan, which covers the period 2007-2012, and which commenced on April 2007, awaits formal approval.

In these circumstances, the CAG report points out that of the 250 pieces of equipment planned for procurement in the 10th Plan period (2002-2007), just 96 had been procured up to March 2006.

While planned procurements were stalled, their place was taken by unplanned purchases. In 2004-05, 28 per cent of the budget, and in 2005-06, 43 per cent of the budget was expended on unplanned items.

Tuesday, 8 May 2007

It's magnificent, but it's not war

by Ajai Shukla
Business Standard, 8th May 07

The release of Justice Eliyahu Winograd’s interim report on Israel’s 2006 invasion of Lebanon was bad news for Prime Minister Ehud Olmert, blaming him for a bad decision to go to war, and his defence minister and military brass for implementing that faulty decision incompetently. With his opposition in no mood for fresh elections, Olmert is surviving for now, but it is clear to all that if Justice Winograd’s interim report has him in such trouble, the final report will sink him without further ado.

In a country like Israel, which India’s establishment often admires for its hard outlook on security, failures on national defence do not go unaddressed. An iconic Prime Minister, Golda Meir, shuffled off into the sunset after Israel’s less-then-optimal performance in the 1973 Yom Kippur War, even though she had been absolved of blame by the Agranat Committee. The logic is simple: if a government’s prime responsibility is the security of its people, security failures are taken seriously.

It is not just Israel that fixates on military failures. The UK, with so much to feel proud of in its military history, obsesses single-mindedly on the campaigns that did not go so well, even those that were fought over a century ago. Never mind Lord Alfred Tennyson’s immortalisation of the Light Brigade’s cavalry charge at Balaklava in 1854; the British parliament focused instead on the words of the Frenchman, Marshal Pierre Bosquet, who assisted in the withdrawal of the Light Brigade remnants: “It’s magnificent, but it’s not war.”

Whitehall’s examination of the Falklands campaign of 1982 focused less on Britain’s implausible success in a war fought 8000 miles away from home, and more on why the UK was taken by such surprise that the first report of the Argentine landing reached the UK through ham radio. After the recapture of Falklands, major changes were implemented in British strategy. The Royal Navy’s planned downscaling gave way to the building of two new aircraft carriers. In all these cases, causes were examined, lapses were documented and existing structures and methods modified so that history could not repeat itself. If another war had to be lost, it would be lost for different reasons.

Compare that with the way India has drawn lessons from the wars it has fought. The official accounts of the 1948 J&K campaign and the 1965 and 1971 wars against Pakistan lie unreleased for reasons best known to the government, so no serious examination of failures has ever taken place. The Henderson-Brookes report on the disastrous 1962 war with China is still “Top Secret”, its key findings unaddressed. After the 1999 Kargil conflict, the report of the official Kargil Review Committee was tabled in parliament on 23rd February 2000. By then India’s political myth-makers had obscured the real narrative of political short-sightedness, intelligence failure, inter-service rivalry, higher military incompetence and logistical deadlocks. Instead, written with the blood of over 500 dead soldiers, was a fairy tale of political sagacity, heroic generals and brave and determined soldiers. Only the last was true.

While Israel does what it must, it would be worth recalling some key features and recommendations of the Kargil Review Committee report, to see how far lessons have been assimilated.

At the broader strategic level, the report indicted successive PMs for taking nobody into confidence on nuclear strategy other than the Chairman of the Atomic Energy Commission and the Scientific Advisor to the Defence Minister. This is still the case.

The Kargil Committee pointed out that India’s nuclear posture remains unknown to India’s military chiefs, in contrast to Pakistan, where the military chiefs control not just nuclear strategy, but the actual instruments of its nuclear deterrent. While nobody suggests that India’s structures must mirror Pakistan’s, the complete disconnect between India’s conventional and nuclear forces gives rise to a yawning gulf in operational planning, especially at the level of the nuclear threshold.

The Kargil Committee correctly drew attention to the absence, in successive governments, of a long-term strategy to deal with insurgency, pointing out that the Home Ministry, state governments and paramilitary forces assume that the army will always be there to pull the chestnuts out of the fire. That is exactly the situation, seven years later. The army has repeatedly declared that it cannot end the insurgency in J&K; the military can only create conditions for a political dialogue with militants, which they have done. But the Home Ministry and the Prime Minister’s Office (PMO) find themselves unable to effectively take that next step.

The Committee noted that the infantry, which primarily bears the responsibility for guarding the high-altitude borders, needs to be equipped with lighter rifles, greater firepower and better equipment. Today, the grandly-named Infantry Modernisation Plan still draws mere driblets of funding while the bulk of India’s defence expenditure goes on big ticket items like aircraft carriers, submarines, tanks and fighter aircraft which may never be used in the kind of wars that India will fight.

In an ironic paragraph, the Kargil Committee seemed aware that its recommendations would never be implemented, because “The political, bureaucratic, military and intelligence establishments appear to have developed a vested interest in the status quo. National security management recedes into the background in time of peace and is considered too delicate to be tampered with in time of war and proxy war.”