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November 2016

Aviation Update: September 2016

Defence Procurement Procedure (DPP) is a set of guidelines approved by Defence Acquisition Council (DAC) for procurement of defence equipment and technology by private players. In DPP 2013, the aim was to ensure expeditious procurement and demonstrate higher degree of probity, public accountability, transparency in operations, free competition and impartiality while achieving the goals of self-reliance in defence equipment. As opposed to this and taking a major step forward, for the first time DPP 2016 has a Preamble, which sets the tone of the document and clearly identifies the following elements –

  • Defence acquisition is not a standard open market commercial form of procurement and has certain unique features such as supplier constraints, technological complexity, foreign suppliers, high cost, foreign exchange implications and geo-political ramifications.
  • On one hand the defence procurement has to maintain the highest standards of transparency, probity and public accountability, on the other hand it has to maintain a balance between competing requirements such as expeditious procurement, high quality standards and appropriate costs needs to be established.
  • Self-reliance is a major corner-stone on which the military capability of any nation must rest and it is necessary to attain self-reliance in design, development and manufacturing in defence sector. So, focus is on Make in India.
  • Enhancing the role of MSMEs in defence sector is one of the defining features of DPP.
  • The DPP favour swift decision making, provides for suitable timelines and delegates powers to the appropriate authorities to ensure an efficient and effective implementation of the procurement process, by all stakeholders concerned.

In continuation of our last edition of Update, we bring to you a comparative of 2013 and 2016 DPP. Comparative has been drawn on the following aspects – (i) Capital acquisition under the BUY decision; (ii) Capital acquisition under the BUY & MAKE decision; (iii) Capital acquisition under the BUY & MAKE Indian decision; (iv) Capital acquisition under the MAKE decision; (v) Definition of Indian Vendor; (vi) Hike in Offset Threshold Limit; (vii) Technical Evaluation in Processing of Offset Proposals; (viii) Exchange Rate Variation; (ix) Parameters while formulation of ERV Clause; (x) Change in IOP or Offset Component; (xi) Solicitation of Offers; (xii) Reduced Validity and Sanctity of AoN; (xiii) Introduction of L1-T1 Methodology for Award of Contracts; (xiv) Annual Acquisition Plan(AAP); (xv) Certification and Payments; (xvi) Fast Track Procedure; (xvii) Selection of IPA; (xviii) Hiring of experts to review rationalize and finalize SQRs; and (xix) Buy ‘(Global)’ Procurements.

 

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