Defence ministry flouts norms for BEL

The Samyukta electronic warfare (EW) system, built by DRDO, with important contributions from the Indian private sector. The MoD is now trying to shut out the latter on grounds of security

By Ajai Shukla

Business Standard, 12th Sept 11

Tomorrow, Defence Minister AK Antony is poised to violate the MoD’s own procurement rules by awarding Bharat Electronics Limited (BEL) a Rs 1800-2000 crore contract for an electronic warfare (EW) system for the army. Bypassing the army’s written reservations, the MoD is citing security considerations to hand BEL this single-source purchase.

An EW system electronically scans the enemy’s radio, radar and data emissions to gather intelligence. At key moments in battle it broadcasts powerful electromagnetic surges to cripple the enemy’s electronics and communications.

The MoD’s apex Defence Acquisition Council (DAC) meeting tomorrow will rule on the procurement of “Track and Wheel Based EW Systems”, mounted on armoured vehicles for India’s mechanised strike corps. The MoD plans to categorise this acquisition as “Buy Indian – BEL”. The Defence Procurement Policy, or DPP, has no provision for such a category.

The categorisation process is crucial, as it decides whether the MoD will buy the concerned equipment off-the-shelf from the global arms bazaar; or buy technology and build it in India; or develop the equipment in India. Accordingly the procurement is categorised as “Buy Global”; “Buy & Make”; “Buy & Make (Indian); or “Make”. When the MoD wants Indian companies to compete for a particular contract, it is categorised as “Buy Indian”.

BEL has campaigned hard to get this massive contract without competition. Backing it is the MoD, which owns BEL. They argue that EW systems are so secret that Indian companies like Tata Power and L&T cannot be trusted with them. Backstopping that argument is a letter from then Deputy National Security Advisor Shekhar Dutt (who, as defence secretary, enjoyed a close association with BEL) reserving such systems for the public sector.

This viewpoint is hotly contested. Dr APJ Abdul Kalam, as DRDO chief gave a private company --- Tata Power (Strategic Electronics Division), or Tata Power SED --- a key development role in the Samyukta, India’s first homegrown EW system.

Also opposing this viewpoint is the army’s top acquisitions manager and deputy chief, Lieutenant General JP Singh. He has consistently told the MoD that competitive bidding will get the army better EW technology at cheaper prices than a contract gifted to BEL. Business Standard has learned that the army has sent a strong letter to the NSA’s office arguing that security is not an issue and asking for an appointment to make a presentation to the NSA.

But before that appointment could materialise, say senior MoD sources, freshly appointed defence secretary Shashi Kant Sharma hurriedly convened a meeting in early August to recommend that the DAC clears the single-source award of the tender to BEL on 13th September. Lt Gen JP Singh, who was not in town, could not attend that meeting. In his place was the army’s vice chief, Lt Gen AS Lamba, who rubber-stamped his okay, ignoring the army’s long-held position.

Three serving lieutenant generals have told Business Standard that Lt Gen AS Lamba, always known for a non-confrontationist attitude, is treading particularly carefully at the moment. He would be the senior-most candidate for army chief if General VK Singh were to resign over the snowballing date of birth issue.

Lt Gen Prakash Chand Katoch, who headed the army’s information systems branch, points out that the army buys EW systems from abroad. “So why can’t private Indian companies be trusted to build them? Sheltering behind security to hand the order to MoD enterprises is unfair. The army insists on getting source codes from the vendors and, therefore, can easily superimpose the security algorithms on them. Get the algorithms from the DRDO, and ask the cheapest bidder to build the system. But BEL keeps trying to get a sweetheart deal for building the entire system,” says Katoch.

The MoD, approached for a comment, has remained silent. In 2010, when the MoD first tried to hand BEL the contract for a “Track and Wheel Based EW system”, Antony’s deputy, MM Pallam Raju declared, “I think that we have a responsibility to the DPSUs since [their] ownership rests with the Government of India.”

The decision that the DAC takes tomorrow will resonate through the forthcoming award of Rs 20,000 crore worth of EW development contracts in the next 5-7 years. In the balance are orders for new EW systems for mountains, each worth Rs 1000 crore. Seven to eight EW systems will be bought for deserts/plains, each worth about Rs 1000 crore. The army will buy an unspecified number of heliborne EW systems, each worth about Rs 500 crore. The precedence set tomorrow could apply to all of these. In any case, say private Indian vendors that want to offer their own EW systems, being nominated for this first tender will allow BEL to cross-subsidise its bid for all the others.