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PROCUREMENT COMPLAINTS HANDLING

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 MoD need to ensure a fair and speedy disposal of complaints as cancellation of an on-going contract and debarment of the companies puts the procurement clock back by several years. The new complaint handling guidelines seems to be a step in the right directions, if followed…

 In past blacklisting/debarring the foreign/Indian OEMs had become the norm, on mere suspicion, without any substantial proof and that also at a stage when the procurement process has almost completed. The government had debarred number of OEMs, based on alleged charges leveled or engineered directly or indirectly by competitors. To name a few these included Singapore Technologies Kinetics, Israel Military Industries (IMI), Rheinmetall Air Defense, Corporation Defense Russia and Denel etc. In all about 100 complaints were referred to the investigating agencies and based on their recommendations these companies were barred, however none of the charges have been proved after prolonged investigations in most of the cases, despite the hype they created in media.

Cancellation of an on-going contract and debarment of the companies guilty of transgressions impacts both the seller and the buyer. For the seller the impact is limited to the loss of business and reputation. The buyer loses the opportunity to acquire the platform/equipment for which the contract had been/ yet to be signed. If the contract includes transfer of technology, the impact is all the more damaging as MoD ends up depriving itself of the technology required for indigenous production. Considering that it takes years to sign a contract and another couple of years for the supplies or transfer of technology to be completed, cancellation of a contract could put the clock back by several years, apart from embroiling MoD in arbitration. The impact of debarment is more disastrous if the debarred company had been participating simultaneously in some other acquisition programmes. As it is, there are very few original equipment manufacturers (OEMs) of sophisticated equipment, weapon systems and ammunition in the world. Disruption in procurement or manufacture of platforms, equipment and ammunition is also a setback for the drive to indigenize defence production.

At present, the complaints received are being handled as per the general guidelines of Central Vigilance Commission (CVC) and DoP&T on the subject. To ensure fair and speedy disposal of complaints for benefit to the procurement process and also to give confidence to the vendors, the Govt has come out with a fresh set of time-bound guidelines vide MoD ID No.1(6)/D(Acq)/13-Vol.II dt. 21.09.2015 available at www.mod.nic.in. The step is likely to ensure that only genuine complaints are entertained, and non-genuine complaints are taken up at different level, no cognizance to anonymous complaints and even official complaints would be entertained with a warning that grievances found to be "frivolous or vexatious" could lead to a stiff penalty. To ensure this, all vendors participating in defence tenders will have to submit bank guarantees that could be encashed for this purpose.

The complaints will be disposed of within a 60-day period and more so no procurement cases will be halted while a complaint has been received or is being probed till a final decision is taken. This makes sense, because a majority of the charges against overseas defence companies were basically leveled by their competitors during the procurement process and as on today, number of complaints is holding up essential purchases.

To summarize gist of new set of guidelines is as under:-

Types of Complaints

  • Complaints by Public:.both known identity and anonymous.
  • Complaints by Competing Vendors.

Processing and Disposal of Complaints

All complaints will be processed and disposed off in an appropriate and time bound manner so that the concerned acquisition scheme is not delayed, while the genuine complaint is addressed and action is taken on priority basis.

 

Complaint where the identity of the complainant is known / well established or complaint is delivered in person. : Receipt of all such complaints will be acknowledged. The complainant will also be requested to provide additional information and/or evidence on which the complaint is based, wherever required, so that the same can be verified/ enquired to reach a logical conclusion. In case the complainant writes back disowning the complaint, the complaint will be treated as an anonymous complaint. If genuineness of the complainant is confirmed, action as per Para 5.III of the Guidelines will be taken for disposal of the complaint.

Complaint where the identity of the complainant is doubtful or the complaint is pseudonymous. :The complaint will first be sent to the address indicated on complaint letter for confirmation. If no response is received from the complainant within 15 days of sending the complaint, a reminder will be sent. After waiting for 15 days of the reminder, if nothing is heard, the said complaint will be treated as anonymous complaint. Anonymous complaints will not be taken cognizance and following procedure will be followed:

  • Anonymous complaints will be filed, irrespective of the nature of allegations.
  • Handling of pseudonymous complaints will be done as per procedure given in Para 10.
  • While putting up main procurement case to RM at CFA approval stage, the folder containing Anonymous/ Pseudonymous complaints pertaining to the case shall also be enclosed and it will be accordingly specially highlighted in the noting sheet.
  • Complaints received by SHQ “only”, for cases below Rs 150 Crore, will be dealt in the same manner as in Para 13 by the Vice Chiefs.

To ensure transparency and due diligence, complaints falling in the two categories mentioned above, along with the result of enquiry into their genuineness, will be posted on MoD website by the concerned SHQ.

Complaints by Competing Vendors

The complainant must adduce cogent evidence to prove its genuineness. In case the complainant fails to do so, the complaint may be treated as vexatious or frivolous. In case vendors' complaint is felt to be vexatious or frivolous by MoD or SHQ as the case may be, a show cause notice will be issued by Acquisition Wing or SHQ to the vendor asking him to render full and verifiable facts in keeping with existing Para 6.8 of Annexure I to Appendix H of DPP-2013. From the reply of the vendor, if it is prima facie established that the complaint is vexatious or frivolous by MoD or SHQ, the same will be referred to Ombudsmen. Based on the findings of Ombudsmen appropriate action will be initiated against the vendor with approval of RM.

The complaint and the result of the enquiry will not be posted on the MoD website as it may violate confidentiality pertaining to the vendors bid, technical details of the equipment or requirement for secrecy.

Integrity Pact Bank Guarantee (IPBG)

Vendors would be required to furnish IPBGs as under which will be valid for period of three years from the date of submission of offer:

In case a vendor unilaterally decides to withdraw from procurement scheme or has been declared non-compliant and if he wishes to withdraw his IPBG, he may do so after 45 days, provided he gives an undertaking that he has no complaints in the case.

Procedure for Processing Complaints (Other than Anonymous/ Pseudonymous)

 Processing of complaints in respect of procurement cases under delegated powers of SHQs/IDS/CGHQ

Acquisition Wing will forward the complaints to respective CFAs in the SHQ/IDS/CGHQ.

The CFA will direct the concerned Directorate (of SHQ/IDS/CGHQ as the case may be) to enquire and submit a factual report on the complaint. The CFA will get the factual report examined and dispose of the complaint by taking appropriate action after having obtained opinion of Ombudsmen wherever so required.

Complaints received directly by SHQs/IDS/CGHQ will be examined within 30 days of receipt of complaint to the extent possible and disposed off.

Processing of complaints in respect of procurement cases other than those under delegated powers

Complaints relating to the capital acquisition will be marked to the Acquisition (Acqn) Wing for further processing. In the Acqn Wing, the complaints related to technical aspects, i.e., RFP, TEC, FET etc will be handled by respective TMs, and those pertaining to other procurement stage(s) after FET, i.e., CNC stage, will be handled by respective JS & AMs.

The TMs/JS & AMs, as the case may be, will forward the complaint to the concerned SHQ for comments/factual report. The concerned SHQ will get the complaint examined and, with the approval of PSO, forward its comments/recommendations to the concerned TM/JS & AM, as the case may be. All the above activities at SHQ will be completed within 30 days of receipt of complaint.

The TM/JS & AM will further examine/analyse the comments forwarded by SHQ. They may obtain views/advice of the concerned FMs in MoD (Finance), wherever so required, and thereafter will submit the file with their recommendations for approval of RM.

Complaints received from public representatives/VIPs will also be examined and processed in a similar manner.

All the above activities will be generally completed within a period of 60 days of receipt of complaint.

 

Addressal by Ombudsmen

MoD and Service Headquarters to maintain a separate panel of independent experts. One or more experts may be selected as Ombudsmen to whom complaints may be referred to if deemed necessary. Individuals selected as Ombudsmen will be on the panel for tenure of two years and will not be repeated. The procedure for appointment of Ombudsmen shall be notified by MoD separately.

In addition to the referral of cases by MoD to Ombudsmen, complainant vendors will be at liberty to request for referring their complaint to the Ombudsmen. Whenever a complaint is referred to the Ombudsmen, he/they shall always be required to rule on the aspect of the complaint being vexatious or not.

Parallel Processing of On-Going Procurement Cases 

In all cases, the acquisition scheme shall be progressed independent of processing of the complaint. Procurement case will be processed for final approval unless CVC specifically asks for withholding the CFA approval.

Protection to Whistle Blowers

Protection to whistle blowers shall continue to be available as per the extant provisions of CVC guidelines.

Powers in Special Cases

Notwithstanding these Guidelines, RM/ Defence Secretary may require any complaint to be enquired into in such manner as may be directed by them.

The MoD further needs to identify measures to remove bottlenecks in weapon procurement and boost defense preparedness. The wrongdoers could be punished without blocking acquisitions and the flow of spares.  Banning business for a foreign/Indian OEM for any breach of the integrity pact should always be the last option.

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