The Indian Defense Ministry today allowed multi-vendor user-trials for five categories of weapons systems to go ahead, after they were held up following allegations of corruption against two vendors, ST (Singapore Technologies) Kinetics and Israel Military Industries (IMI).
But while trials are to go ahead, any further progress and decisions with regard to the tenders will be subject to the report submitted by the CBI (Central Bureau of Investigation), which has been investigating allegations of corruption.
This comes after ST Kinetics and IMI were blacklisted by the Ministry of Defense in June for alleged involvement in the tenders that were tainted by corruption discovered after the arrest of the former Director General Ordinance Factories and Chairman of the Ordinance Factory Board (OFB), Sudipta Ghosh.
Seven companies were blacklisted by the Ministry of Defense at that time, including the two listed above.
Singapore Technologies was in the running for a US $ 650 million deal for 155 mm towed artillery guns to be supplied to the Indian Army. A subsidiary of Singapore Technologies, ST Kinetics was bidding to sell 145 units to the army. IMI was contracted at the end of March by the OFB to build five artillery munition factories in the Indian state of Bihar at a cost of $ 240 million, over a three-year period. The factories were also to have produced shells for Bofors artillery guns.
The five weapons systems for which user-trials are to go ahead are:
Light Strike Vehicle (for paratroops and Special Forces)
High zone Bi-modular System
While the multi-vendor trials for the first three systems were held up because of the blacklisting of ST Kinetics, the trials for the last two systems were frozen because of the blacklisting of IMI.
But the army has been pushing for trials to take place to prevent amplification of delays in defense acquisition. Their logic is that even if the blacklisted companies don’t make it through the trials process, some other company could be selected and delays in the procurement process could be prevented. If, however, they do make it through the trials, the case would still be subject to the CBI investigation report.
The army has been plagued by delays in defense procurement which has made its modernization process an obstacle course. The army has not been able to buy any artillery guns since the Bofors howitzers bought in the mid-1980s. The blacklisting of vendors for wrongdoing has also been especially to the detriment of artillery acquisition, with Bofors and Denel both being considered out of the running for acquisition of artillery guns.
The armed forces have often complained that the blacklisting of even a single company on charges of corruption often freezes multiple tender processes for a variety of different weapons systems, simply because that particular company has bid for all those tenders. They also point out that freezing trials and tender processes leaves the armed forces interminably bereft of new equipment, even though the products of other, non-blacklisted vendors are available as options. This can also result in the raising of prices by non-blacklisted vendors who are still in the running, in the absence of a competitor.
Interestingly, some officials at the Ministry of Defense have noted the coincidence between the recent, frequent exchange of visits between military officials of Israel and India and the green light to user-trials, which also include the participation of IMI.