India rooting out corruption in defense procurement

India rooting out corruption in defense procurement

Mandeep Singh

Companies bidding on defense contracts in India now enjoy a fairer playing field because of new policies designed to root out corruption and improve transparency. The measures target bribery and the use of intermediaries to secure defense contracts.

The transparency initiative comes after three major deals worth a combined U.S. $2.7 billion involving India’s Ministry of Defence and foreign defense suppliers were fully or partially abandoned between the late 1980s and 2019 due to corruption findings, according to a February 2021 report by the Observer Research Foundation (ORF) in New Delhi.

These included U.S. $1.4 billion in contracts originating in 1987 with Swedish-owned Bofors for 410 howitzer field guns, pictured; a U.S. $500 million contract in 2010 with AgustaWestland, which was owned by British and Italian investors, for 12 medium-lift helicopters; and a U.S. $800 million deal with Swiss aircraft maker Pilatus for 106 single-engine trainer planes that was canceled in 2019.

In each case, intermediaries allegedly paid bribes to Indian officials to secure the deals, ORF reported. While court actions proved inconclusive, findings by India’s Central Bureau of Investigation and other authorities resulted in the government banning or restricting the three foreign suppliers’ business dealings in India.

Bribery is identified as a form of corruption that must be avoided in the precontract Integrity Pact, which must be signed by government defense buyers and firms bidding on defense contracts. The pact is included in a Defence Acquisition Procedure (DAP) policy paper issued in July 2020 and affects contracts in 2021. The agreement requires buyer and bidder to “avoid all forms of corruption” during contract proceedings by following a system that is “fair, transparent and free from any influence/unprejudiced dealings.”

Foreign and domestic bidders must sign the pact before bidding on defense contracts. The pact prohibits noncompetitive pricing by bidders and preferential treatment for any bidder on the part of the buyer. The rules also prohibit bidders from colluding with third-party intermediaries.

To ensure compliance, the DAP stipulates that panels of independent external monitors be nominated to scrutinize the procurement process. The monitors investigate complaints arising at any stage of the procurement process.

“The government of India desires that all actions regarding procurement of any equipment are totally transparent and carried out as per established procedures,” the DAP states.

Mandeep Singh is a FORUM contributor reporting from New Delhi, India.