INDIA Law and Practice Contributed by: Alina Arora, Samarth Gupta and Parth Singh, Shardul Amarchand Mangaldas & Co
fall under the DAP 2020. Purchases charged to the revenue budget (ie, supplies, spares, maintenance, IT and services) fall under the DPM 2025. There is no minimum value threshold for applicability of either instrument. 2.4 Restricted and Classified Procurement Under the DAP 2020, a classified request for proposal (RFP) is handled under the precautions of its security classification, and each bidder signs a non-disclosure agreement in the prescribed format. The DPM 2025 permits exemption of offers/relevant information from electronic publication where national security requires. 2.5 Tender Procedures for Defence Contracts Acquisitions under the DAP 2020 are category- dependent (Buy, Buy & Make, Make, etc) and typically involve the following stages (with variations depend - ing on category): • request for information; • setting qualitative requirements and performance parameters; • acceptance of necessity (AoN) – the government’s in-principle approval of the purchase and its cat - egory; • RFP; • technical evaluation and field trials; • opening of commercial bids for compliant bidders; • price negotiation by contract negotiation commit - tee; and • approval by competent financial authority and contract signature. Typically, bids are submitted in a single stage (with technical and commercial offers in separate covers) and the contract is awarded to the technically compli - ant lowest (L1) bidder. Negotiated and direct routes (IGA/foreign military sales (FMS)) have historically accounted for a substantial share of capital spending by the MoD/Indian defence forces, with the Supreme Court of India (the “Supreme Court”) noting in the Rafale litigation ( Manohar Lal Sharma v Narendra Damodardas Modi , AIRONLINE 2018 SC 1376) that IGAs (including FMS) accounted for nearly 40% of the INR7.45 trillion (USD78.5 billion)
procured since 2002 under the Defence Procurement Procedure (predecessor to the DAP 2020). 2.6 Direct Contract Awards and Single- Source Procurement Routes Under the DAP 2020, an ab initio single-vendor case may be approved where only one vendor can sup - ply equipment that gives a qualitative edge. The DAP 2020 allows purchase under IGA/FMS where a gov - ernment-to-government transaction carries strategic, military, technological, economic or diplomatic ben - efit. The fast-track procedure/EP compress the pro - cess under the DAP 2020 for procurements address - ing urgent operational requirements. Under the DPM 2025, a proprietary article certificate permits purchase from a sole manufacturer/rights-holder, and a single tender enquiry is available in operational emergencies or for standardisation with existing equipment. Pricing Single-vendor cases usually entail establishing a benchmark price before the commercial offer is opened. Under the DAP 2020, benchmarking is under - taken by a benchmark models committee, whose recommendations inform internal discussions of the contract negotiation committee. For procurement of DPSU equipment in single-vendor cases, the DAP 2020 requires a separate costing committee consti - tuted by the DDP to price the equipment. IGA/FMS purchases are made at prices set in direct govern - ment-to-government negotiations. Practice These routes account for some of the largest recent procurements, including the Rafale purchase under a 2016 IGA with France and the 2024 MQ-9B purchase from the USA under FMS. 2.7 Offsets, Industrial Participation and Sovereign Capability Requirements The DAP 2020 marked a graded shift in emphasis from offset obligations to indigenous content (IC) requirements. Offsets Offset applies to procurements under the Buy (Global) category where estimated cost at AoN is INR20 billion
87 D EFENCE CON TRACTS 2 026
CHAMBERS.COM
Powered by FlippingBook