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Government to set up Defence Procurement Organisation

The Union Government is planning to set up a Defence Procurement Organisation (DPO), new procurement body to integrate and streamline the long and arduous process of defence acquisitions.

The DPO will be a vertical under the Union Defence Ministry. It will simplify the defence purchase procedure by integrating procurement processes.

Need for DPO

Government has modified several times the Defence Procurement Process, which applies to all defence capital procurements to bring in transparency and speed up acquisitions. But even after multiple modification, the process continues to be lengthy and complicated.

Background

The new agency will be established based on the recommendation of government appointed committee on the modalities of setting up the DPO. The committee was headed by Dr. Pritam Singh, former Director of Indian Institute of Management (IIM) Lucknow and has submitted a report to UnionDefence Minister Manohar Parrikar.

Increase in financial powers for Procurement

The Cabinet Committee on Security (CCS) chaired by the Prime Minister has increased the financial powers of the Defence Minister to clear defence deals upto Rs.2,000 crore from earlier Rs.500 crore limit to shorten the procurement cycle. Now only deals of Rs.3,000 crore and above would go to the CCS for approval. CCS also increased joint financial powers of Finance Minister and Defence Minister to approve projects up to Rs.3,000 crore, up from the earlier Rs.1,000 crore.  The Defence Secretary also has been given financial powers upto Rs.500 crore to clear deals.

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