Acquisition Reform – Lessons from Bernard Gray

The pace of military acquisitions is a matter of concern not only in India but also in most Western democracies. The US Defence Secretary, Robert Gates, recently highlighted the poor US experience1 in this area. The French have had their difficulties even as the Australians have only recently concluded an investigation. The British too have had huge problems over an allegedly under resourced military campaign in Afghanistan leading to a very public wrangling between General Sir Richard Dannatt ( till recently CGS, British Army ) and his political superiors. The dissonance over poor campaign infrastructure in Afghanistan has led to the resignation of Eric Joyce, a parliamentary aide to Bob Ainsworth, the Secretary of Defence. The political fallout too has been significant – increasingly, the British public is questioning the futility of being earnest about the war in Afghanistan if the desired equipment cannot be provided to the soldiers and in good time. A recent poll2 in The Sun found that seven out of ten Britons believe that Gordon Brown is failing to support British forces in Afghanistan. Cumulatively, the crisis underlines the criticality of focused and timely defence acquisitions, with repeated failures having deleterious consequences not only on National Security but also on political fortunes and outcomes.

In India, the concerns are similar, leading Prime Minister Manmohan Singh to acknowledge as much while addressing the Combined Commanders Conference3 in New Delhi on October 20, 2009, where he said, “I am aware that procedures for defence acquisitions and procurement are a matter of concern to the armed forces. We must ensure a balance between the needs of timely modernization and the necessity of conforming to the highest standards of transparency, probity and public accountability.’’ A seminar held at IDSA on the subject on October 27, 2009, debated various facets of the challenge.

The Bernard Gray Report

It is in the aforestated context that the Bernard Gray Review of Acquisition4 is extremely relevant and timely. Gray is a former Defence Correspondent with the Financial Times, former director of Cable and Wireless – the renowned UK Broadcaster, author of the Strategic Defence Review of 1998, and a leading independent thinker.

The Report is captioned as an Independent Report. Even a quick read reveals the value of such an exercise by a detached professional — a forthright, unbiased rendition as against a hobbled compromise that the work of a multi-disciplinary committee would have produced. The report is insightful and path breaking, both, in an honest identification of the malaise as also in terms of the possible solutions that it recommends. It would be of great interest to those who seek genuine reform, since the report by its own admission seeks to target ‘vested interests’5 that lie at the heart of delays and inefficiencies in defence acquisitions. Those that merely seek to tinker, however, need not even bother to read – they will find the report singularly uninspiring.

The report examines existing structures and processes in the UK MoD and states that while the processes may be more efficient6 than in other departments, they fall well short of meeting the myriad operational challenges. Equally, the report opines that the systemic behaviours described in the report are not the result of bad behaviour by individuals, but of a series of structural incentives that encourage principled individuals to act in a way that does not maximize the outcome7 for the MoD as a whole. The existing processes, therefore, it asserts, are simply not good enough, more so, because adversaries are not waiting for the sclerotic acquisition systems to catch up. While acknowledging that the business of defence acquisitions is a complex challenge, the report emphasizes that doing no worse than the world average is indeed a poor consolation. It further argues that time and cost overruns are not mere accounting entries but actually cause grave damage to military output8 and are therefore simply not unacceptable (this when the UK is widely acknowledged to have done the most to drive reform in the area of acquisitions).

Salient Recommendations

The recommendations of the Review are perceptive in that they seek to remove all the prevarication that pervades the acquisition processes today. First and foremost it calls for a periodic Strategic Defence Review9 (to be held once in five years in the first session of a new parliament and to be enshrined in statute) – which will force a reluctant political class to undertake periodic threat assessments and extend an explicit but broad based political commitment to the military capabilities that need to be created by way of response. It goes on to recommend the creation of a 10 year roll on10 Defence Budget (enshrined in law), duly costed and audited by the Treasury, to facilitate long term planning as also allow for the longish acquisition cycles. Thirdly it calls for a stronger customer-supplier11 relationship between DCDC Capability (responsible for capability definition, spelling out the customer requirement and budget control of the agreed equipment plan ) and Defence Equipment Support ( DES – responsible to translate the customer requirement into a viable arms and equipment capability). Fourthly, it calls for an improvement in the ability of DES to deliver efficiently on new equipment and support through better Project Management12 (if necessary through privatization if Whitehall bureaucracies cannot get their act together). And lastly, it pinpoints accountability in the office of the Permanent Under Secretary, PUS,13 (equivalent to our Defence Secretary) in the acquisition process; while bestowing total ownership of the Acquisition Plan on the PUS, it concurrently demands accountability from him to Parliament, enshrined in law. If the PUS is held so precisely accountable, ipso facto, subordinate bureaucracies are bound to fall in line. As is quite evident, the entire focus is on ensuring timely operational deliverance and rigorous elimination of costs.

It is equally interesting to note that on the very day of its release, the Report was accepted by the government (barring a few recommendations) and Bernard Gray was persuaded to head the process that would ensure implementation of agreed reforms14 (unlike in our case where very sensible reports continue to gather dust or are adopted in such a convoluted and diluted form so as to lose all meaning). The fact that the author of the report enjoys the confidence of the Minister and has been associated with the process of implementation may make it that much more difficult for attempted reforms to be stymied. Do we in India need to take a cue?

Relevance in the Indian Context

The malaise that Gray seeks to address is remarkably familiar in the Indian context. The major recommendations of the Review are precisely those that we have been so dismissive of as ‘impractical’ or even ‘violative of the Indian statute’ ( the roll – on defence budget, for instance ). We need to see that if these provisions are being adopted by the British on whom we have modeled so many of our systems, why can’t we do likewise. While issues like probity, public accountability, etc., are of critical importance, with very often mere allegations of breaches having severe political and bureaucratic consequences, they cannot become ends in themselves, or be the principal roadblock in the way of operational deliverance. Operational outcomes and the need to provide combat worthy equipment in time must remain the central drivers. Is that the case as matters obtain ? No. The hard reality is that concerns about issues like probity, correctness of procedures, discovery of the right price, etc., relegate those of operational outcomes to the distant background leading to a situation where the tail wags the dog. Each attempt at reform seeks to strengthen the tail even as operational capacities continue to hollow out ; consequently, we have a barking dog which cannot bite.

And what is worse is that the central discourse in the IDSA seminar of October 27 seemed to be that while we may be bad we were only as bad as the Brits and the rest of the world. Such justifications are not only factually untrue and grossly out of step with global trends in acquisition reform but also very poor consolation. The British by adopting the Bernard Gray Reforms will be moving onto third generation reforms (accountability in the processing chain and timely deliverance ) while we have not as yet carried out even the first and second generation reforms (multi – disciplinary manning of acquisition processes in the MoD, giving a far greater say to the Armed Forces as customers / stakeholders / drivers, allowing FDI and the private sector in to promote competition). The problem with India’s acquisition reforms is that it is obsessed with procedural cosmetics while constantly skirting substantive structural reforms. In fact the series of DPPs (Defence Procurement Procedures) have only added to the procedures and bureaucratese even as time and cost overruns have increased.

India’s responses, howsoever well intentioned, are unlikely to succeed if we do not restore a modicum of common sense to our processes instead of merely adding copious procedure. Globally, the trend is to acquire what is easily available off the shelf. Military Off The Shelf Purchases (MOTS)15 are the default option for the Australian Armed Forces – benefits of other options must be demonstrated through a clear business case, even before being considered. In India in the name of indigenization our scientific establishments block all attempts to acquire equipment from global bidders even as the bureaucratic rigmarole ensures that the private sector is not adequately incentivised to step into defence. While it makes all the sense for the DRDO to focus on a few high end, high technology, sensitive projects there is no reason why sixty two years after independence, our private sector ( a TATA, L& T or Mahindra) cannot come up with an indigenous version of the MBT or an Artillery Gun. The wings of our scientific establishment needs to be clipped and its focus narrowed – the indigenization slogan cannot be used as a veto to block all acquisition. It must confine itself to a few projects on which it must deliver. Wars, after all, cannot be fought with technology demonstrators.

India needs to transform existing relationships within the acquisition establishment. The primacy of the political class (as those that bear the ultimate responsibility for military deficiencies and underperformance) and the executors – in – chief, principal stakeholder and primary customer viz, the Armed Forces needs to be acknowledged. See how the Armed Forces drive processes in the British MoD, as part of both Capability Definition Processes and Delivery Organisations. The heads of both the wings – DCDS Capability who lays down aspirational objectives and DES who ensures deliverance while trading off practical concerns (industrial, financial and technical constraints) – are three stars from the Services. The others that influence the processes, viz, the bureaucracy, the finance czars, the scientific and industrial establishment are critical provided they remain just that. In real life, it is an acknowledged fact that through convoluted manipulation of processes they have acquired a larger than life role with the Services being reduced to craven pleaders. There is a need to address this central deficiency and learn from the British experience. In the days of the Cold War, the infirmities in acquisition were explained away by arguing that, ‘the balance of delays’ ensured that both sides would enjoin battle with equal deficiencies. Such smart alecism gave way in the Cold War’s aftermath to the assertion that militaries are no longer required, leading to a significant drawdown in capability. The fight with the Taliban has helped to shatter these self-serving myths, leading to a public clamour for resourcing the troops in the right manner and restoring much of that capability. The consequences are being borne by the political class (plummeting ratings for Gordon Brown) and the military of course who have paid with their lives. The government may have successfully warded off financial scandal in defence but is now faced with one of even more telling proportions – that of embarrassing military defeat. There is a need to learn, correct the skew between probity and operational deliverance and restore common sense to our acquisition processes – not through long winding platitudes but through demonstrated action. The whole relationship between the bureaucracy, the scientific establishment, the Defence Public Sector Undertakings, and the finance professionals needs to be transformed – from one of supplication (which is presently the case) to a more equal relationship where the customer (the armed forces) demands and gets the best bargain and in good time. Yes, as complexities associated with acquisitions increase there is a need to become more innovative and multi-disciplinary (academics, strategic experts, finance and project management professionals) – in our case every step towards reform has seen an injection of more and more of the same ubiquitous babudom which caused the problem in the first place.

We also need to pinpoint accountability for endless delays. The inordinate delays in our processes which are attributed to the need for probity and cost savings do not stand the test of logic. The Bernard Gray Report captures the costs of delay wonderfully and records that much that we tend to pass off as ‘defence inflation’ can actually be attributed to behaviours and laborious processes within the MoD. We may therefore like to take a leaf out of the Bernard Gray Report.

Choices and Consequences

The difficulties in adapting the reforms proposed by Bernard Gray (undoubtedly a very strong package of measures) to the Indian context are great but the benefits will be even greater – ensuring the operational effectiveness of the Armed Forces by providing the frontline with the right kit at the right time. It would also make sense to take the great leap and reform, learning from the British experience and adopting, instead of traversing, the same beaten path with less than desirable results. In their current form, our acquisition processes are akin to a hockey match where there is a lot of procedural frenzy, rapid ball play, brisk running down the flanks but very few goals – long on form but miserably short on outcomes. This paradigm must change. If a 25 feet long ditch is to be crossed it would make more sense to attempt the one great leap instead of taking a series of irresolute smaller jumps that will only land us repeatedly in the ditch. If we are to achieve the objectives laid out by Prime Minister Manmohan Singh during his address of October 20, 2009, Bernard Gray may well have provided us with an actionable framework. Or at the very least, some food for thought.

Whether we decide to take a leaf out of the Bernard Gray Report or not, one thing is clear – the leitmotif of our acquisition processes must change. Timely modernization must be the guiding beacon albeit one which is predicated on the pillars of probity, accountability and economy ; instead of the present state where everything else is important except timely modernization. If we don’t take necessary steps to ensure timely modernization in an evenly spread out manner, we will be faced with three possible prospects – either our armed forces will not be prepared for challenges when they emerge ; we will rush to make purchases in the manner of Kargil in near desperation thus exposing ourselves to manipulation by arms sharks or we will end up resorting to frenzied modernization16 to make up for the lost years, thus whipping up needless war hysteria ( as is currently the case with China ). Each of these makes little strategic sense. In proffering advice to the political class to overcome the acquisition imbroglio, we must offer viable options in line with global trends in acquisitions, instead of constantly fanning their fears with regard to the taint of financial scandal. As is evident from the British experience, while the need for probity is great, the need for operational deliverance is greater. Democracies like ours need to take note.

• 1. Robert M. Gates, “A Balanced Strategy: Reprogramming the Pentagon for A New Age,” Foreign Affairs, January/February 2009
• 2. The Sun Online, September 3, 2009
• 3. Asian Age, October 21, 2009.
• 4. The Bernard Gray Review Of Acquisition was released by the British Defence Secretary, Bob Ainsworth on 15 Oct 09. The study was commissioned by the UK MoD and was undertaken by Bernard Gray in concert with Strategic Consulting Business Firm L.E.K. Consulting. See .
• 5. Bernard Gray Review of Acquisition, p. 14.
• 6. ibid.
• 7. ibid.
• 8. ibid, p. 19.
• 9. ibid, p. 10.
• 10. ibid.
• 11. ibid, p. 11.
• 12. ibid, p. 12.
• 13. ibid, p. 11.
• 14. Press Release, Independent Review of Defence Acquisition, October 15, 2009 www.mod.uk.
• 15. Bernard Gray Review of Acquisition, p. 84.
• 16. Shekhar Gupta, “Opportunity: Made in China,” Indian Express, November 7, 2009.