Applicability of CVC Guidelines to Defence Procurement

A question that often worries those involved in procurement of goods and services in the Ministry of Defence (MoD) and the Services is whether the procedure laid down in the manuals they follow is complete in all respects. There are, additionally, provisions of the General Financial Rules (GFR), supplementary instructions issued by other agencies like the Department for Promotion of Industry and Internal Trade (DPIIT), and the tender guidelines issued by the Central Vigilance Commission (CVC).

Many training programmes on acquisition include a session or two on the ‘CVC instructions’, which reinforces the impression that it is not enough to follow the departmental manuals and that one must also make sure that all CVC guidelines are complied with. Considering that the CVC has issued as many as 72 circulars containing various guidelines on public procurement till the end of June 2022, it would be an enormous task for anyone to sift through all these circulars to ensure compliance with the CVC guidelines. This impression merits dispelling.

To set the context, in the absence of any central law on public procurement in India, spending by the ministries and departments on procurement of goods and services is governed by the general principles laid down in the GFRs, which were first promulgated in 1947, and whose latest version was released by the Ministry of Finance’s (MoF’s) Department of Expenditure (DoE) in 2017.1

These rules deal with a wide range of subjects from budget formulation and government accounts to inventory management and grants-in-aid given by the government. There is only one small chapter that deals with procurement of goods and services, though another three even smaller chapters on works, inventory and contract management also have some bearing on the subject.

Cognisant of the fact that the GFRs are grossly inadequate for addressing the complexities of procurement by big departments like Defence and Railways, the framers of these rules permit them to issue detailed instructions ‘broadly in conformity with the general rules contained in’ the relevant chapter of the GFRs.2 Pursuant to this enabling clause, several ministries have promulgated their own procurement manuals containing detailed procedural instructions to address the peculiarities of their acquisition programmes.

The MoF itself has promulgated three procurement manuals: Manual on Procurement of Goods, Manual on Procurement of Works, and Manual on Procurement of Consultancy & Other Services.3 These manuals are followed by the ministries and departments which spend meagre amounts on procurement of routine goods and services and, therefore, do not need to formulate bespoke procedures for procurement.

The MoD too has promulgated at least four such manuals. The primary MoD manuals, currently in force, are the Defence Procurement Manual 2009 (DPM 2009), Defence Acquisition Procedure 2020 (DAP 2020), and Defence Works Procedure 2020 (DWP 2020). These manuals contain the procedure for revenue and capital procurements, and execution of civil works, respectively. A separate Procurement Manual promulgated in 2020 applies to all types of procurement by the Defence Research and Development Organisation (DRDO).4

Since these manuals have been, explicitly or implicitly, promulgated in terms of the aforesaid enabling clause in GFR 2017, the provisions thereof are, ipso facto, in conformity with the GFRs and other relevant government instructions, including those issued by the CVC. In fact, para 1.1.2 of DPM 2009 clearly states that it is ‘laid down in terms of Rule 135 of the General Financial Rules, 2005’, which corresponded to analogous clause in GFR 2017.

More to the point, para 1.5.1 of DPM 2009 states that ‘The provisions contained in this Manual are in conformity with other Government manuals like the General Financial Rules, Financial Regulations (Defence Services Regulations), as also other instructions issued by the Government and the Central Vigilance Commission from time to time’.

This should have put all apprehensions at rest, but it hasn’t. There are two reasons why the doubt about the need to factor in the CVC instructions while taking decisions keeps nagging the personnel involved in procurement of goods and services, despite the specific provisions in DPM 2009 quoted above.

The first reason is that DAP 2020, and its earlier versions, which regulates the armed forces’ capital budget, does not contain provisions analogous to the above-mentioned provisions in DPM 2009 and similar provisions in the DRDO Procurement Manual 2020. The second, more important, reason is that DPM 2009 itself nullifies the confidence generated by the aforesaid provisions by stipulating in para 1.5.4 that the ‘provisions of this Manual would be subject to general or special instructions/orders/ amendments which the Government may issue from time’.

A notification posted by the CVC on its website in July 20225 addresses the procurement executives’ dilemma to some extent. The notification mentions that while presently, guidelines are issued by the CVC, DoE, NITI Ayog, DPIIT, etc., the Commission had come to the ‘logical conclusion’ after deliberations with the DoE, that ‘it would only be appropriate if public procurement guidelines are issued from D/o Expenditure’ only. This is because ‘multiple organizations issuing guidelines, procurement executives were facing problems in having a single authoritative source of reference’.6

In pursuance of this decision, the DoE has already updated its manuals7 in which ‘all the CVC guidelines on public procurement have been merged’ and consequently ‘all the earlier guidelines of CVC on public procurement have been withdrawn’. The CVC notification goes on to say that all the organisations ‘are required to update/align their procurement guidelines/manuals in line with the above Manuals of D/o Expenditure and upload them on their website at the earliest for easy access of their officials and other stakeholders’.8

The ball is now in MoD’s court, as well as that of other ministries’ which have analogous manuals, as the CVC’s notification calls for immediate review of all the manuals promulgated by it to ensure that all government instructions, guidelines, and directives issued till date that must be followed by those engaged in procurement of goods and services are incorporated therein. But this one-time measure will not be good enough.

The MoD must institute a system to take cognisance of the instructions as and when issued by the DoE, which will henceforth be the nodal department for issuing procurement related instructions in future, and to promptly incorporate them in the MoD manuals. This alone will inspire confidence among the procurement executives and hasten decision-making. This will work if the task of reviewing the manuals is coordinated by a single authority within the MoD which, apart from immediate updating of the manuals, will also ensure that there are no ambiguities and contradictions within and across the manuals as regards the essential procedural requirements.  

Views expressed are of the author and do not necessarily reflect the views of the Manohar Parrrikar IDSA or of the Government of India.

• 1. General Financial Rules 2017, Department of Expenditure, Ministry of Finance, Government of India.
• 2. Ibid., ‘Chapter 6: Procurement of Goods and Services’, Rule 141 which reads: This chapter contains the general rules applicable to all Ministries or Departments, regarding procurement of goods required for use in the public service. Detailed instructions relating to procurement of goods may be issued by the procuring departments broadly in conformity with the general rules contained in this Chapter.
• 3. These manuals are posted on the DoE website but could not be accessed on 29 August 2022. See ‘Department of Expenditure’.
• 4. With the reorganisation of the Ordnance Factory Board (OFB) into seven Defence Public Sector Undertakings on 15 October 2015, the OFB Procurement Manual 2018 is not mentioned here.
• 5. The CVC notification is available at ‘Central Vigilance Commission’.
• 6. Ibid.
• 7. The latest version of all the three manuals, updated in June 2022, have been uploaded on the CVC website. See Central Vigilance Commission, ‘Tender Guidelines’, June 2022.
• 8. Ibid.