Recent media reports indicate that India’s Ministry of Defense (MoD) has decided to allow private companies to manage and operate all Army Base Workshops (ABWs) and station workshops in eight cities across six states. The scheme is called GOCO (Government Owned, Contractor Managed).
Ostensibly, the move is part of a major restructuring by the government of India to modernize the military. It claims that this will sharpen the teeth (fighting units), while shortening the tail (logistics).
But if one takes a closer look the government of Prime Minister Narendra Modi, substantial reforms haven’t even taken off. The Modi administration, despite being in charge since May 2014, has not even commenced the process to define a national-security strategy.
The vital requirement of appointing a chief of defense staff, recommended after the Kargil War of 1999, has been given the short shrift. Instead, we are now witnessing a repeat of past follies, which will end up degrading India’s military even further. The deeper malaise that has prevented the modernization of the military continues to grow.
At first, the proposed GOCO, on paper, seemed like an excellent idea. A government directive to the Integrated HQ of MoD (Army) explains the concept:
The government will provide land, infrastructure, plant and machinery, equipment system support, oversight…. The contractor operates and utilizes the facilities available, manages all types of work and is also responsible to get required licenses, certifications and accreditations to deliver mutually agreed targets and maintains the plant machinery and services integral to the venture.
MoD orders issued on September 7, 2017, instructed workshops to prepare costing models for benchmarking lowest bidders. The eight ABWs and station workshops employ 12,000 workers.
This move follows the recommendations of the government-appointed Committee of Experts (CoE) on “Enhancing Combat Capability and Rebalancing Defense Expenditure of the Armed Forces.” It was headed by Lieutenant-General D B Shekatkar, who retired from the army almost a decade ago.
On December 21, 2016, the CoE submitted its report to the defense minister. Of the 188 committee recommendations, 65 were approved, mostly pertaining to the army, and involved redeploying some 57,000 personnel. These reforms, termed Phase 1, are to be completed by the end of 2019.
Significantly, the CoE vociferously stated that if all 188 recommendations were effected within five years, it would result in saving 250 billion rupees (US$3.9 billion) that could be utilized for modernizing the Armed Forces. But the MoD sent only 99 of the 188 recommendations to the Armed Forces for implementation. The fate of the remaining 89 is unclear.
The “approved” reforms included a performance audit of non-combat organizations under the MoD and making such organizations as Defense Estates, Defense Accounts, DGQA (Directorate General of Quality Assurance), Ordnance Factory Board (OFB), and DRDO (Defense Research and Development Organization) accountable, which are directly under the MoD. It is the ministry’s inherent responsibility to audit them regularly.
Interestingly, what has been approved suits the bureaucracy perfectly, including the redeployment of civilian defense officers.
Significantly, of the 57,000 personnel being redeployed, 31,000 are civilian defense officials. The reduction of civilian officers could have been used to augment the military’s combat strength. But clearly, that has not been thought through.
Uniformed personnel make up only 15% of the 12,000 workers currently employed in the Army Base Workshops. Once GOCO is in place, the MoD will take over control. That does not portend well for India’s military.
Hostage to bureaucracy
The moribund and outdated Ordnance Factories (OF), started by the British, continue to be white elephants. Once upon a time they were run by the military. Once they were handed over to a civilian bureaucracy, they lost their efficacy. The fate of the Indian Army’s past troubles trying to source combat uniforms from the OFs is a startling tale of inefficiency and corruption.
Last last year Army HQ wrote to the Ordnance Factories Board (OFB) seeking to procure combat uniforms directly from private vendors. It sought a no-objection certificate for these purchases, as mandated by procurement rules.
Each combat uniform set from the OF costs the army 4,150 rupees. In his letter to the OFB, the Master General of Ordnance pointed out that combat uniforms using the same material, stitched locally, would cost 1,900 rupees, as against the OF price of 4,150 rupees.
The army letter also stated that if procured from private vendors in the “same volume,” the price of each combat-uniform set could go down to 1,200-1,300 rupees.
The annual procurement of combat uniforms from OF, because of multiple factors, has varied from 250,000 to 1 million sets. If the average annual procurement is 500,000 sets, the annual savings to the army comes to between 14.2 billon and 14.7 billion rupees if it the uniforms were procured through private vendors.
Naturally the All-India Defense Employees Federation was up in arms at this proposal. Bowing to pressure, the MoD immediately struck it down. Had the ministry accepted it, the savings would have been substantial.
This lends credence to suspicions that the MoD-DRDO-OFB cabal could be pocketing huge profits. Ironically, the factory at Kanpur that manufactures the combat uniforms outsources the material and the stitching to private vendors!
The GOCO move is likely to meet a similar fate. At a time when the military is desperate for modernization, it is saddled with more bureaucratic hurdles. The result of the MoD’s takeover of the army workshops is likely to be the same as with the ordnance factories. It ended up increasing costs manifold rather than reducing them.
GOCO is a well-thought-out plan to enlarge India’s governmental defense-industrial complex surreptitiously.
Ideally, the Department of Defense Production, which is part of the MoD, needs to be moved out and merged with the Ministry of Commerce and Industry. The military may save on manpower from this “privatization” but the Army is already short of 9,000 officers and 50,000 soldiers.