LEARNING FROM EXPERIENCE

         One of the unintended imperfections of the present system of BUY projects could be a lack of clarity in procedures leading to procurement.This should get resolved eventually. Take the case of a telecom or IT network project in the Services as an example.The QRs would be made and vetted within the ambit of MoD whereas the Govt of India has a specialist ministry and organisation to assess telecom and IT networks. The Scientific Advisors at various levels of MoD have their limitations as the Services have learnt from experience. Effectively the competence and limitations of the Director/Joint Director gets translated into QRs and goes virtually unchallenged once the case file exits the proposing directorate. Entire focus of the vetting process is concentrated on the procedural and financial aspects only.

At this point in time not only the DPP but the entire gamut of higher defence management is under review. It is requested that the readers of this blog do not underestimate their power to initiate positive change. Every little action within your ambit will add up to a significant whole and has potential to be an agent for major changes. 

Please read the article below and leave your comments to show your participation.

Lokpal and defence procurements

          In recent weeks, the Lokpal Bill has dominated public discourse. There seems to be a naïve belief that a strong Lokpal will root out all corruption. However, a law to establish a Lokpal is unlikely to be more effective than the existing laws to prohibit dowry or untouchability. To make a significant dent on the all-pervasive malaise of corruption, reforms will be needed at different levels of governance and in different sectors, particularly those prone to corruption. 

          One sector needing special attention is defence. John Githongo, Kenya’s former Permanent Secretary for governance, has called defence “the last refuge of grand corruption”. Fortunately, over the past few years, the defence sector in India has remained untainted by any major scandal. But the world over defence is rated as the most corruption-prone of all international businesses. According to Transparency International’s (T.I’s) Bribery Payers’ Index, defence has the dubious distinction of ranking among the top three most corrupt sectors, along with oil, construction and engineering.  A US Department of Commerce report asserts that the defence sector alone accounts for 50 per cent of all graft allegations. Experts estimate that bribes amount to nearly 15 percent of expenditure on arms acquisition. Hence, ministries of defence can never afford to be complacent. It is hardly surprising, therefore, that in his recent address to the top brass of the Army and Air Force, Defence Minister A.K. Antony had cautioned them about “the danger of falling prey to corrupt practices perpetrated by vested interests in the garb of aggressive marketing” and urged them to “stand guard with resolve against any such overtures”. 

          Corruption in defence hurts the nation’s vitals. It makes defence more costly and diverts scarce resources from development. Corrupt practices dramatically impact operational effectiveness and in turn the credibility of the defence forces.  Corruption scandals erode public trust, create insecurity and demoralise the armed forces.

          National security is treated as sacrosanct. Why is then defence so corruption prone? Transparency International offers some answers.

First, defence contracts are large, technically complex and extremely difficult to comprehend fully. Understanding technical specifications of highly sophisticated equipment like a modern-day multi-role aircraft can be a daunting task. Technical specifications are more specific in defence than in other sectors and hence vulnerable to manipulation.

Second, defence contracts involve huge  sums of money with all their attendant risks. All transactions are carried out under a cloak of secrecy, on the ground of national security. However, secrecy works more in favour of companies and officials rather than public interest.

Third, the task of developing technology-intensive weapon systems requires huge investment in research and development over a number of years. The arms export market is highly restrictive in nature. The supply side of the market is controlled by government and multilateral export regimes. On the demand side is generally the government or a government agency. The nature of the market is such that the equilibrium of demand and supply is hardly ever achieved. Most sellers are desperate to recover their huge investments and profiteer, whenever an opportunity arises. This desperation leads to unscrupulous practices.

Fourth, the use of agents and middlemen in defence business is widespread; they flourish despite all types of bans. Agents act as the conduits for bribes. Information about agents is, therefore, treated as commercially sensitive.

Fifth, because of the very nature of defence business, there are only a handful of suppliers. This situation leads to lack of competition. An analysis of the available data shows that more than 50 per cent purchases in defence are from a single source, making price discovery a complex task. 

Finally, offsets, which are additional investments made by suppliers over and above their sales, are a large and unregulated area, which pose a special challenge in terms of transparency. Economists see offsets as highly problematic and inefficient. The World Trade Orgranisation has banned offsets in other sectors, but the practice of offsets in defence transactions is common. In India too, offsets are now a mandatory requirement in large contracts. Assessing a fair value of offsets from the preferred supplier is never easy.

          Can an effective Lokpal make defence corruption-free? The answer is obviously no. But such an institution can help the process of investigation and prosecution of the corrupt. This has to be done in a manner that it does not hamper decision-making for defence procurements, which is already painfully slow. What can then be done to deal with corruption in defence?

One major area needing reform is the formulation of technical specifications or ‘Qualitative Requirements’.  Either on account of inadequate technical knowledge and data or due to deliberate design, these are often worked out in such a manner that only a couple of vendors or sometimes just a single vendor can meet them. This practice virtually eliminates competition and renders price — negotiations an infructuous exercise.  Unless qualitative requirements are designed broadly, by specialists, with a view to consciously encouraging competition, defence transactions will remain vulnerable to corrupt practices.

          According to an International Monetary Fund paper on the subject, “The natural policy prescription to attack corruption in military spending/procurement should be to introduce competition and reduce patronage at the level of officials receiving bribes”.  This calls for greater transparency regarding defence requirements. Sharing of information regarding future defence requirements, however sanitized, is essential for providing prospective vendors leads for the future. 

Defence budgets are often approved by parliaments without detailed scrutiny. Disclosure of costs and expenditures associated with defence purchases and stricter parliamentary oversight can help promote greater transparency.

In the process of reforming procurement procedures, defence suppliers should be fully engaged through a consultative process. While agents and middlemen are banned in India, if in actual practice they continue to operate, it is better to disclose their identities, payments and terms of their contracts.

Offsets should be subjected to rigorous standards and supervision. They should also be fully disclosed to enhance transparency and facilitate monitoring. 

No one should be under an illusion that the Lokpal law alone can effectively fight corruption. Equally vital will be the role of systemic reforms which prevent opportunities and incentives for corruption. 

(The writer is Director-General, Institute for Defence Studies and Analyses, New Delhi.)

http://www.tribuneindia.com/2011/20110625/edit.htm#4

Metro Transport Telecom Networks : Can We Ignore TDM?

Though Defence Networks are NOT commercial networks driven by revenue, still least cost per bit approach is necessary as it is funded by the taxpayer. Defence has generations of legacy networks but is now looking ahead towards a pure IP future. Is this vision justified? Operators today are re-introducing a new TDM standard for reducing the cost per bit. Should Defence networks use a pure IP or a IP-TDM combination approach? May we have an informed debate as to what is best for the country. The article below is your start point.

The fiber optic networks of many telecommunications companies in metropolitan areas are experiencing a shift from carrying primarily voice traffic to carrying a growing mix of data, video and voice traffic. Data transmissions are based on internet protocol, or IP, and carry services such as voice over IP, or VoIP, Internet access, and various video services. Video services include broadcasting streaming video and multicasting streaming video that is either identical or can be differentiated by subscriber choice, either at standard definition capacity or at HDTV capacity. In addition, these services include transmission of all of these services over a cellular network to advanced handheld devices over third generation, or 3G and 3.5G, cellular networks.

                 Data traffic volumes carried over these metropolitan area networks are surpassing voice traffic volumes. Data traffic is forecast for further growth over the coming years. This increase in data relative to voice traffic is mainly a result of the rapid growth of the Internet, video services and local area networks. Offerings of high speed data services at rates of up to 100 mega bits per second, or Mbps, have reached millions of subscribers in a number of Asian markets, including Japan and Korea. These services are offered either over fiber connections or a combination of fiber and fast access technologies, such as ADSL release 2, very high speed digital subscriber line, or VDSL, and VDSL release 2, wireless or cable networks. Similar expansion of fiber to the premise and fiber to the curb has reached millions of subscribers in the United States as well. Connecting subscribers with fiber is expected to allow for significantly higher speed services, mainly data and video services and, as a result, will require an upgrade of metro telecom equipment with technologies that enable very high speed transmissions of data services over fiber networks.

                Telecommunication companies have typically managed their data transfer capacity needs through their existing metro transport technologies. These technologies were originally designed for transporting voice services. These traditional solutions, however, are not designed to support high levels of data services traffic. Traditional networks are also inefficient when transporting data as they fail to utilize inherent differences in the type of network support that is required for the transmission of data traffic.

                 Data traffic is generally less susceptible to corruption resulting from minor time delays and less time-sensitive than voice traffic. In addition, data traffic often exhibits a bursty nature, with dynamically varying levels of utilization of communication channels, as opposed to voice traffic which normally requires constant levels of channel utilization. Substantially all of the metropolitan area networks are based on transmission equipment that is limited to transmission capacities of 2.5 Gbps and below. Telecommunications carriers are expected to upgrade their metro networks over the next few years to be able to support transmission capacities of up to 10Gbps in order to better support high bandwidth data services. A range of new solutions is being developed to address the need of carriers and service providers to be able to support higher levels of data traffic within and between metropolitan areas, commonly referred to as metro transport.

                One type of solution, consisting of a router or switch that transports packets of data, focuses on the characteristics of data traffic without supporting legacy voice and other circuit-based data services. In this type of solution, data services and legacy services are transmitted and maintained in different metro networks. Another type of solution attempts to take advantage of the characteristics of data traffic while continuing to support traditional voice traffic over a converged metro network. This second type of solution offers transmission capacities of 10 Gbps and, to a lesser extent, 2.5 Gbps, and supports transmission of both packets of data and traditional circuit-based voice and data services over the same network. Data services supported include the transmission of a range of video services, whether in standard or high definition mode, as well as over cellular networks. We may expect that the metro transport solution for the transmission of traditional voice and increased data traffic will combine the efficient transport of data services based on Ethernet protocol with high reliability voice services based on SONET/SDH protocol.

Major metro transport technologies include the following voice and/or data protocols:

SONET / SDH . SONET is the American National Standards Institute, or ANSI, standard for synchronous voice transmission on optical media. The international equivalent of SONET is synchronous digital hierarchy, or SDH. Together, these two voice protocols ensure standards to enable digital networks to interconnect internationally and existing conventional transmission systems to utilize fiber with the help of interfaces that connect network end-users, called tributary attachments.

Ethernet. Ethernet is the most widely-installed local area network, or LAN, technology. It is often used in college dormitories and office buildings. The most commonly installed Ethernet systems are called 10BASE-T and provide transmission speeds up to 10 Mbps.

RPR . Resilient packet ring, or RPR, is an emerging technology that is being designed to integrate Ethernet data protocols for the efficient transmission of data with traditional SONET voice protocols. An industry standard for RPR, IEEE 802.17, was approved in 2004. RPR is being developed as an alternative to SONET transport for networks that support high levels of data traffic, while allowing carriers to maintain traditional SONET attributes, such as resiliency. Resiliency refers to the ability to employ a back-up or alternate route in the event of a system or optical fiber failure, as well as the fast restoration of service in the event of any other failure. RPR is expected to allow carriers to conduct performance monitoring of transmission rates, traffic volume, and failures and alarms, comparable to the monitoring available with traditional SONET-based networks.

Multiprotocol Label Switching. Multiprotocol label switching, or MPLS, is a standards-approved technology for speeding up network traffic flow and making it easier to manage. MPLS involves setting up a specific path for a given sequence of packets, identified by a label put in each packet, thus saving the time needed for a router to look up the address to the next node to forward the packet to. MPLS is called multiprotocol because it works with the Internet Protocol, or IP, Asynchronous Transport Mode, or ATM, and frame relay network protocols.

In addition to moving traffic faster overall, MPLS makes it easy to manage a network for quality of service, or QoS. For these reasons, MPLS is gradually being adopted as networks begin to carry more and different mixtures of traffic.

Pseudo Wire Emulation. Pseudo wire emulation, or PWE, is a standards-approved technology for mapping different services over packet switched networks, such as MPLS. A pseudowire emulates a point-to-point link, and provides a single service which is perceived by its user as an unshared link or circuit of the chosen service, and can be used as a convergence layer for multiservice systems.

RPR’s Advantages over Existing Data and Voice Transport Protocols

RPR is a more efficient voice and data transport protocol than traditional SONET rings that have been retrofitted to handle data traffic for the following reasons:

Usage of a single fiber ring and spatial reuse capabilities. SONET utilizes only one ring of optical fibers. A second ring is available in case of a failure in the first ring, but is otherwise not used. This creates unutilized capacity in SONET, as half of the network capacity is idle during normal operations. RPR enables the use of this redundant bandwidth under normal operating conditions, while maintaining the redundancy capabilities. In addition, RPR supports spatial reuse, which allows the re-use of the same ring bandwidth over different spans of the ring.

Statistical multiplexing qualities. With SONET, data transmitted from one specific network element, or node, to another may be sent only using bandwidth that has been dedicated for that transmission. RPR increases bandwidth efficiency by allowing data transmissions to be broken up into packets and inserted in bandwidth that might have otherwise been dedicated (but not used) for a separate transmission. This process is called statistical multiplexing. When less than all network users are actively transmitting or receiving data at the same time, it results in a more efficient utilization of the total available bandwidth on a network.

Drafting DPP 2012 : Views of the Taxpayers Solicited

            The MoD has reportedly commenced seeking proposals from various stakeholders suggesting changes to the Defence Procurement Procedures(DPP) 2011 for incorporation in the 2012 edition. IAF has proposed that:-

•         the validity of commercial bids which now stand at 19 months from the date of submission should be increased to 30 months from the date of the issue of the RFP.
•          the ‘Buy (Indian)’ category of the DPP should have at least 50 per cent indigenization instead of the present 30 per cent.
•          the ‘Make’ category, which now has no stipulation about the prescribed quantum of indigenisation, should have at least 60 per cent indigenous content on cost basis at the production stage.
•          the ‘vendors’ to provide a complete list of “optional equipment,” at the time of responding to the RFP.
•          the sellers are not allowed to submit any additional data pertaining to the trials, after the trials are over.
•          the vendors to be asked to submit an illustrated spare parts catalogue in the standard contract document itself. This catalogue should have the base price and pricing mechanism for subsequent purchase of spares in the life cycle of the equipment.
•          the way field evaluation trials are held be changed as per certain suggestions given by them.

            A defence plan has a fixed span of 5 years while Annual Acqusition Plans are permitted to be completed in two consecutive years. Repeated iterations of DPP have led to a certain maturity in the procurement policy. At this juncture it comes to mind that do we really require an annual review of DPP now? Should we go in for a new version once in two years or even once in five years? Are IAF’s recommendations acceptable by the taxpayer? Are the recommendations made purely for the comfort of Air HQ or they would serve a justifiable purpose, if implemented? Do these suit other Service Headquarters?

            I look forward to a an informed debate and real recommendations to enable framing of a taxpayers view.

Blog Editor

'Always on' War

           When the US President classifies a cyber attack as an attack on sovereignty of the nation requiring lethal response, the world takes notice. Today the infrastructure supporting our society is so dependent on information systems and communication networks that a cyber attack by a state or a non state actor can wreak havoc. It can cripple power systems, aviation, shipping, railways, factories, mobile networks and the entire span of productive activity.

           In such a situation there is really no option but to treat cyber attack as war on society and the state. The legislation and the Rules of Engagement to deal with the various situations need to be constantly updated. More importantly, our organization for countering cyber threats requires to be an integrated national structure cutting across the boundaries of various Central Ministries. This requires an informed debate in the parliament so as to balance citizen liberties with national security requirements. Some loss of digital privacy is bound to occur – this would be the price we pay for protecting our vital information based infrastructure.

          We as citizens must analyze and discuss the issue in perspective and take necessary steps to ensure cyber security in our individual ambit. Collectively this measure alone would increase our resilience several fold.