Lok Sabha Question No. 244 (STARRED), answered on 2016-12-02
Subject: Blacklisting Policy for Defence Procurement
Ministry: DEFENCE
Asked by: SRINIVAS KESINENI, ASADUDDIN OWAISI

## GOVERNMENT OF INDIA MINISTRY OF DEFENCE DEPARTMENT OF DEFENCE

## LOK  SABHA

## STARRED QUESTION NO.244

TO BE ANSWERED ON THE 2 ND  DECEMBER, 2016

## BLACKLISTING POLICY FOR DEFENCE PROCUREMENT

*244.  SHRI  KESINENI NANI: SHRI  ASADUDDIN OWAISI:

Will the Minister of DEFENCE j{kk ea=h be pleased to state:

- (a) the details of companies and arms contractors blacklisted by the Government for misconduct / wrongdoings in defence deals in the recent past;
- (b) whether the new blacklisting policy for defence procurement has been announced recently and if so, the salient features of the same;
- (c) whether the Government proposes to review all the blacklisted firms, in the light of new policy initiatives, if so, the details thereof; and
- (d) the other steps taken to ensure transparency, accountability and probity in defence procurements?

## A    N    S    W    E    R

MINISTER OF STATE IN THE MINISTRY OF DEFENCE

(DR. SUBHASH BHAMRE)

र  ा रा य मं ी

(डा. सुभाष भामरे)

(a) to (d): A Statement is laid on the Table of the House.

*******

## STATEMENT  REFERRED  TO  IN  REPLY  TO  PARTS  (a)  TO  (d)  OF  LOK SABHA STARRED QUESTION NO. 244 FOR ANSWER ON 2.12.2016

No firm / entity has been blacklisted for misconduct / wrongdoing in defence deals during the last three years.  However, six firms have been debarred  from  further  business  dealings  with  Ministry  of  Defence  for a  period  of  ten  years.    This  was  further  made  applicable  to  all  allied  / subsidiary firms of each of the debarred firms until further orders or until such  time  as  the  order  of  debarring  of  the  firm  subsists,  whichever  is earlier.    Also,  business  dealings  have  been  suspended  /  put  on  hold  in respect  of  13  firms.    In  respect  of  another  four  firms,  orders  have  been issued restricting  procurement  from  the  concerned  firms  to  cases  where procurements  are  justified  and  necessary  on  the  basis  of  operational urgency, national security and non-availability of other alternatives.

Ministry  of  Defence  has  recently  issued  Guidelines  for  penalties  in business dealings with entities, which have come  into effect from 21.11.2016.    The  Guidelines  have  also  been  put  in  public  domain  by uploading them on the website of Ministry of Defence. The Guidelines lay down policy for levy of financial penalties and / or Suspension / Banning of business dealings with entities, seeking to enter into contract with / having entered into a contract for the procurement of goods and services by the Ministry of Defence.

It has also been decided to review existing cases of suspension/ ban/ blacklisting  etc.  against  vendors  in  light  of  the  new  guidelines  dated 21.11.2016.

The other steps taken to ensure transparency, accountability, probity in defence procurements are as under:

- (i) The  Defence  Procurement  Procedure  (DPP),  2016  envisages signing of an Integrity Pact between Government and the bidders for all capital procurement / schemes of Rs. 20 crores and above. The earlier provision required signing of such pact only for case involving Rs.100 crores and above.
- (ii) DPP, 2016 provides that a foreign vendor is required to disclose full details of any such person, party, firm or institution engaged by  them  for  marketing  of  their  equipment  in  India,  either  on a  country  specific  basis  or  as  a  part  of  a  global  or  regional arrangement.

:  2  :

- (iii) It  further  provides that  the  Seller  has  to  confirm  and declare  to the  Buyer  that  it  is  the  original  manufacturer  of  the  stores contracted and that  no agent has been engaged to influence or manipulate  award  of  the  contract,  or  indulge  in  corrupt  and unethical practices.
- (iv) Penal  provisions  in  Standard  Clauses  of  Contract  for  use  of undue influence (including engagement of agents).
- (v) Submission of Integrity Pact Bank Guarantee (IPBG).
- (vi) Violation  of  Pre  Contract  Integrity  Pact  (PCIP)  may  result  in calling  off  negotiations,  cancellation of  contract,  encashment  of bank guarantee and debarment from future procurement.
- (vii) Ascertaining vigilance status of L1 vendor before seeking Competent Financial Authority (CFA) approval.

*******