Context: Defence Minister Rajnath Singh released a new version of the Defence Research and Development Organisation (DRDO) Procurement Manual 2020 on Tuesday. The previous Procurement Manual was modified in 2016. This is being done to encourage more participation of Indian industry, including start-ups and micro, small & medium enterprises (MSMEs) in defence research and development, the statement added. Some more enabling measures of PM-2020 are exemption of bid security and performance security up to Rs. 10 lakh, no negotiations for commercial off-the-shelf items/services wherever price discovery is happening through market forces.
Key Points

• The previous Procurement Manual of DRDO was last modified in 2016. Its objective is to encourage more participation of Indian industry, including Start-ups and Micro, Small & Medium Enterprises (MSMEs) in Defence Research & Development (R&D) for achieving ‘Atmanirbhar Bharat’.
• Bid security declaration option for earnest money deposit, increase of threshold limit for advance payment, placement of order on lowest bidder 2 (L2) in case L1 backs out are some of the salient features of the new manual.
• Some more enabling measures of PM-2020 are exemption of bid security and performance security up to Rs 10 lakh, no negotiations for commercial off-the-shelf (COTS) items/services wherever price discovery is happening through market forces.
• Performance security for service contracts is linked to the payment cycle instead of total contract value.
• Procurement of stores from development partners, safeguarding of free issue material through insurance cover instead of bank guarantee (BG) are other facilitating measures adopted to help the industry.
• The liquidated damage (LD) rate for development contracts has been reduced.
• The delivery period (DP) extension process has been simplified for faster decision making.

Also Read: https://abhipedia.abhimanu.com/Article/pcs/MjI3MDM0/Defence-Acquisition-Procedure-2020-Indian-Economic-System-PCS--pcs

Road Ahead

• DRDO was creating an conducive environment and an ecosystem as far as defence manufacturing in the country is concerned. It has listed out 108 items that it would want to procure from the industry and the public sector as well as private sector need to work together by keeping national interest in mind. Both should collaborate and we should take the best of both sectors forward. PM 2020 not only help the DRDO but it will also help the startup and the MSMEs little ensured that India has a whole has better finished and final products, keeping inmind new ideas and design.