The Ministry of Defence has been grappling with the introduction of Government Owned Contractor Operated, or GOCO, model for the functioning of Army Base Workshops for the last three years. The logic of GOCO is to bring about efficiency and save manpower. But this reform is facing stiff resistance from the Army, which argues that it would be more cost-effective to reform the existing system, and blames the current inefficiency of Army Base Workshops on the lack of funds for infrastructure and modernisation and delayed supply of spares by ordnance depots/factories.
But the GOCO model is an idea whose time has come.
The issue came to the fore due to the recommendations of the Shekatkar Committee made in December 2016. The Comptroller and Auditor General (CAG) had also in a report that year sounded alarm bells about the inefficient functioning of the Army Base Workshops. After deliberations, in January this year, PricewaterhouseCoopers was appointed as a consultant to attract private players for the project.
What is the current system?
The Army follows the traditional ‘womb to tomb’ life cycle support management for maintenance, repair and overhaul (MRO) of its costly equipment, which remains in service for up to three decades. Broadly, the traditional system encompasses maintenance, servicing and low-end repairs by unit- and division-level workshops; quarter life and two-thirds life medium-level repairs by intermediate workshops at corps level; and mid-life overhaul as also overhaul of major assemblies at ABWs. The Corps of Electronics and Mechanical Engineers (EME) is responsible for the MRO system. In case of equipment manufactured under licence, ordnance factories like the Heavy Vehicles Factory also undertake overhaul of equipment.
In the last three decades, there has been a quantum jump in military technology and the MRO of military equipment has become very complex. At the field level, the MRO has sustained the challenge because it only requires minor repairs at unit-level workshops and replacement of components and assemblies at field formation workshops. However, quarter life and two-thirds life medium repairs and mid-life overhaul have run into problems on account of lack of infrastructure, spares and expertise. This is the responsibility of intermediate workshops and ABWs.
Inefficiency of ABWs
Indian Army has eight base workshops, which were established during World War 2. These are run by the Corps of EME and staffed by a mix of civilian defence and Army personnel in 3:1 ratio. The average manpower of a base repair workshop is 1,500-2,000. Each workshop deals with a specific equipment. The infrastructure, expertise and work culture has not kept pace with time, leading to below par and inefficient performance. These workshops have been under the scrutiny of the CAG, with three performance audits carried out in 1992, 2005 and 2015.
The 2015 audit was taken up to assess the effectiveness of the workshops with regards to timeliness of overhaul, adequacy of infrastructure for overhaul, timely availability of spares, and quality of repairs. The audit also looked into the status of assurances given in the ‘action taken notes’ on earlier reviews.
Major observations of the 2015 performance audit:
- There was a big backlog of overhaul of most equipment due to inefficiency in not achieving annual targets, reducing the reliability and life of the equipment and adversely affecting the operational readiness. The backlog was 90 per cent of total holding incase of Armoured Recovery Vehicle WZT-2, 34 per cent for Radar TC Reporter, 33 per cent for BMP-2, 21 per cent for Battle Field Surveillance Radar, 20 per cent for Tank T-72, and 18 per cent for Radar Fly Catcher.
- Non-formulation of overhaul policy for Class ‘B’ vehicles – Scania, Tatra and Kraz. Presently, base workshops are accepting these vehicles of eight years vintage and above for overhaul as per the direction of EME Directorate.
- Lack of facilities for repair/overhaul of MBT Arjun.
- Quality Index for overhaul of BMPs was 70-77 per cent against specified 95 per cent.
- There were no facilities for test firing of tanks and BMPs, which is mandatory after overhaul. Also, no facilities exist to check the fording capability of tanks and amphibious capability.
- While the guidelines issued by the defence ministry stipulated that the cost of overhaul of vehicle and engine would in no case exceed 30 per cent of the cost of a new vehicle/engine, no cost accounting mechanism was in place in the ABWs to ensure cost-effectiveness of the repairs and overhauls.
- Non-availability of critical spares, leading to deviation sanctions and thus compromising the reliability of the equipment.
In a nutshell, the existing system had large manpower, poor work culture, inadequate infrastructure, poor spare back up, and inefficient performance, all of which resulted in below par reliability of equipment and adversely affected operational readiness. The Shekatkar Committee had also noted all this in its report. It recommended that the ABW should be restructured on the Government Owned Privately Operated (GOCO) model, which has been adopted by many foreign armies with mixed results.
Pros and cons of GOCO
The GOCO model will bring in corporate culture, leading to efficiency and accountability. Private operators can easily go into partnership with Original Equipment Manufacturer (OEM), both for expertise and spares. The government can save on manpower — 12,500 personnel workforce of the ABWs. Under this model, the ABWs can also undertake quarter life and two-thirds life medium-level repairs and save on manpower committed at intermediate workshops. This model also opens avenues for absorbing trained retired personnel, which can be built into the contract.
But the corporate world is driven by market forces, which means the GOCO model will be more costly. In most cases, private operators will want better infrastructure, which would have to be upgraded or replaced at government cost. Private operators may not have the expertise to deal with military equipment; they are also unlikely to absorb the existing manpower and will want a younger and better-trained workforce. Thus, it may be more cost-effective to reform the existing ABWs by improving the infrastructure and ensuring timely availability of spares and better work culture.
In my view, the GOCO model’s time has come because the Army has failed to reform the ABWs to make them more efficient and cost-effective. I would even recommend applying the GOCO model to our overstaffed, corrupt and inefficient ordnance factories. Yes, it is going to cost more, but when does better quality and efficiency come without additional cost?
Lt Gen H S Panag PVSM, AVSM (R) served in the Indian Army for 40 years. He was GOC in C Northern Command and Central Command. Post retirement, he was Member of Armed Forces Tribunal. Views are personal.