New Defence Rules: 5-year ban for poor supplies, 10 years for misconduct

New Delhi: Defence suppliers failing to meet contractual obligations or supplying equipment that underperforms can face a 5-year debarment from all government contracts, while those indulging in ethical misconduct can be banned for 10 years, new guidelines released by the Ministry of Defence state.

In an overhaul to its guidelines for penalties in business dealings with entities, the defence ministry has brought out clear criteria for banning companies, including a detailed procedure for imposition of financial costs.

The updated guidelines, which replace a 2016 framework, have a zero tolerance stance on corruption and will hold vendors accountable for delays in supply of equipment as well as poor performance of systems supplied.


Violations of the Integrity Pact (IP) or fraudulent actions can lead to a debarment of up to 10 years, which includes breaches like corruption, bribery and illegal commissions. The debarment will be initially for a year, which will then be reviewed by a high-power committee. The policy states that debarment will not exceed 10 years.

For non-performance, the debarment will initially be for six months and can be extended to a maximum of five years. The performance will be measured on several factors like delivery timelines, serviceability, downtime and failure rates.

The new guidelines also extends debarment and suspension to "allied firms", joint ventures, and even entities resulting from mergers or acquisitions. If a debarred company attempts to escape by restructuring or offloading liabilities to a new firm, the MoD now has the legal mandate to treat the successor as a blocked entity.

As per the guidelines, vendors will be granted a mandatory 30-day window to respond to the allegations.