Public Procurement

Public Procurement
Enhancing Transparency, Efficiency and Accountability

June 2023
The Associated Chambers of Commerce and Industry of India

Message
Government Procurement is an integral part of a country’s governance and financial management system. It
comprises major expenditure by the Government towards acquisition of Works, Goods, and Services and accounts
for a substantial amount of global and national expenditure. Adopting effective, responsive, and evident purchase
procedures are essential to overcome traditional bottlenecks and flourish business opportunities. A well-functioning
and efficient public procurement system is critical for the development process, which makes the need for integrity in
public procurement not only an ethical requirement but an economic one too.
In India, the General Financial Rules (GFR) of the Ministry of Finance, Govt. of India serve as the foundation for
the policies and procedures governing public procurement. They help ensure responsibility and accountability, bring
efficiency and transparency in the purchase of goods, services and works by the Governments and State Owned
Enterprises (SOEs), follow fair and equitable treatment of suppliers, promote competitiveness in Public Procurement,
and secure the best value for money. Given the federal framework for delivering public services, the government
procurement procedure in India is highly complicated. Hence, there is a need to understand the regulations, rules,
and their applicability for the procurement of various goods and services.
In this context, with a view to share global best practices and better understand the procurement procedures at
different levels, ASSOCHAM jointly with Nangia Andersen has come out with this Report on the subject, which will
be released at the Public Procurement Summit 2023. The report serves as a comprehensive analysis of the strengths,
challenges, and opportunities that define the landscape of public procurement in India today. We hope that the
Report will provide valuable insights to policymakers and industry stakeholders and the deliberations at the Summit
will help in laying the roadmap towards innovative solutions that foster greater transparency, enhance competition,
and promote efficiency in our procurement processes.
Deepak Sood
Secretary General
ASSOCHAM
Foreword
India in 2023, Part of G-20 under the leadership of honourable Prime minister Shri Narendra Modi is creating a global
awareness, with the growing volume of business opportunities there is a huge potential for the public procurement
by our country of both make in India as well as foreign produce. I really feel with the increasing requirements of the
government, linked with the scale & magnitude of the government managed projects holds enormous economic
potential for local and overseas firms.
Today our government is promoting the foreign investors by granting them access to Indian markets like never before.
Parliament has recently approved a proposal to further liberalise investment & increase FDI inflow into India, eased
investment caps and opened up restricted sectors for foreign investors. Indian Government is aggressively working
on the infrastructure development through various schemes which are geared towards improved physical & social
infrastructure, digital and physical connectivity, defence.
We in our report have tried to cover public policy guidelines, tender processes and contractual guidelines. Our focus
shall be on the framework of the administrative rules, sector specific manuals & state specific legislation. At the core of
the procurement lies the “General financial rules -GFR” which comprises of the rules & directives on financial procedures
and procurement. All the procurement adheres to the principles outlined in the GFR.
Our report will also define some of the challenges as seen by the suppliers. there are some unique risks and practical
concerns and bottlenecks. Transfer of technology, Timelines, Limited price negotiations, Local State preferences and
rules and agents/subcontractors
We are pleased to present this knowledge paper – “Public Procurement in India -Insights” in The 11th Public Procurement
Summit “Enhancing Transparency, Efficiency and Accountability” organised by ASSOCHAM. The paper aims to cover the
major regulations and practices of public procurement in India and gives an insight to the various aspect governing the
ecosystem of public procurement in India. The knowledge paper also highlights the best practices for enhancing the
transparency and efficiency in public procurement. Please do let us know your views, suggestions on our report.
Sincerely,
Poonam Kaura
(Partner) Government and Public Sector advisory
Nangia Andersen LLP
Contents
1. Introduction to Public Procurement..................................................................................................................... 1

1.1 Overview of Public Procurement............................................................................................................................ 1
1.2 Background and Importance of Public Procurement............................................................................................. 1
1.3 Key Challenges in Public Procurement................................................................................................................... 4
2. Legal, Procedural, and Regulatory Framework of Public Procurement.................................................................. 6
2.1 Laws, Regulations, and Policies Governing Public Procurement............................................................................ 6
2.2 Procedural Guidelines and Best Practices.............................................................................................................. 6
2.3 General Financial Rules (GFR) and Their Impact.................................................................................................... 7
2.4 Government Initiatives for Improving Procurement Efficiency and Transparency................................................. 8
3. Procurement Methods for Goods....................................................................................................................... 10
3.1 Overview of Procurement Methods..................................................................................................................... 10
3.2 Standard Bidding Documents and Templates....................................................................................................... 13
3.3 Pre-Qualification and Post-Qualification Processes.............................................................................................. 13
3.4 Evaluation of Bids: Techno-Commercial and Price Assessment........................................................................... 14
3.5 Ensuring Reasonableness of Prices...................................................................................................................... 15
3.6 Bid Evaluation Committee Proceedings................................................................................................................ 15
3.7 Make in India and Purchase Preference Policies.................................................................................................. 16
4. Procurement of Works and Infrastructure Projects............................................................................................ 17
4.1 General Financial Rules for Procurement of Works.............................................................................................. 17
4.2 Types of Tenders and Contracts............................................................................................................................ 17
4.3 Standard Bidding Documents for Works.............................................................................................................. 18
4.4 Pre-Qualification and Post-Qualification Procedures........................................................................................... 19
4.5 Bid Evaluation and Contract Award...................................................................................................................... 19
4.6 Payment Terms and Price Adjustments................................................................................................................ 20
5. Procurement of Consulting Services................................................................................................................... 21
5.1 General Financial Rules (GFR) and Government Guidelines for Consulting Services........................................... 21
5.2 Manual for Procurement of Consultancy Services............................................................................................... 21
5.3 Model RFP Template............................................................................................................................................ 22
5.4 Selection Methods and Evaluation Criteria.......................................................................................................... 22
5.5 Negotiation and Contract Types for Consulting Services...................................................................................... 23
6. Procurement System of Railways & Defence in India.......................................................................................... 25
6.1 Key Features – Goods, Services and works Manual of Ministry of Railways........................................................ 25
6.2 Key Features – Goods & Services Manual of Ministry of Defence....................................................................... 31
7. Government e-Marketplace (GeM).................................................................................................................... 36
7.1 Key Statistics and Trends in Government e-Marketplace..................................................................................... 36
7.2 Impact of GeM on Public Procurement................................................................................................................ 36
7.3 Major Initiatives and Features of GeM................................................................................................................. 37
8. Government eProcurement System of NIC (GePNIC).......................................................................................... 39
8.1 Key Statistics and Trends in Government eProcurement System (2007- Till Now).............................................. 39
8.2 Impact of GePNIC on Public Procurement........................................................................................................... 39
8.3 Key Initiatives and Features.................................................................................................................................. 39
9. Responsible and Sustainable Procurement........................................................................................................ 41
9.1 Promoting Socially Responsible Procurement: Ethical Considerations................................................................ 43
9.2. Green Purchasing: Driving Sustainability in Procurement Processes.................................................................. 45
9.3 Opportunities for Sustainable Procurement in Government Purchasing............................................................. 46
10. Understanding the Complex Nature of Government Procurement..................................................................... 47
10.1 Challenges and Complexity Factors in Public Procurement............................................................................... 47
10.2 Risk Management and Mitigation Strategies..................................................................................................... 49
11. Best Practices for Enhancing Efficiency and Transparency................................................................................... 52
11.1 Streamlining Processes and Automation:........................................................................................................... 52
11.2 Strengthening Transparency and Accountability Measures............................................................................... 53
11.3 Capacity Building and Training........................................................................................................................... 54
List of figures
Figure 1: Public Procurement Framework in India.............................................................................................................. 1

Figure 2: Thematic Presentation of Public Procurement System........................................................................................ 3
Figure 3: Institutional setup of Indian Railways................................................................................................................. 25
Figure 4: Railway board for Materials Management......................................................................................................... 26
Figure 5: Materials Management Organization at the Zonal and Depot level................................................................... 26
Figure 6: Procuring agencies for IR.................................................................................................................................... 27
Figure 7: Share of Indigenous Purchase............................................................................................................................ 28
Figure 8: Expenditure by IR for goods procurement......................................................................................................... 29
Figure 9: Procurement Procedure for Indian Railways...................................................................................................... 30
Figure 10: Procurement Risk Framework.......................................................................................................................... 49
Figure 11: Risk Management through Planning, Bidding, and Implementation................................................................ 50
Chapter 1: Introduction to Public Procurement
1. Introduction to Public Procurement
1.1 Overview of Public Procurement
Public procurement plays a vital role in governance and the efficient delivery of public services. As governments worldwide strive
to provide quality services to their citizens, the process of procuring goods, works, and services becomes a critical component in
achieving these objectives. Public procurement involves the acquisition of goods, services, and infrastructure by government entities,
ensuring transparency, fairness, and value for money.
The significance of public procurement extends beyond the simple act of purchasing. It serves as a crucial mechanism for governments
to allocate resources, foster economic development, and promote social welfare. By implementing effective procurement policies
and procedures, governments can ensure optimal utilization of public funds, promote competition among vendors, and stimulate
economic growth.
Efficient public procurement contributes to improved governance by enhancing accountability, transparency, and integrity in the
utilization of public resources. It establishes a level playing field for businesses, encourages fair competition, and safeguards against
corruption and favouritism. Additionally, public procurement processes adhere to regulatory frameworks that promote ethical
practices, sustainable development, and social responsibility. Moreover, public procurement directly impacts the delivery of public
services to citizens. By procuring goods and services of high quality at competitive prices, governments can provide essential services
such as healthcare, education, infrastructure development, and public utilities effectively. Well-executed procurement processes
ensure timely availability of goods and services, minimizing disruptions and maximizing the benefits to the public.
However, public procurement is a complex and multifaceted process that requires careful consideration of policy frameworks,
regulatory guidelines, technological advancements, and collaboration among stakeholders. It is crucial for policymakers, procurement
professionals, and stakeholders to stay abreast of the latest developments, global trends, and best practices in public procurement to
ensure optimal outcomes.
To ensure that these procurements are made by following a uniform, systematic, efficient and cost-effective procedure and also to
ensure fair and equitable treatment of service providers, there are statutory provisions; rules; financial, vigilance, security, safety,
countertrade and other regulations; orders and guidelines of the Government on the subject of public procurement (hereinafter
referred as ‘Procurement Guidelines’) which provide framework for the public procurement system.
1.2 Background and Importance of Public Procurement
Public procurement has a rich historical background, and its importance in ensuring transparency, fairness, and value for money in
government expenditure cannot be overstated. Let’s delve into the background and significance of public procurement:
Background
Public procurement has been practiced
by governments throughout history. In
ancient civilizations, rulers and governments
engaged in trade and procurement activities
to meet the needs of their communities.
Over time, public procurement evolved
as societies developed more complex
administrative systems and governments
assumed responsibility for providing public
services and infrastructure.
Public Procurement Framework in
India
The public procurement frame in India has
four broad features constitutional provi-
sions, legislative provisions, administrative
Figure 1: Public Procurement Framework in India
guidelines, and overseers.
11th Public Procurement Summit 2023: Enhancing Transparency, Efficiency and Accountability 1
Constitutional provisions
• Article 246 specifies the legislative powers in the federal structure of India into three lists namely Union List, State List, and
Concurrent List.
• Articles 298, 299, 300 and 300A authorize the governments to contract for goods and services.
• Article 355 specifies the executive power.
• Beyond that, Constitution does not provide any guidance on public procurement principles, policies, and procedures.
Legislative provisions
In the absence of a dedicated procurement law at the Union level, the legislative status of various procurement rules and regulations
are guided by:
• Contract Act 1872
• Sale of Goods Act 1930
• Prevention of Corruption Act 1988
• Arbitration and Conciliation Act 1996
• Information Technology Act 2000
• Competitions Act 2002
• Central Vigilance Commission Act 2003
• Right to Information Act 2005, etc.
Apart from these, a few States such as Tamil Nadu, Karnataka, Rajasthan, Andhra Pradesh, and Assam follow their own procurement
Acts to carry out public procurement at the State level.
Administrative Guidelines
 Delegation of Financial Power Rules (DFPR) 1978
 It was enacted to meet the provisions outlined in the Article 288 of the constitution.
 DFPR commends the expenditure autonomy of the different levels of authorities for decentralized procurement.
 General Financial Rules (GFRs) 2017
 The GFR is a compilation of general rules and orders to be followed by the government entities dealing with the matters
involving public financial management.
 It aims at facilitating efficiency in government functioning in accordance with the accountability and procedure of financial
discipline.
 It was first enacted in 1947 which subsequently has been revised and issued as GFR 1963, GFR 2005, and GFR 2017.
 Sector wise
 Defence procurement framework:
 The objective is to maintain a balance between the competitive acquisition and the best value of money given the sector-
specific characteristics such as supplier constraints, technological complexity, high cost, foreign exchange implications, foreign
suppliers, and geopolitical ramifications.
 Directorate General of Supplies and Disposal:
• The DGS&D conducts the Rate Contracts for the government entities following the DGS&D manual.
• DGS&D also performs other procurement related activities on request of any ministry/department such as registration of
vendors, drawing of technical parameters for the stores, inspection of stores whenever insisted by the user departments.
• In 2016, DGS&D initiated an e- platform Government e-Marketing (GeM) for conducting rate contracts, which will be discussed
later in detail.
 Railway procurement framework:
• The public procurements in Indian Railways are governed by the Indian Railway Financial Code 1998, Indian Railways Rolling
Stock Code 2008 etc.
• The Indian Railway employs a multi-level procurement system that includes Indian Railways Stores Service (IRSS), Railway
Board, Zonal Railways etc.
2 11th Public Procurement Summit 2023: Enhancing Transparency, Efficiency and Accountability
• The Indian railway uses Indian Railways E-Procurement System (IREPS) for procurement and also uses the arbitration mechanism
for settlement of any dispute before approaching the courts.
Overseers
There are five major government bodies to check procurement probity issue in India namely:
 Procurement Policy Division
 The PPD attempts to disseminate the best practices, provides guidance and capacity building, and issues the procurement
manuals.
 The PPD has revised GFRs, manuals for procurement of goods and services in 2017.
 Comptroller and Auditor General (CAG) and Central Vigilance Commission (CVC)
 CAG and CVC address the probity issues.
 Apart from probity issue, CVC and CAG also release guidelines on public procurement, which are mostly advisory in nature,
but not binding on the procuring entities.
 Competition Commission of India (CCI)
 CCI takes on the anti- competitive elements.
 The CCI intends to monitor and promote competitiveness in public procurement by identifying and correcting anti-competitive
elements.
 Central Bureau of Investigation (CBI)
 CBI is engaged for investigation and prosecution of the criminal cases in procurement activities upon recommended by the
other procurement overseers.
Public Procurement System
Planning of Procurement: The procurement process starts with the need assessment of the procuring entity followed by internal research
for technical and financial specifications. Recently, GFR 2017 has prescribed to adopt two-stage bidding process (for the procurements
where an entity does not have expertise) to explore the market and to finalize the specifications holding technical discussions with
the prospective bidders in a transparent manner. Once
the need is finalized, the stage of bid planning then
involves a few other elements such as sanction of the
procurement (administrative, technical, and financial),
cost estimation, and assignment of officials for
different stages (bid preparation, bid evaluation, etc).
Preparation and Publication of Bids: The bid
documents also include critical information such as
bid fee, earnest money deposit (EMD) or bid security,
performance security, etc. While the procuring entity
charges a fee for most of the bids, a few bids are
exempted.
The EMD in India has an average validity of 45 days
beyond the final bid validity period, and it is stipulated Figure 2: Thematic Presentation of Public Procurement System
to be 2-5 percent of the estimated procurement. The
MSEs registered with the concerned ministry/department/procuring entities are exempted from depositing the EMD.
Bid documents also include the timeframe of the procurement process, i.e., dates of accessing bid documents, pre-bid meetings,
submission, opening, and evaluation. A few bids also include clauses on environmental concerns especially in construction tenders
which is a Planning of Procurement Award & Execution Preparation and Publication of Bids Submission and Evaluation of Bids Redressal
Mechanism crucial step for ensuring GPP. The bids so prepared are then advertised/published through multiple channels including
e-portals with a reasonable time to access and submit the bids.
Submission of Bids & Evolution: Once a bidder decides to submit a bid in response to a notice inviting tender/bid, it needs to properly
prepare and submit the bid complying all the specifications and procurement timeline as mentioned in the bid documents. Both the
concerned government officials and bidders use valid digital signature certificate (DSC) to access the e-portals.
Most of the bids are submitted in a two-envelope system, i.e., the bidders submit technical bid and financial bid separately. Although the
bids need to be opened and evaluated immediately after the submission deadline, there are often delays in bid opening and evaluation.
However, there have been some improvements in this regard, and a few entities have started electronic bid opening. The delays of opening
and evaluation of bid have been drastically reduced after the introduction of e-procurement. The bids are opened in the presence of the
bidders or their representatives and evaluated for compliance with the tender specifications to select the qualified bids.
Award & Execution: After the selection of technically qualified bidders, the contract is awarded promptly and transparently to the most
favoured bidder/s as per the award criteria. GFR 2017 has stressed on using quality-price criteria for awarding the contract especially in
the procurement of services. In order to enhance transparency in the system, the procurement framework has mandated the publication
of contract awards. The awardee is asked to accept and sign the contract for execution. The awardee has to deposit a performance
security in the form of a certificate of deposit. The performance security is regulated to be 5-10 percent of the contract value.
Redressal Mechanism: Establishment of an efficient redressal mechanism is a key element for ensuring transparency and accountability
in public procurement by addressing the faults and non-compliances in a procurement process. A bidder (including successful), if
found guilty, is debarred either indefinitely or for a given period from participating in public procurement.
Importance of Public Procurement
1. Transparency and Accountability: Public procurement is crucial for promoting transparency and accountability in government
expenditure. By conducting procurement processes in an open and transparent manner, governments can ensure that decisions
are based on fair competition, objective evaluation, and adherence to established rules and regulations. Transparency and
accountability in public procurement build public trust and confidence in the government.
2. Value for Money: Public procurement plays a vital role in obtaining the best value for money in government spending. By
promoting competition among suppliers and conducting thorough evaluations, governments can select the most qualified and
cost-effective suppliers. This helps to optimize the allocation of public funds and ensure that taxpayers’ money is spent efficiently.
3. Economic Development and Market Competition: Public procurement provides significant opportunities for businesses, especially
small and medium enterprises (SMEs), to participate in government contracts. By encouraging competition and creating a level
playing field, public procurement stimulates economic growth, innovation, and job creation. It enables businesses to expand their
operations, enhance their capabilities, and contribute to the overall development of the economy.
4. Infrastructure Development: Public procurement is crucial for the development of public infrastructure, such as roads, bridges,
schools, hospitals, and utilities. By procuring goods, services, and works for infrastructure projects, governments can improve
the quality of life for citizens, enhance public services, and support economic development. Public procurement ensures that
infrastructure projects are executed efficiently and in accordance with quality standards.
5. Fairness and Non-Discrimination: Public procurement processes aim to ensure fairness and non-discrimination among suppliers.
By establishing clear evaluation criteria and transparent procedures, governments can mitigate the risk of favoritism, nepotism,
and corruption. Fair and open competition allows suppliers of all sizes and backgrounds to participate, creating equal opportunities
for businesses.
6. Regulatory Compliance: Public procurement is governed by laws, regulations, and policies that set out the framework for
conducting procurement activities. Compliance with these regulations ensures that procurement processes are conducted in a
legally sound and ethical manner. This helps to prevent malpractice, maintain public trust, and protect the interests of both the
government and suppliers.
In summary, public procurement is of paramount importance in government operations. It ensures transparency, fairness, and
accountability in the expenditure of public funds, promotes economic development, supports infrastructure projects, and stimulates
market competition. By embracing best practices and continuously improving procurement processes, governments can maximize the
benefits of public procurement and achieve better outcomes for citizens and the economy.
1.3 Key Challenges in Public Procurement
Public procurement faces several challenges that can hinder its effectiveness, integrity, and ability to achieve desired outcomes.
These challenges vary across different contexts and jurisdictions, but some of the key challenges commonly encountered in public
procurement include:
• Lack of Competition: Limited competition among suppliers can lead to reduced value for money and hinder innovation. When
there are few qualified suppliers or when the market is dominated by a small number of players, competition may be restricted.
This can result in higher prices, reduced quality, and a lack of diversity in offerings. Governments should actively promote
competition through measures such as market research, supplier development, and promoting the participation of SMEs.
• Capacity Constraints: Government entities responsible for procurement may lack the necessary skills, expertise, and resources
to conduct efficient procurement processes. Insufficient procurement capacity can result in delays, errors, and inadequate
evaluations, leading to suboptimal procurement decisions. Governments should invest in building procurement capacity through
training programs, knowledge sharing platforms, and recruitment of skilled procurement professionals.
• Complex Regulations and Procedures: The regulatory framework governing public procurement can be complex, lengthy, and
bureaucratic. Excessive regulations and administrative procedures can create barriers to entry for suppliers, increase compliance
costs, and impede efficiency. Governments should simplify and streamline procurement regulations and procedures, ensuring
they strike a balance between transparency and efficiency.
• Transparency and Accountability: Ensuring transparency and accountability in public procurement is crucial for preventing
corruption and building public trust. Lack of transparency in procurement processes can create opportunities for favoritism,
collusion, and bid rigging. Inadequate mechanisms for oversight and monitoring can hinder accountability and make it challenging
to detect and address irregularities. Governments should establish robust monitoring and evaluation mechanisms, promote
transparency in procurement processes, and provide channels for reporting and addressing grievances.
• Technological Advancements and Digital Divide: Rapid technological advancements present both opportunities and challenges
in public procurement. While digital platforms, e-procurement systems, and data analytics can enhance efficiency, transparency,
and accountability, their adoption requires investment in technology infrastructure and capacity building. The digital divide,
where certain stakeholders have limited access to technology and digital skills, can further exacerbate disparities and hinder the
adoption of digital procurement solutions.
• Risk Management: Public procurement involves various risks, including project delays, cost overruns, contract disputes, and
supplier failures. Inadequate risk management strategies can result in suboptimal procurement outcomes and negative impacts
on projects and services. Governments need to adopt comprehensive risk management approaches, including risk identification,
assessment, mitigation, and contingency planning.

Chapter 2: Legal, Procedure, and Regulatory Framework
of Public Procurement
2. Legal, Procedural, and Regulatory Framework of Public Procurement
The legal framework for public procurement consists of a set of laws, regulations, and policies that govern the procurement process.
These regulations vary across countries but generally aim to ensure transparency, fairness, and accountability in public procurement.
They provide guidelines on the procedures for soliciting bids, evaluating proposals, awarding contracts, and managing procurement-
related disputes. Some common examples of laws and regulations governing public procurement include the Public Procurement Act,
Government Contracts Regulations, and Procurement Policy Board Guidelines.
2.1 Laws, Regulations, and Policies Governing Public Procurement
Laws, regulations, and policies governing public procurement are a critical part of the legal framework that guides how government
entities conduct their procurement activities. These rules are established to ensure transparency, fairness, competition, and
accountability in the procurement process.
Laws: Laws are legislative acts passed by the government or a legislative body that provide the legal basis for public procurement.
These laws define the rights, obligations, and responsibilities of the parties involved in the procurement process. They establish the
overarching principles, procedures, and requirements that must be followed. Examples of laws governing public procurement include
the Public Procurement Act, Government Contracts Act, or any specific procurement legislation enacted by a country’s legislature.
Regulations: Regulations are detailed guidelines derived from laws that provide specific instructions on how to implement and
comply with the legal requirements. Regulations further clarify the procedures, thresholds, documentation, and other aspects of the
procurement process. They serve as a practical guide for procurement officers and participants, ensuring uniformity and consistency in
the execution of procurement activities. These regulations are typically issued by the government, procurement agencies, or relevant
regulatory bodies.
Policies: Policies are a set of guidelines and principles that outline the strategic objectives and considerations for public procurement.
They provide a framework for decision-making and help achieve broader policy goals, such as promoting sustainable procurement,
supporting small businesses, or encouraging local industry development. Procurement policies define the objectives, values, and
preferred practices that guide the procurement activities of government entities. They are often developed by central procurement
bodies or ministries to ensure consistency across different government departments.
The laws, regulations, and policies governing public procurement cover various aspects, including but not limited to:
• Thresholds and procurement procedures: They define the monetary thresholds that determine the procurement methods to be
used (such as open tender, restricted tender, or direct procurement) based on the estimated value of the procurement. They also
outline the procedures and steps to be followed at each stage of the procurement process.
• Transparency and disclosure requirements: These regulations ensure transparency by mandating the publication of procurement
opportunities, bid evaluation criteria, and contract awards. They may also require the disclosure of conflicts of interest and
financial information to prevent favouritism and corruption.
• Competition and equal treatment: The laws and regulations promote fair competition and equal treatment of all potential
suppliers. They establish rules to prevent bid rigging, collusion, or discriminatory practices and encourage a level playing field for
all participants.
• Evaluation and award criteria: The regulations specify the criteria and methods for evaluating bids, including technical and
financial assessments. They define the weightage assigned to different evaluation factors and determine the basis for awarding
contracts to the successful bidder.
• Contract management and dispute resolution: These regulations outline the rights and obligations of the parties involved in the
contract, contract administration procedures, performance monitoring, and mechanisms for resolving disputes.
2.2 Procedural Guidelines and Best Practices
Procedural guidelines are developed to ensure consistency and efficiency in the procurement process. They outline the step-by-step
procedures to be followed at each stage, from planning and requisition to contract administration and closeout. These guidelines
cover various aspects, including bid solicitation, bid evaluation, contract negotiation, and performance monitoring. Best practices,
on the other hand, are recommendations and strategies based on successful experiences and lessons learned in public procurement.
They provide guidance on how to achieve better outcomes, promote competition, enhance transparency, and mitigate risks.
Over and above the basic aims of procurement, the obligations of procuring authorities can be grouped into following five fundamental
principles of public procurement, which all procuring authorities must abide by and be accountable for:
I. Transparency principle
II. Professionalism principle
III. Broader obligations principle
IV. Extrinsic legal principle
V. Public accountability principle
General Financial Rules, 2017 lay down the Fundamental Principles of Public Procurement. These principles and other additional
obligations of procuring authorities in public procurement can be organised into five fundamental principles of public procurement,
which all procuring authorities must abide by and be accountable for:
• Transparency Principle: The transparency principle in procurement emphasizes openness, visibility, and accessibility throughout
the procurement process. It ensures that all relevant information regarding the procurement is made available to potential
bidders and stakeholders. This includes publishing procurement notices, bid evaluation criteria, contract award information, and
any changes or updates to the procurement process. Transparency helps prevent favouritism, corruption, and unethical practices
by promoting fair competition and providing equal opportunities for all interested parties.
• Professionalism Principle: The professionalism principle in procurement highlights the importance of conducting procurement
activities with a high level of expertise, competence, and integrity. It requires procurement professionals to possess the necessary
skills, knowledge, and qualifications to effectively manage the procurement process. This includes adhering to ethical standards,
maintaining confidentiality, and avoiding conflicts of interest. Professionalism ensures that procurement decisions are made
objectively, based on merit and the best interests of the procuring entity.
• Broader obligations principle: The broader obligations principle recognizes that public procurement extends beyond simply
acquiring goods, services, or works. It encompasses broader societal and economic objectives, such as promoting sustainability,
supporting local industries, and ensuring social responsibility. Procurement processes should take into account these broader
obligations and consider factors such as environmental impact, social considerations, and economic development. By incorporating
these considerations, procurement can contribute to positive societal outcomes and sustainable development.
• Extrinsic Legal Principle: The extrinsic legal principle emphasizes compliance with applicable laws, regulations, and policies
governing public procurement. Procurement activities must adhere to the legal framework established by the government or
relevant authorities. This principle ensures that procurement processes are conducted within the boundaries set by the law,
promoting legality, fairness, and accountability. Compliance with legal requirements helps protect the interests of both the
procuring entity and potential bidders and provides a basis for resolving disputes or challenges related to procurement.
• Public Accountability Principle: The public accountability principle highlights the responsibility of procuring entities to be
accountable to the public and stakeholders for their procurement decisions and actions. It requires transparency in financial
management, decision-making, and the use of public resources. Public accountability ensures that the procurement process
is subject to scrutiny, review, and oversight, promoting trust, credibility, and confidence in the public sector. It also encourages
feedback, complaints, and mechanisms for redressal, enabling the public to hold procuring entities accountable for their
procurement practices.
2.3 General Financial Rules (GFR) and Their Impact
The General Financial Rules (GFR) in India serve as a comprehensive set of guidelines and instructions related to financial management
and procurement in government departments and organizations. The history of GFR can be traced back to the pre-independence era
when the British government introduced the Financial Rules in 1947.
Over time, GFR has undergone several amendments to adapt to the changing needs and requirements of the government. These
amendments are made to address emerging financial and procurement challenges, incorporate new policies, and improve the
efficiency and transparency of public expenditure.
The specific history and details of GFR amendments are vast and varied, but some notable amendments are as follows:
• Introduction of GFR 2005: In 2005, a major overhaul of the financial rules was done, and the new set of rules known as GFR 2005
was introduced. It aimed to simplify and rationalize the existing rules, streamline financial procedures, and enhance transparency
and accountability in government expenditure.
• Amendments to GFR 2005: Since the introduction of GFR 2005, there have been several amendments to further refine and
update the rules. These amendments have incorporated changes in procurement policies, financial management practices,
and accounting standards. They have also addressed issues related to e-procurement, project management, and public-private
partnerships.
• GFR 2017: In 2017, a comprehensive revision of the GFR was undertaken, resulting in the introduction of GFR 2017. This revision
aimed to align the rules with the changing economic and administrative environment and to incorporate the government’s
initiatives such as Make in India, Digital India, and Ease of Doing Business. GFR 2017 emphasized the use of technology,
e-governance, and e-procurement to improve efficiency and transparency.
• Recent Amendments: From time to time, the government has made specific amendments to address emerging issues
and challenges. These amendments have focused on areas such as integrity and transparency in procurement, ensuring fair
competition, promoting sustainable practices, and enhancing accountability. They have also incorporated changes in tax laws,
accounting standards, and financial reporting requirements.
It is important to note that the specific details of GFR amendments are subject to change and may vary over time. Government
departments and organizations are advised to refer to the latest version of GFR and stay updated with the amendments and circulars
issued by the relevant authorities to ensure compliance with the current financial rules and practices.
The impact of GFR on public procurement can be summarized as follows:
• Compliance with Financial Regulations: GFR establishes a framework that ensures compliance with financial regulations and
guidelines. It provides clear instructions on financial management practices, budgetary controls, and expenditure limits. By
adhering to GFR, government entities ensure that their procurement activities are in line with the financial rules and regulations
set by the government, promoting accountability and transparency.
• Streamlined Procurement Procedures: GFR outlines the procedures and processes to be followed during the procurement cycle.
It provides guidelines on various stages of procurement, including planning, tendering, evaluation, contract award, and contract
management. GFR helps in standardizing procurement practices, reducing ambiguity, and ensuring consistency in procurement
procedures across government entities. This streamlines the procurement process, making it more efficient and effective.
• Financial Approvals and Fund Utilization: GFR sets out the requirements and procedures for obtaining financial approvals for
procurement activities. It defines the levels of authority for approving procurement decisions based on the estimated value of the
procurement. GFR also provides guidelines on fund utilization, ensuring that procurement activities are aligned with budgetary
allocations and financial limits. This helps in proper financial planning and control, preventing overspending and ensuring the
optimal utilization of funds.
• Transparency and Accountability: GFR emphasizes transparency and accountability in public procurement. It mandates the
documentation of procurement processes, maintenance of records, and disclosure of information related to procurement
activities. GFR promotes the publication of procurement notices, bid evaluation criteria, and contract award information, ensuring
that the procurement process is open and accessible to all stakeholders. This transparency enhances trust and confidence in the
procurement process and helps prevent corruption and favouritism.
• Financial and Risk Management: GFR provides guidelines for financial and risk management in procurement. It emphasizes the
need for proper financial controls, including the segregation of duties, financial reporting, and audit requirements. GFR also
highlights the importance of risk assessment and mitigation strategies in procurement activities. By incorporating financial and
risk management principles, GFR ensures that procurement decisions are made in a financially responsible and risk-aware manner.
In summary, General Financial Rules (GFR) have a significant impact on public procurement. They establish a framework for compliance
with financial regulations, streamline procurement procedures, promote transparency and accountability, and enhance financial and
risk management practices. Adhering to GFR ensures that government entities conduct their procurement activities in a prudent,
efficient, and transparent manner, ultimately benefiting both the government and the public.
2.4 Government Initiatives for Improving Procurement Efficiency and Transparency
Governments undertake various initiatives to enhance procurement efficiency and transparency. These initiatives aim to streamline
processes, reduce bureaucracy, promote competition, and combat corruption. They may include the establishment of centralized
procurement agencies, implementation of e-procurement systems, development of standard bidding documents and templates,
capacity building programs for procurement professionals, and promotion of sustainable procurement practices. Additionally,
governments may introduce measures to improve supplier registration, pre-qualification, and evaluation processes, as well as
measures to encourage the participation of small and medium enterprises (SMEs) in public procurement.
Government initiatives for improving procurement efficiency and transparency play a crucial role in enhancing the effectiveness and
accountability of public procurement processes. Here are some key initiatives undertaken by governments:
• Centralized Procurement Agencies: Governments may establish centralized procurement agencies or bodies responsible
for overseeing and managing the procurement activities of multiple government entities. These agencies help consolidate
procurement requirements, leverage economies of scale, and promote consistent procurement practices across different
departments or sectors.
• E-Procurement Systems: Governments increasingly adopt electronic procurement systems, commonly known as e-procurement,
to digitize and automate procurement processes. These systems enable online publication of tender notices, electronic submission
of bids, online bid evaluation, and transparent contract award processes. E-procurement systems improve efficiency, reduce
paperwork, minimize manual errors, and enhance transparency by providing real-time access to procurement information.
• Standard Bidding Documents and Templates: Governments develop and provide standardized bidding documents, templates,
and guidelines to streamline the procurement process. These documents establish uniform requirements, evaluation criteria, and
contract terms, ensuring fairness, transparency, and consistency in the bidding and evaluation process.
• Capacity Building Programs: Governments invest in capacity building programs to enhance the skills and knowledge of
procurement professionals. These programs provide training on procurement best practices, legal frameworks, contract
management, negotiation skills, and risk management. By improving the capabilities of procurement personnel, governments
can ensure more efficient and effective procurement outcomes.
• Sustainable Procurement Practices: Governments promote sustainable procurement practices by integrating environmental,
social, and economic considerations into the procurement process. They encourage the use of environmentally friendly products,
support socially responsible suppliers, and promote fair trade and ethical sourcing. Sustainable procurement practices not only
contribute to environmental and social goals but also lead to long-term cost savings and improved supplier performance.
• Supplier Registration and Pre-Qualification: Governments simplify the supplier registration process and establish pre-qualification
criteria to ensure that only qualified and reliable suppliers participate in procurement processes. This helps eliminate unqualified
or unscrupulous suppliers and ensures a more competitive and transparent bidding environment.
• SME Participation: Governments encourage the participation of small and medium enterprises (SMEs) in public procurement by
introducing measures such as setting aside a certain percentage of contracts for SMEs, providing training and support programs for
SMEs to enhance their procurement capabilities, and simplifying tendering procedures to facilitate their participation. Promoting
SME participation fosters innovation, supports local economies, and enhances competition in the procurement market.
These government initiatives collectively contribute to improving procurement efficiency, reducing corruption risks, promoting fair
competition, and enhancing transparency and accountability in public procurement. By implementing these measures, governments
strive to ensure that public funds are utilized effectively, and that the procurement process benefits both the government and the
society at large.
Chapter 3: Procurement Methods for Goods
3. Procurement Methods for Goods
3.1 Overview of Procurement Methods
These methods are essential for the procurement process and play a crucial role in determining the outcome of the procurement
exercise. By understanding the various approaches and strategies available, procurement professionals can make informed decisions
based on the specific requirements and circumstances of each procurement project.
The following are some of the commonly used procurement methods for goods:
1. Open Tenders
a) Open Tender Enquiry (OTE)
b) Global Tender Enquiry (GTE)
2. Procurement through Selected Suppliers
a) Limited Tender Enquiry - LTE (up to Rs. 25 (Rupees twenty-five) lakh)
b) Special Limited Tender Enquiry (SLTE above Rs. 25 (Rupees twenty-five) lakh under special circumstances)
3. Nomination Basis Tenders
a) Proprietary Article Certificate (PAC)
b) Single Tender Enquiry (STE) without PAC
4. Procurements without Calling Tenders
a) Direct Procurement without Quotation
b) Direct Procurement by Purchase Committee
Open Tender Enquiry (OTE)

The Open Tender Enquiry (OTE) is a procurement method where bids are invited from all interested suppliers through a public
announcement. It is designed to provide equal opportunity to all eligible suppliers, ensuring transparency and maximizing competition
in the procurement process.
In the OTE method, the procurement entity publicly announces the tender, making the announcement widely accessible to interested
suppliers. This ensures that all eligible suppliers have an equal chance to participate and submit their bids. By openly inviting bids, the
procurement entity aims to promote fair competition and obtain the best value for money.
OTE is typically used when there is a large pool of suppliers who can meet the required specifications. It allows for a wide range
of suppliers to participate, increasing the chances of receiving competitive bids. The openness and transparency of the process
also contribute to accountability and fairness. During the OTE process, suppliers are provided with detailed information about the
procurement requirements, including technical specifications, delivery timelines, and evaluation criteria. They are given a specific
timeframe to prepare and submit their bids, ensuring a standardized and structured process.
OTE procedures through e-procurement or through traditional tendering should be adopted in the following situations:
I. Procurements exceeding the threshold of Rs. 25 lakh (Rupees Twenty-Five Lakh)
II. All common use requirements with clear technical specifications
III. For requirements that are ordinarily available in the open market, but it is necessary to evaluate competitive offers to decide the
most suitable and economical option available; and
IV. When requirements are not available from known sources or sources are presently limited and need to be broad based. In such
situations, even for procurements below Rs. 25 (Rupees twenty-five) lakh, OTE mode may be used, if warranted. (Rule 161 of GFR
2017)1.
1 https://doe.gov.in/sites/default/files/GFR2017_0.pdf
Overall, the Open Tender Enquiry method ensures that all eligible suppliers have an equal opportunity to participate in the procurement
process. It promotes transparency, accountability, and healthy competition, leading to the selection of the most suitable supplier and
achieving value for money in the procurement of goods.
Global Tender Enquiry (GTE)
The Global Tender Enquiry (GTE) is a procurement method that involves inviting tenders from suppliers worldwide. It is specifically
used when there is a need for specialized goods or when local suppliers are unable to meet the requirements of the procurement.
GTE allows the procurement entity to engage with suppliers on a global scale, expanding the pool of potential bidders. By reaching
out to international suppliers, the procurement entity gains access to a broader range of goods and services, which may not be
available locally. This enables the entity to explore different options and select the most suitable supplier who can meet the specific
requirements.
The use of GTE promotes global competition among suppliers, creating a competitive environment that can result in improved quality,
better pricing, and innovative solutions. By inviting tenders from suppliers worldwide, the procurement entity can attract bids from
experienced and specialized suppliers who may offer unique products or services.
GTE is particularly beneficial when the procurement involves complex projects, advanced technologies, or specific expertise that may
not be readily available within the local market. It allows the entity to tap into global expertise and capabilities, ensuring that the
procurement meets the desired standards and requirements.
Hence, it may be viable only in following situations:
I. Where Goods of required specifications/quality are not available within the country and alternatives available in the country are
not suitable for the purpose.
II. Non-existence of a local branch of the global principal of the manufacturer/vendors/ contractors.
III. Requirement for compliance to specific international standards in technical specifications.
IV. Absence of a sufficient number of competent domestic bidders likely to comply with the required technical specifications, and in
case of suspected cartel formation among indigenous bidders. (Rule 161 of GFR 2017)2.
In summary, the Global Tender Enquiry method provides the opportunity to engage with international suppliers and access a wider
range of goods and services. It promotes global competition, enhances the procurement entity’s options, and enables the selection of
the most suitable supplier who can fulfill the specialized requirements of the procurement.
Limited Tender Enquiry (up to Rs. 25 (Rupees twenty-five) lakh)
Limited Tender Enquiry is a restricted competition procurement, where a preselected list of vendors is directly approached for
bidding; bids from uninvited bidders are treated as unsolicited and are normally not entertained, except in special circumstances. LTE
procedures should be default mode of procurement when the estimated value of procurement is between Rs. 2.5lakh to Rs. 25 lakh
(Rupees two and a half Lakh to Twenty-five Lakh). The bidding documents should be simple normally consisting of a single page with
terms and conditions printed overleaf. (Rule 162 of GFR 2017)3.
In LTE, the procurement entity identifies and selects a predetermined list of suppliers who have been pre-qualified based on their
capabilities, experience, financial stability, or other relevant factors. These suppliers are invited to participate in the tendering process
by submitting their bids.
The use of LTE allows for a more targeted approach, as it focuses on a select group of suppliers who have already met certain pre-
qualification requirements. This method is typically used when the procurement entity has a good understanding of the market and
wants to streamline the process by engaging with a smaller number of suppliers who are likely to meet the desired specifications and
requirements.
By limiting the number of suppliers invited to participate, LTE can help reduce the administrative burden and speed up the procurement
process. It also allows for better control over the evaluation and selection of suppliers, as the entity can focus on assessing bids from
a smaller pool of pre-qualified suppliers.
However, it is important to ensure that the pre-qualification criteria are fair, transparent, and non-discriminatory to promote
competition and provide equal opportunities to all eligible suppliers. The procurement entity should clearly define the criteria and
requirements for pre-qualification and communicate them effectively to the potential suppliers.
In summary, Limited Tender Enquiry (LTE) is a procurement method used for procurements up to a specific monetary limit. It involves
inviting bids from a limited number of pre-qualified suppliers who meet specific criteria. LTE allows for a more targeted approach,
streamlines the procurement process, and enables better control over supplier selection.
Special Limited Tender Enquiry (Above Rs. 25 (Rupees twenty-five) lakh under special circumstances)
Special Limited Tender Enquiry (SLTE) (Rule 162 of GFR 2017)4 is a procurement method used under special circumstances when the
procurement value exceeds the limit specified for Limited Tender Enquiry (LTE). In such cases, SLTE allows for a limited number of
suppliers to be invited to participate in the tendering process.
SLTE is employed when there are unique or exceptional circumstances that justify deviating from the regular procurement methods.
These circumstances could include urgency, security concerns, technical complexity, or limited availability of suppliers with the
required expertise.
Unlike Open Tender Enquiry (OTE) or Global Tender Enquiry (GTE), where bids are invited from a large pool of suppliers, SLTE restricts
the number of suppliers invited to participate. The procurement entity identifies a limited number of suppliers who are deemed
capable of meeting the specific requirements of the procurement.
The selection of suppliers for SLTE is based on various factors, such as their experience, expertise, track record, or specific qualifications.
The aim is to ensure that the selected suppliers have the necessary capabilities to deliver the required goods or services effectively.
By limiting the number of suppliers, SLTE aims to strike a balance between competition and the need for expediency or unique
expertise. It allows the procurement entity to focus on a select group of suppliers who are most likely to meet the specialized
requirements of the procurement.
It is important to note that SLTE should be used judiciously and in accordance with the applicable laws, regulations, and procurement
policies. The decision to use SLTE should be well-documented, justifiable, and transparent to ensure fairness and prevent any potential
misuse of the procurement process.
In summary, Special Limited Tender Enquiry (SLTE) is a procurement method used in special circumstances when the procurement
value exceeds the limit specified for Limited Tender Enquiry (LTE). It allows for a limited number of suppliers to be invited based on
their capabilities and expertise. SLTE strikes a balance between competition and specialized requirements, ensuring the procurement
entity can efficiently and effectively meet its procurement needs.
Proprietary Article Certificate (PAC)
Procurement of goods, certain items are procured only from Original Equipment Manufacturers (OEMs) or manufacturers having
proprietary rights (or their authorised dealers/stockists) against a PAC certificate signed by the appropriate authority. Under this
method, a Proprietary Article Certificate is issued by the procuring entity to justify the selection of a specific supplier or brand. The
certificate states that the required goods or services are unique, proprietary, or patented, and can only be provided by the nominated
supplier or brand. The PAC establishes that there is no reasonable alternative available in the market, and therefore, competitive
bidding is not feasible.
In the context of procurement, a Proprietary Article Certificate (PAC) (Rule 166 of GFR 2017)5 is a document issued by the procuring
entity to justify the selection of a specific supplier or brand for the procurement of goods or services. The purpose of the PAC is to
declare that the required goods or services are unique, proprietary, or patented, and can only be provided by the nominated supplier
or brand.
The PAC serves as evidence that there are no reasonable alternatives available in the market that can meet the specific requirements
of the procuring entity. It establishes that competitive bidding or seeking multiple suppliers is not feasible or practical due to the
unique nature of the goods or services involved.
The issuance of a PAC ensures transparency and accountability in the procurement process by providing a valid and justifiable reason
for deviating from the standard competitive bidding procedures. It helps prevent unfair competition and protects the rights of the
supplier or brand that holds the proprietary rights to the goods or services in question.
It is important to note that the issuance of a PAC should be based on genuine and verifiable reasons, and the procuring entity should
exercise caution to prevent any misuse or favouritism. The use of PAC should comply with the applicable laws, regulations, and
procurement guidelines to maintain integrity and fairness in the procurement process.
Direct Procurement without Quotation
This method involves directly procuring goods or services from a specific supplier without obtaining competitive quotations or bids.
The procuring entity may choose this method when the value of the procurement is relatively low, or when there is a pre-existing
agreement or understanding with a particular supplier. Direct procurement without quotation is typically used for urgent or minor
procurements where the cost and time associated with the competitive bidding process are not justified.
The procedure is the simplest and it is suitable only in very low value, urgent and simple requirements in the following situations:
I. Procurements do not exceed the threshold (for each requirement) of Rs. 25,000 (Rupees Twenty-five Thousand) for each case.
II. The requirement is urgent but was not covered in the procurement plan.
III. The requirement is for off-the-shelf goods of simple and standard specifications. Examples of procurement are day-to-day needs
of the office and field units, and so on.
Direct Procurement by Purchase Committee
This mode of procurement is used for procurements valued above Rs. 25,000/- (Rupees Twenty-five Thousand) and upto Rs. 2,50,000
(Rupees Two Lakh Fifty Thousand) only on each occasion. In this method, a purchase committee is formed within the procuring entity
to directly select and procure goods or services from a specific supplier or contractor. The committee assesses the requirements,
evaluates potential suppliers, and makes the procurement decision without issuing a tender or soliciting bids. This method is often
used for specialized or customized procurements where the expertise and knowledge of the purchase committee are essential in
selecting the most suitable supplier.
3.2 Standard Bidding Documents and Templates

Standard bidding documents and templates are standardized forms and documents that are used during the bidding process to ensure
consistency and fairness. This section explains the purpose and contents of standard bidding documents and templates. It covers
important documents such as the invitation to bid, instructions to bidders, bid forms, and contract agreements. These standardized
documents help streamline the bidding process, ensure clarity, and provide a common framework for bidders.
3.3 Pre-Qualification and Post-Qualification Processes

Pre-Qualification Processes
In Pre-Qualification bidding stage, competent qualified tenderers are shortlisted by using a Pre-qualification Criterion (PQC – for
example, i) past experience of similar contracts, ii) performance capability and iii) financial strength) prior to the issue of the bid
document exclusively to shortlisted bidders in the second stage. Pre-qualification Bids (PQBs) should meet the norms of transparency,
fairness and maintenance of competition. Since PQB system may strain the transparency principle and there is heightened risk of
cartelization among shortlisted bidders, PQB should be done only as an exception under specified circumstances. It should not be a
routine/ normal mode of procurement of goods and an eligibility criteria clause as part of single/two envelop/cover tendering should
suffice in normal/ routine situations.
The pre-qualification process is typically conducted before the bidding phase and aims to assess the qualifications and capabilities of
potential bidders. It involves the following steps:
• Eligibility Check: The procuring entity verifies whether bidders meet the specified eligibility criteria, such as legal status,
registration, and compliance with applicable laws and regulations.
• Technical Evaluation: Bidders’ technical capacities, expertise, experience, and resources are assessed to determine their ability to
meet the project requirements.
• Financial Evaluation: Bidders’ financial stability, liquidity, and ability to undertake the project are evaluated. This may involve
reviewing financial statements, bank references, and other relevant financial documents.
• Shortlisting: Based on the evaluation, a shortlist of qualified bidders is created, who are then invited to participate in the bidding
phase.
Post-Qualification Process
The post-qualification process occurs after the bid submission and aims to verify the qualifications of the winning bidder before
contract award.
The process typically involves:
• Substantiation of Bid: The procuring entity examines the bid to ensure that it meets all the requirements, including technical
specifications, commercial terms, and completeness of documentation.
• Qualification Verification: The winning bidder’s qualifications, such as technical and financial capacities, are verified through
further investigation, site visits, interviews, or requesting additional documentation.
• Integrity Check: The procuring entity may conduct integrity checks, such as evaluating the bidder’s past performance, reputation,
and compliance with ethical and legal standards.
• Contract Award: Once the post-qualification process is completed, the contract is awarded to the winning bidder, subject to
successful negotiation of terms and conditions.
Prequalification and Post Qualification (PQ) shall be based entirely upon the capability and resources of prospective bidders to
perform the particular contract satisfactorily, taking into account their experience and past performance, capabilities with respect to
personnel, equipment and manufacturing facilities, financial standing. The quantity, delivery and value requirement shall be kept in
view, while fixing the PQ criteria. No bidder should be denied prequalification/post qualification for reasons unrelated to its capability
and resources to successfully perform the contract.
3.4 Evaluation of Bids: Techno-Commercial and Price Assessment

The evaluation of bids involves assessing the technical and commercial aspects of the submitted bids to determine the most suitable
and competitive offer. This section explores the evaluation criteria, methods, and procedures used to assess the technical soundness,
compliance, and overall quality of the bids. It also discusses the price assessment process, which involves analyzing the financial
proposals and determining the reasonableness and competitiveness of the prices offered.
In evaluation of the techno-commercial bid, conformity of the eligibility/qualification, technical and commercial conditions of the
offered goods to those in the bid document is ascertained. Additional factors, if any, incorporated in the tender documents may also
be considered in the manner indicated therein. Evaluation has to be based only on the conditions included in the tender document
and any other condition should not form the basis of this evaluation.
I. Evaluation of eligibility/ qualification Criteria: Procuring Entity will determine, to its satisfaction, whether the tenderers are
eligible, qualified and capable in all respects to perform the contract satisfactorily. Tenders that do not meet the required eligibility/
qualification criteria prescribed will be treated as unresponsive and not considered further. This determination will, inter-alia, take
into account the tenderer’s financial, technical and production capabilities for satisfying all of Procuring Entity’s requirements as
incorporated in the tender document. Such determination will be based upon scrutiny and examination of all relevant data and
details submitted by the tenderer in its/his tender as well as such other allied information as deemed appropriate by Procuring
Entity.
II. Evaluation of Technical Suitability: The description, specifications, drawings and other technical terms and conditions are
examined by TC in general and a technical member of the TC in particular. Nobody outside the TC should be allowed to determine
this evaluation. The tender document should clearly state whether alternative offers/makes/models would be considered or not
and, in the absence of an express statement to the effect, these should not be allowed. An important document is the exceptions/
deviation form submitted by the tenderer. It is important to judge whether an exception/deviation is minor or major. Minor
exceptions/deviations may be waived provided they do not constitute any material deviation and do not have significant financial
impact and, also, would not prejudice or affect the ranking order of the price bid. Exceptions/deviations should not grant the
tenderer any undue advantage vis-à-vis other tenders and Procuring Entity.
III. Evaluation of Commercial Conditions: The TC will also evaluate the commercial conditions quoted by the tenderer to confirm
that all terms and conditions specified in the GCC/SCC have been accepted without reservations by the tenderer. Only minor
deviations may be accepted/allowed, provided these do not constitute material deviations without financial impact and do not
grant the tenderer any undue advantage vis-à-vis other tenders and Procuring Entity.
IV. Considering Minor Deviations: Court has consistently taken a view that procuring entity is entitled to consider and allow minor
deviations, which do not amount to material deviations. A material deviation, reservation, or omission which should not be
waived are those that: a) Affects, in any substantial way, the scope, quality or performance of the goods and related services
specified in the contract; b) Limits, in any substantial way, inconsistent with the tendering documents, the procuring entity’s rights
or the tenderer’s obligations under the contract; or c) If rectified, would unfairly affect the competitive position of other tenderers
quoting substantially responsive tenders.
V. Declaration of Successful Bidders: If it is a multiple envelop tender, then the TC prepares a recommendation of techno-commercial
bid to declare successful bidders. In such cases, after the approval of CA, the results of the Techno-commercial bid evaluation are
to be announced (including informing the failed Bidders). Price bids are opened in the presence of technically suitable bidders,
who are willing to attend the bid opening, at a pre-publicised date, time and place or on the portal in case of e-procurement. In
single envelop/cover tender, TC proceeds to evaluate the price aspects without a reference to CA at this stage.
3.5 Ensuring Reasonableness of Prices

Ensuring the reasonableness of prices is essential to maintain fairness and transparency in the procurement process. Here are some
methods and techniques commonly used to evaluate and verify the reasonableness of prices offered by bidders:
• Market Research and Benchmarking: Procuring entities often conduct market research to gather information on prevailing
market rates for similar goods or services. This helps establish a benchmark against which bid prices can be evaluated. Comparing
the bid prices with market rates provides an indication of whether the prices are reasonable and competitive.
• Price Analysis: Price analysis involves a systematic examination and evaluation of the components of a bid’s price proposal. This
analysis assesses the reasonableness, completeness, and accuracy of the prices. It may involve evaluating the cost breakdown,
profit margin, overheads, and any other cost elements included in the bid. Price analysis helps identify any significant deviations
or inconsistencies and ensures that the prices offered are justifiable.
• Historical Price Data: Procuring entities may refer to historical price data from previous similar contracts or procurements. This
allows them to compare the prices quoted in the current bidding process with those from past contracts. By analyzing historical
price data, any significant deviations or trends can be identified, providing insights into the reasonableness of the current bid
prices.
• Seeking Clarifications: During the evaluation process, procuring entities may seek clarifications from bidders regarding their
pricing strategy. This can involve requesting additional information or documentation to support the reasonableness of the prices
quoted. Bidders may be asked to provide details on their cost structure, pricing methodology, market conditions, or any other
relevant factors that justify their pricing.
• Independent Expert Opinion: In some cases, procuring entities may engage independent experts or consultants to provide an
objective assessment of the reasonableness of the bid prices. These experts can offer specialized knowledge and expertise in the
specific industry or market, helping validate the fairness and competitiveness of the prices.
By employing these methods and techniques, procuring entities can ensure that the prices quoted by bidders are reasonable,
competitive, and aligned with market standards. It is important to note that the reasonableness of prices should be assessed in
conjunction with other evaluation factors, such as technical compliance, quality, and the overall value offered by the bidder. This
ensures a comprehensive evaluation and selection process, resulting in the procurement of goods or services at fair and reasonable
prices.
3.6 Bid Evaluation Committee Proceedings

The bid evaluation committee plays a crucial role in the procurement process by evaluating the submitted bids and recommending
the most suitable bidder for contract award. The bid evaluation committee is typically comprised of qualified and experienced
individuals who have the necessary expertise to evaluate bids effectively. The committee may include representatives from various
relevant departments or disciplines, such as technical experts, financial analysts, legal advisors, and procurement professionals. The
composition may vary depending on the nature and complexity of the procurement.
The bid evaluation committee is responsible for evaluating the submitted bids and recommending the most suitable bidder for contract
award. Its primary roles and responsibilities include:
• Reviewing Bids: The committee carefully reviews and examines all submitted bids to ensure compliance with the requirements
specified in the bidding documents. It assesses the technical soundness, completeness, and overall quality of each bid.
• Evaluation Criteria: The committee applies the predetermined evaluation criteria and weightage to assess the bids objectively.
These criteria typically include technical compliance, financial stability, experience, qualifications, and any other relevant factors
specified in the bidding documents.
• Evaluation Proceedings: The committee conducts evaluation proceedings in a systematic and consistent manner. This involves
scoring or ranking the bids based on the established evaluation criteria and procedures. Minutes or records of the evaluation
proceedings are maintained to ensure transparency and accountability.
• Clarifications: If necessary, the committee seeks clarifications or additional information from the bidders to ensure a comprehensive
understanding of the bids. These clarifications should be sought from all bidders equally and without giving preferential treatment
to any specific bidder.
• Recommendation: Based on the evaluation, the committee prepares a recommendation report, highlighting the strengths and
weaknesses of each bid. It recommends the bidder(s) that best meet the evaluation criteria and provides justification for the
selection.
Transparency, fairness, and adherence to procedures are essential to maintain the integrity and credibility of the bid evaluation
process. They help ensure that the selected bidder is the most suitable and offers the best value for the procuring entity, based on
objective evaluation and recommendation by the bid evaluation committee.
It’s important for the bid evaluation committee to conduct their proceedings diligently, following the established procedures and
guidelines. This helps build trust among bidders, promotes competition, and ultimately leads to the selection of the most qualified
and capable bidder for contract award.
3.7 Make in India and Purchase Preference Policies

Make in India and purchase preference policies are initiatives aimed at promoting domestic manufacturing and giving preference to
locally produced goods. To encourage ‘Make in India’ and promote manufacturing and production of goods and services in India with
a view to enhancing income and employment, Department of Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce
and Industry, Government of India, issued Public Procurement (Preference to Make in India), Order 2017.6 The order is issued pursuant
to Rule 153 (iii) of GFR, 2017. The Order is applicable on the procurement of Goods, Works and Services. For the purpose of this Order:
I. ‘L1’ means the lowest tender or lowest bid, or the lowest quotation received in a tender, bidding process or other procurement
solicitation as adjudged in the evaluation process as per the tender or other procurement solicitation.
II. ‘Margin of purchase preference’ means the maximum extent to which the price quoted by a “Class-I local supplier” may be above
the L1 for the purpose of purchase preference. It has been fixed as 20 (twenty) percent.
III. ‘Nodal Ministry’ means the Ministry or Department identified pursuant to this order in respect of a particular item of goods or
services or works.
IV. ‘Procuring entity’ means a Ministry or department or attached or subordinate office of, or autonomous body controlled by, the
Government of India and includes Government companies as defined in the Companies Act.
V. ‘Works’ means all works as per Rule 130 of GFR- 2017, and will also include ‘turnkey works’.
6 Latest revision to the Order notified vide OM No. P-45021/2/2017-PP (BE-II) issued by DPIIT, dated 16.09.2020
Chapter 4: Procurement of Works and Infrastructure Projects
4. Procurement of Works and Infrastructure Projects
4.1 General Financial Rules for Procurement of Works
The General Financial Rules (GFR) for procurement of works provide guidelines and procedures to be followed in the procurement
process for infrastructure projects. These rules ensure transparency, fairness, and efficiency in the procurement of works. They cover
various aspects such as procurement planning, tendering, contract management, and payment terms. The GFR helps in promoting
accountability, cost-effectiveness, and timely execution of works.
Here are some key features of the GFR for procurement of works:
• Procurement Planning: The GFR emphasizes the importance of effective procurement planning, including the identification
of project requirements, estimation of costs, and determination of procurement methods. It encourages procuring entities to
develop comprehensive procurement plans to ensure the timely and efficient execution of works.
• Tendering Procedures: The GFR provides guidelines on the tendering process, including the preparation and publication of tender
documents, evaluation of bids, and selection of the most suitable bidder. It emphasizes the principles of open competition, equal
treatment of bidders, and transparency in the evaluation and selection process.
• Contract Management: The GFR outlines procedures for contract award, contract administration, and contract performance
monitoring. It emphasizes the need for effective contract management practices to ensure compliance with contractual
obligations, timely completion of works, and resolution of any contractual disputes that may arise.
• Financial Scrutiny and Audit: The GFR highlights the importance of financial scrutiny and audit in the procurement process. It
establishes procedures for the scrutiny of financial aspects related to the procurement of works, including the examination of
cost estimates, budget allocations, and financial reports. The GFR also encourages regular audits to ensure accountability and
transparency in the use of public funds.
• Payment Terms: The GFR provides guidelines on payment terms for works contracts. It specifies the conditions, timelines, and
procedures for making payments to contractors, including the documentation required for invoice processing and verification.
The GFR aims to ensure timely and accurate payments to contractors while maintaining financial control and accountability.
• Cost-effectiveness and Value for Money: The GFR promotes cost-effectiveness and value for money in the procurement of works.
It encourages procuring entities to conduct cost analyses, evaluate bids based on price reasonableness, and consider the overall
value offered by bidders in terms of quality, technical capabilities, and project delivery.
• Timely Execution: The GFR emphasizes the importance of timely execution of works projects. It encourages the establishment of
realistic timelines, performance milestones, and monitoring mechanisms to ensure the timely completion of projects within the
allocated budget and timeframe.
The General Financial Rules for procurement of works provide a framework for procuring entities to follow in order to achieve
transparency, fairness, accountability, and efficiency in the procurement process. By adhering to these rules, procuring entities can
effectively manage their financial resources, select qualified contractors, and ensure the successful execution of works projects.
4.2 Types of Tenders and Contracts
There is different basis for linking payments to the performance of Contract (called types of contracts) – each having different risks
and mitigation measures. Bids are called and evaluated based on the type of contract. The choice of the type of contract should be
based on Value-for-Money (VfM) with due regard to the nature of Work. Adoption of an inappropriate type of contract could lead to
a situation of lack of competition, contractual disputes and non-performance/ failure of the contract. Standard forms for all the types
of contracts are available with Public Works Organizations like CPWD and the same may be used for calling the tenders.
Mostly used types of contracts are:
• Lump sum (Fixed Price) Contract: This form is used for work in which contractors are required to quote a lump sum fixed price
figure for completing the works in accordance with the given designs, specifications and functional requirements. Bidder’s price
is deemed to include all elements of cost - no arithmetical correction or price adjustments are allowed during evaluation and
execution. Lump sum contracts are easy to administer because it is a fixed price for a fixed scope and payments are linked to
clearly specified outputs/ milestones.
• Item rate (Unit Rate) Contract: For item rate tenders, contractors are required to quote rate for each individual items of work on
the basis of Bill of quantities (BOQ) provided by the Procuring Entity in the Bid Documents. Reasonable variations in quantities can
be allowed during the execution in terms of the contract. This is the most commonly used contract type for civil work. This type of
contract is suitable for all types of major works such as buildings, bridges, culverts, roads, sewer lines, irrigation works, and carries
the least risk of uncertainty for the parties.
• Percentage Rate Contract: For percentage rate contract, the contractors are required to quote rate as overall percentage above
or below the total estimated cost. This type of contract works best when the work does not involve major design process
and directions, and simple drawings are sufficient for execution. It saves on the time and effort of detailed design before the
procurement process. This type of tender can be used in respect of for small and routine types of original works for which
estimates can be made based on available schedule of rates and all repair works e.g., levelling and development works including
such works as storm water drainage, water supply and sewer lines.
• Piece Work Contract: Piece Work Contract is to be used mainly in following cases:
i. The cases, in which it is necessary to start the work in anticipation of formal acceptance of contract, an agreement on piece
work contract may be drawn and the contract may be cancelled as soon as regular contract is signed.
ii. For running contracts i.e. those for pipes, laying of sewerage etc. quotations are called periodically and a running rate
contract is drawn up as a result of those quotations usually for one year. The piece work contract provides for payment of
stipulated rates only when it refers to such quantity of time and also stipulates that the procuring entity may put an end to
the agreement at his option at any time.
• Engineering, Procurement and Construction (EPC) Contracts: The Engineering, Procurement and Construction (EPC) (also called
‘Design & Build’ Contracts) approach relies on assigning the responsibility for investigations, design and construction to the
contractor for a lump sum price determined through competitive bidding. The objective is to ensure implementation of the
project to specified standards with a fair degree of certainty relating to costs and time while transferring the construction risks
to the contractor. On the recommendations of National Institution for Transforming India (NITI Aayog) the Cabinet Committee on
Economic Affairs (CCEA)7 has recommended that Item Rate contracts may be substituted by EPC contracts wherever appropriate
• Public Private Partnership (PPP): PPP means an arrangement between a government/ statutory entity/ government owned entity
on one side [Sponsoring (PPP) authority – or simply the Authority] and a private sector entity (a legal entity in which 51% or more
of equity is with the private partner/s - concessionaire) on the other, for the creation and/ or management of public assets and/
or public services, through investments being made and/ or management being undertaken by the concessionaire, for a specified
period of time (concession period) on commercial terms, where there is well defined allocation of risk between the concessionaire
and the Authority; and the concessionaire (who is chosen on the basis of a transparent and open competitive bidding), receives
performance linked payments that conform (or are benchmarked) to specified and pre-determined performance standards,
measurable by the Authority or its representative.
4.3 Standard Bidding Documents for Works
The bid documents must be based on relevant Standard Bidding Documents for the Type of Contract (Lump Sum, Item Rate Etc);
Estimated Value range, Bidding System (Single Envelope/ Two Envelope/ PQB) etc. Standard Bidding Document for e-procurement
would be slightly different from the traditional Standard Bidding Document. Normally, if the organisation does not have its own SBD, it
may follow those of other Public Works Organisation like CPWD. Before floating the tender, the Bid Document should be got approved
by the competent authority.
The contents of Bid Documents would therefore vary, but will generally comprise the following (some of these sections may be named
or organised differently in some organisations):
Volume 1
i. Notice Inviting Tenders (NIT)
ii. Section I Instructions to Bidders (ITB) and Appendix to ITB (AITB)
iii. Section II General Conditions of Contract (GCC)
iv. Section III Special Conditions of Contract (SCC)
Volume 2
i. Section IV Technical Specifications
7 Niti Aayog OM No. N-14070/14/2016-PPPAU dated September 05, 2016
Volume 3
i. Section V Forms of Bid
ii. Section VI Bill of Quantities
iii. Section VII Standard Formats: Bid Security, Performance Security, Advance Payment Security, Form of Agreement
iv. Section VIII Schedules for Supplementary Information
v. Section IX Sample Forms for updating qualification information, and so on
Volume 4
i. Section X Drawings
Volume 5
i. Section XI Documents to be furnished by the bidder
4.4 Pre-Qualification and Post-Qualification Procedures
Pre-Qualification Procedures
In high value contracts or complex technical requirements where capability of source of supply is crucial (for example in construction
of complex bridges), for the successful performance of the contract, besides considering techno-commercial suitability, it is necessary
to ensure that competition is only among bidders with requisite capabilities matching the challenges of the task. In case bidders
with inadequate capability are allowed to compete, the better qualified bidders would be eliminated, since their bid price is likely to
be higher commensurate with their higher capability and infrastructure. In such situations a separate stage of PQB bidding system
may be considered. In PQB stage, competent qualified tenderers are shortlisted prior to the issue of the bid document exclusively to
shortlisted bidders in the second stage by using a Pre-qualification Criterion (PQC).
Pre-qualification Bids (PQBs) should meet the norms of transparency, fairness and maintenance of competition. Since PQB system
may strain the transparency principle and there is heightened risk of cartelization among shortlisted bidders, PQB should be done only
as an exception under specified circumstances. It should not be a routine/ normal mode of procurement of works and an eligibility
criteria clause (post qualification) as part of single/ two envelope/ cover tendering should suffice in normal/ routine situations. PQB
bidding as a separate stage is contra-indicated in the following circumstances:
i. Where procurement can be done through limited tender enquiries.
ii. Where the requirement is technically and commercially simple enough that prequalification of the bidder is not crucial for the
performance of the contract, for example, routine residential buildings.
iii. Where the procurement is of medium value (say less than Rs 100 crore) or moderately complex in nature and the time, effort
and money required from the bidder to participate in a tender is not very high, a clear-cut, (preferably fail-pass) post-qualification
criteria can be specified in a three envelope single stage bidding (instead of separate PQB bidding), so that a bidder’s risk of having
his bid rejected on grounds of qualifications is remote if due diligence is exercised him.
Post-Qualification Procedures
Post-qualification verifies the qualifications of the winning bidder before awarding the contract. These procedures help ensure that
only qualified and capable bidders participate and that the selected bidder meets the necessary requirements. These procedures aim
to ensure that the bidder meets all the requirements and criteria specified in the bidding documents. Technical bids should be analysed
and evaluated by a Consultancy Evaluation Committee (CEC) constituted by the Ministry or Department. The CEC shall record in detail
the reasons for acceptance or rejection of the technical proposals analysed and evaluated by it. The Ministry or Department shall open
the financial bids of only those bidders who have been declared technically qualified by the Consultancy Evaluation Committee for
further analysis or evaluation and ranking and selecting the successful bidder for placement of the work contract.
4.5 Bid Evaluation and Contract Award
The evaluation of Bids is one of the most significant areas of purchase management and the process must be transparent. All tenders
are to be evaluated strictly on the basis of the terms and conditions incorporated in the tender document and those stipulated
by the tenderers in their tenders. The Contracting Authority may include quality, price, technical merit, aesthetic and functional
characteristics, environmental characteristics, running costs, cost effectiveness, after-sales service and technical assistance, delivery
date and delivery period or period of completion etc. No criteria shall be used for evaluation of tenders that cannot be verified or
not stated in the contract, with the exception of provisions of laws in force. No hearsay information or hitherto undeclared condition
should be brought in while evaluating the tenders. Similarly, no tender enquiry condition (especially the significant/ essential ones)
should be overlooked/ relaxed while evaluating the tenders. The aim should be to ensure that no tenderer gets undue advantage
at the cost of other tenderers and/ or at the cost of Procuring Entity. Information relating to evaluation of tenders and the Tender
Committee’s (TC’s) deliberations should be confidential and not be shared with persons not officially connected with the process.
Award of Work
Prior to the expiry of the period of bid validity, the successful bidder will be notified (briefly indicating therein relevant details such
as quantity, specification of the goods ordered, prices, and so on) in writing by a registered letter or any other acknowledgeable and
foolproof method that his bid has been accepted. GFR 2017 (Rule 159) makes it mandatory to publish details of Bid award on the CPPP
and also in the notice board/ bulletin/ website of the concerned ministry or department/ eProcurement Portal. In case publication
of such information is sensitive from commercial or security aspects, dispensation may be sought from publishing of such results by
obtaining sanction from the Secretary of the Department with the concurrence of the concerned Financial Advisor.
4.6 Payment Terms and Price Adjustments
Payment Terms
Payment terms define the schedule and conditions for making payments to the contractor throughout the duration of the works
contract.
Some common payment terms include:
• Milestone Payments: Payments are made based on the completion of specific project milestones or stages. These milestones are
typically identified in the contract and correspond to significant project deliverables or achievements.
• Progress Payments: Payments are made based on the percentage of work completed by the contractor. The payment schedule
may be tied to the progress achieved by the contractor as certified by the engineer or project manager.
• Retention: A portion of the payment is retained by the procuring entity as security until the satisfactory completion of the
works. Retention amounts are usually released to the contractor after a specified defect liability period or upon completion of all
outstanding obligations.
• Final Payment: The final payment is made to the contractor upon successful completion and acceptance of the works as per the
contract terms and conditions.
Price Adjustments
Price adjustments are mechanisms incorporated into works contracts to account for changes in costs or project scope over time. These
adjustments help ensure that the contractor is fairly compensated and that the contract remains financially viable.
Some common types of price adjustments include:
• Inflation or Price Escalation: Contracts may include provisions to adjust prices to account for inflation or changes in market
conditions. This ensures that the contractor is adequately compensated for any increases in costs that occur during the contract
period.
• Variation Orders: Variation orders allow for adjustments to the contract price and scope due to changes requested by the
procuring entity. These changes may include modifications, additions, or deletions to the original contract scope of work. Price
adjustments are made based on the agreed-upon rates or formulas specified in the contract.
• Fluctuations in Material or Labor Costs: Contracts may include provisions to account for fluctuations in the cost of materials,
labor, or other inputs. These provisions may involve price adjustments based on predefined indices or formulae that reflect
changes in market prices.
The inclusion of payment terms and price adjustments in works contracts ensures that contractors are compensated fairly and that
the contract remains financially viable despite potential changes in costs or project scope. These provisions provide clarity and
transparency regarding the financial aspects of the contract and help manage the financial risks associated with the execution of
works projects.
Chapter 5: Procurement of Consulting Services
5. Procurement of Consulting Services
5.1 General Financial Rules (GFR) and Government Guidelines for Consulting Services
Consultancy services8 means any subject matter of procurement (which as distinguished from ‘Non- Consultancy Services’ involves
primarily non-physical project-specific, intellectual and procedural processes where outcomes/deliverables would vary from one
consultant to another), other than goods or works, except those incidental or consequential to the service, and includes professional,
intellectual, training and advisory services or any other service classified or declared as such by a Procuring Entity but does not
include direct engagement of a retired Government servant. These Services typically involve providing expert or strategic advice
e.g., management consultants, policy consultants, communications consultants, Advisory and project related Consulting Services
which include, feasibility studies, project management, engineering services, finance, accounting and taxation services, training and
development etc.
The Ministries or Departments may hire external professionals, consultancy firms or consultants (referred to as consultant hereinafter)
for a specific job, which is well defined in terms of content and time frame for its completion.9
The General Financial Rules provide a framework for financial management and procurement procedures in government projects.
They define the principles, guidelines, and regulations that govern the procurement process for consulting services. The GFR ensures
transparency, accountability, and efficiency in the use of public funds.
Engagement of consultants may be resorted to in situations requiring high quality services for which the concerned Ministry/ Department
does not have requisite expertise. Approval of the competent authority should be obtained before engaging consultant(s).10
Where the estimated cost of the consulting service is up to Rupees twenty-five lakhs, preparation of a long list of potential consultants
may be done on the basis of formal or informal enquiries from other Ministries or Departments or Organisations involved in similar
activities, Chambers of Commerce & Industry, Association of consultancy firms etc.
Where the estimated cost of the consulting services is above Rupees twenty-five lakhs, in addition to preparation of a long list of
potential consultants, an enquiry for seeking ‘Expression of Interest’ from consultants should be published on Central Public
Procurement Portal (CPPP) at www.eprocure.gov.in and on GeM. An organisation having its own website should also publish all its
advertised tender enquiries on the website.11
Government guidelines are specific instructions and requirements issued by government entities for the procurement of consulting
services. These guidelines supplement the GFR and provide detailed instructions tailored to the specific needs of the government
agency or project.
5.2 Manual for Procurement of Consultancy Services

The Manual for Procurement of Consultancy Service provides detailed guidance and procedures for the procurement of consulting
services. It serves as a reference document for government agencies and procuring entities to follow during the procurement process.
The manual covers various topics, including:
• Definition and scope of consultancy services
• Procurement planning and budgeting for consultancy services
• Selection methods and criteria for evaluating consultants
• Preparation and issuance of request for proposals (RFP) or other bidding documents
• Evaluation of technical proposals and consultant selection
• Negotiation and contract award
• Contract management and monitoring of consultancy services
8 Rule 177 of GFR 2017

9 Rule 178, GFR 2017
10 Rule 180, GFR 2017
11 Rule 183, GFR 2017
The manual provides a standardized approach to the procurement of consulting services, ensuring consistency, transparency, and
fairness. It helps procuring entities effectively manage the entire procurement process, from planning to contract management, in
accordance with the established procedures and guidelines.
5.3 Model RFP Template
The Model Request for Proposal (RFP) Template is a standardized document that defines the requirements, terms, and conditions for
procuring consulting services. It serves as a guide for the preparation of the RFP, which is issued to solicit proposals from potential
consultants.
The model RFP template typically includes the following sections:
• Introduction and background of the project
• Objectives and scope of the consultancy services
• Eligibility and qualification criteria for consultants
• Instructions to consultants on preparing and submitting their proposals
• Technical and financial evaluation criteria
• Terms of reference or work plan for the consultancy services
• Contractual terms and conditions
The model RFP template helps ensure consistency and clarity in the bidding process for consulting services. It provides a standardized
format for procuring entities to outline their requirements and evaluation criteria, facilitating a fair and transparent evaluation of
proposals received from consultants.
5.4 Selection Methods and Evaluation Criteria
The selection methods and evaluation criteria are key elements in the procurement of consulting services. They define the process of
selecting the most qualified consultant for a specific project. Common selection methods and evaluation criteria include:
• Quality and Cost-Based Selection (QCBS): QCBS is a two-stage selection method that considers both the technical and financial
proposals of the consultants. The technical proposal is evaluated first, based on predefined criteria such as relevant experience,
technical expertise, qualifications of key personnel, understanding of the project scope, methodology, and proposed work plan.
After the technical evaluation, the financial proposals of the qualified consultants are opened and compared to determine the
most cost-effective offer. In QCBS selection, minimum qualifying marks (normally 70-80 (seventy – eighty) out of maximum 100
(hundred) marks) as benchmark for quality of the technical proposal will be prescribed and indicated in the RfP along with
a scheme for allotting marks for various technical criteria/ attributes. During evaluation of technical proposal, quality score is
assigned out of the maximum 100 (hundred) marks, to each of the responsive bids, as per the scheme laid down in the RfP.
• Least Cost Selection (LCS): LCS involves selecting the consultant offering the lowest cost, provided they meet the specified
qualifications and experience requirements. Consultants submit their financial proposals alongside their technical proposals, and
the selection is based solely on the lowest price among the qualified consultants. Minimum qualifying marks for quality of the
technical proposal are prescribed as benchmark (normally 75 (seventy-five) out of maximum 100 (hundred)) and indicated in the
RfP along with a scheme for allotting marks for various technical criteria/ attributes.
• Quality-Based Selection (QBS): QBS prioritizes the technical qualifications and expertise of the consultants. The evaluation
focuses on the technical proposal and qualifications of the key personnel, assessing factors such as relevant experience, technical
expertise, understanding of the project scope, methodology, and proposed work plan. After the technical evaluation is completed,
the financial proposals may be opened and considered to determine the most suitable consultant.
• Fixed Budget Selection (FBS): FBS involves allocating a fixed budget for the consultancy services. Consultants are requested
to submit their proposals within the specified budget, and the selection is based on the evaluation of the technical proposals.
This method allows for a cost-conscious approach while ensuring that the quality and qualifications of the consultants are not
compromised.
The evaluation criteria for consulting services are defined in the bidding documents, such as the Request for Proposals (RFP) or other
relevant documents. The criteria are typically aligned with the specific needs of the project and the consulting services required.
Common evaluation criteria may include:
• Relevant experience: Consultants are evaluated based on their past experience in similar projects or sectors, demonstrating their
ability to successfully deliver similar assignments.
• Technical expertise: The evaluation assesses the technical qualifications and expertise of the consultants, including the
qualifications and experience of key personnel, the availability of specialized skills, and the resources and capabilities of the
consulting firm.
• Methodology and work plan: The consultants’ proposed approach, methodology, and work plan for carrying out the assignment
are evaluated to ensure they align with the project requirements and demonstrate a clear understanding of the scope and
objectives.
• Understanding of the project: Consultants are assessed on their comprehension of the project’s context, challenges, and
objectives. This criterion evaluates their ability to address the specific needs and requirements of the project effectively.
• Financial viability: While financial proposals may not be the primary criterion in all selection methods, they are evaluated for
reasonableness and competitiveness to ensure that the proposed fees are fair and within the project’s budget constraints.
By using appropriate selection methods and evaluation criteria, procuring entities can identify and select the most qualified consultant
for their projects, ensuring that the consulting services provided meet the required standards and objectives.
5.5 Negotiation and Contract Types for Consulting Services
In the Consultancy Services contract, the accepted Terms of Reference and methodology etc. are laid down in form of ‘Description
of Service’. Therefore, before the contract is finally awarded, discussions may be necessary with the selected bidder to freeze these
aspects, especially when, it is discouraged during evaluation of technical proposals to seek clarifications on these matters. However,
such technical discussions do not amount to negotiations in the sense, the word is used in Procurement of Goods and Works.
However, in Procurement of Consultancy, this discussion is termed as Negotiations since these discussions may have some financial
ramifications at least for the bidder. Negotiations are not an essential part of the selection process. In many cases, however, it is
felt necessary to conduct negotiations with the selected consultant for discussions of the ToR, methodology, staffing, government
ministry/department’s inputs, and special conditions of the contract. These discussions shall not substantially alter (or dilute) the
original ToR or terms of the offer, lest the quality of the final product, its cost, and the initial evaluation be vitiated. The final ToR and
the agreed methodology shall be incorporated in “Description of Services,” which shall form part of the contract.
Financial negotiations shall only be carried out if, due to negotiations, there is any change in the scope of work which has a financial
bearing on the final prices or if the costs/cost elements quoted are not found to be reasonable. In such negotiations, the selected
firm may also be asked to justify and demonstrate that the prices proposed in the contract are not out of line with the rates being
charged by the consultant for other similar assignments. However, in no case such financial negotiation should result in an increase in
the financial cost as originally quoted by the consultant and on which basis the consultant has been called for the negotiations. If the
negotiations with the selected consultant fail, the Procuring Entity shall cancel the bidding procedure and re-invite the bids.
The name of the successful bidder along with details of costs, and so on, shall be posted on the departmental website after award of
work to the successful bidder has been made and communicated to him in writing.
There is different basis for linking payments to the performance of services (called types of contracts) – each having different risks and
mitigation measures. Bids are called and evaluated based on the type of contract. The choice of the type of contract should be based
on Value-for-Money (VfM) with due regard to the nature of assignment. Adoption of an inappropriate type of contract could lead to a
situation of lack of competition, contractual disputes and non-performance/failure of the contract.
Each type of contract is described briefly in subsequent paras, and criteria are suggested for their adoption along with risks and
mitigation measures. Mostly used types of contracts are:
i. Lump sum (Firm Fixed Price) contract: The lump sum (firm fixed price) contract is the preferred form of contract and under
normal circumstances; the Procuring Entity shall use this form of contract. Consultant’s proposal is deemed to include all prices
- no arithmetical correction or price adjustments are allowed during evaluation. Lump sum consultancy contracts are easy to
administer because there is fixed price for a fixed scope and payments are linked to clearly specified outputs/ milestones/
deliverables such as reports, documents, drawings, bills of quantities, software programs and so on. In view of Risks mentioned
below this type of contracts are widely used for simple planning and feasibility studies, environmental studies, detailed design of
standard or common structures, preparation of data processing systems, and so forth.
ii. Time based (Retainer-ship) contracts: In Time-based (Retainer-ship) contracts payments are based on agreed hourly, daily, weekly,
or monthly rates for staff (who in consultancy contracts are normally named, but not so in other services) and on reimbursable
items using actual expenses and/or agreed unit prices. These are also called as retainer ship contracts, since the consultant/
service provider are retained for a pre-decided period. The rates for staff include salary, social costs, overhead, fee (or profit),
and, where appropriate, special allowances. This type of contract is appropriate when Lump sum contract is not feasible due to
difficulties in defining the scope and the length of services, either because the inputs required for attaining the objectives of the
assignment is difficult to assess or because the services are tied up to activities by others for which the completion period may
vary.
iii. Percentage (Success Fee) contract: Percentage (Success/ Contingency Fee) contracts directly relate the fees paid to the consultant/
service provider to the estimated or actual project cost, or the cost of the goods procured or inspected. Since the payment is
made after the successful realisation of objectives, it is also called success (or contingency) fee contract. The final selection is
made among the technically qualified consultants/ service providers who have quoted the lowest percentage while the notional
value of assets is fixed.
iv. Retainer-ship cum Success fee-based contract: In Retainer and Success (Contingency) fee contracts the remuneration of the
consultant includes a retainer (time based, monthly payment) and a success fee (Percentage based), the latter being normally
expressed as a percentage of the estimated or actual Project cost. Thus, this type of contract is a combination of Time Based and
Percentage Contracts
v. Indefinite delivery contract: These contracts are used when Procuring Entity need to have “on call” specialized services, the
extent and timing of which cannot be defined in advance. This is akin to the system of ‘Rate Contracts’ or framework contracts
in the procurement of Goods. There is no commitment from Procuring Entity for the quantum of work that may be assigned to
the consultant/ service provider. The Procuring Entity and the firm agree on the unit rates to be paid, and payments are made on
the basis of the time/ quantum of service actually used. The consultant/ service provider shall be selected based on the unit rate
quoted by them for providing the services.
Chapter 6: Procurement System of Railways and Defence in India
6. Procurement System of Railways & Defence in India
The procurement systems of Railways and Defence in India are distinct and operate under separate frameworks. The Indian
Railways is one of the largest rail networks in the world and has its own procurement procedures in place. The primary organization
responsible for procurement is the Indian Railways’ central procurement agency known as the Research Designs and Standards
Organization (RDSO). RDSO is responsible for developing specifications, testing and approving various equipment, materials, and
technologies used by Indian Railways. And the defence procurement system in India is governed by the Ministry of Defence (MoD)
and follows a multi-tiered approach. The primary procurement organization within the MoD is the Defence Acquisition Council
(DAC). The Defence Procurement Procedure (DPP) provides guidelines and regulations for the acquisition of defence equipment
and systems.
6.1 Key Features – Goods, Services and works Manual of Ministry of Railways
Indian Railways (IR) is a state-owned public utility of the Government of India under the Ministry of Railways and headed by the
Minister of Railways. The management of the IR is led by the Chairman, Railway Board (CRB). Members of the Railway Board include
the Financial Commissioner, Member Traffic, Member Engineering, Member Rolling Stock, Member Traction, Member Staff, Member
Material Management, and Member Signal & Telecom, who represent their respective functional domains.
For administrative purposes, IR is divided
into 17 zones, each headed by a General
Manager. The GMs manage rail operations
within each zone, and have powers to
sanction certain projects up to a certain
amount. Zonal Railways are further
divided into smaller operating units called
Divisions. There are 68 Operating Divisions
in IR at present, each under a Divisional
Railway Manager.
In addition, several Production Units
look at the manufacturing of coaches,
locomotives, and wheels. There are
Training Establishments and Public
Sector Enterprises which manage various
ancillary activities such as catering,
ticketing, developing land, and managing
the dedicated freight corridors.
On a Zonal Railway setup, a General
Manager is assisted by Additional
General managers and heads of different
departments such as Chief Engineer,
Chief Operating Superintendent, Chief
Commercial Superintendent, Chief Figure 3: Institutional setup of Indian Railways
Mechanical Engineer, Controller of Stores,
etc.
Materials Management
In the Railway board, the Member-Materials Management deals with planning, organizing, communication, directing, and controlling
of activities concerned with the flow of materials into IR and its further movement to various users and departments. An Additional
Member (Railway Stores) is the head of Railway Stores Directorate. There are Executive Directors, Directors/Joint Directors and Deputy
Directors in this Directorate.
Functions of Railway Stores Directorate
• Policy Formulation: Frame and issue of policy guidelines to all Zonal Railways and
production units on stores and purchase
• Inventory Control: Policies for efficient inventory management
• Centralized Purchase: High value purchase to ensure equitable distribution as per
needs, where the purchase is beyond the approval limit of General Manager
• Liaison with other Ministries: Railways Liaison Officer designated for purchases
coordinated through the Directorate General of Supplies and Disposals and other
ministries
• Coordination for supply of steel: With steel plants in drawing Rolling programme
and monitoring of supply of steel to various units.
Materials Management in Zonal Level Railways
At the Zonal Railways, the Material Management/Stores Department is at three levels
- Headquarters level, Divisional level and Extra Divisional or District level in the form of
Stores Depots and Printing Presses. Figure 4: Railway board for Materials
Management
At the zonal levels, head of the department is the Principal Chief Materials Manager
(PCMM). The PCMM is assisted by Chief Materials Managers (C.M.M.s), Dy. Chief Materials Managers, who are further assisted by
the Senior Materials Managers (S.M.M.) and Assistant Materials Managers. The Figure below represents the materials management
organization at the zonal and depot level.
The entire activity of procurement, inspection,
accounting, stocking, distribution of stores and
disposal of surplus stores and scrap materials is looked
after by the Stores Department. Items for the stores
are procured for the maintenance of rolling stock
(locomotives, coaches, EMU Coaches, and wagons)
and infrastructure (track, signaling systems, building,
etc.), operation of assets (lubricating oils, etc.) and
repairs in workshops. Procurement of stores is done
on-line through IREPS website: www.ireps.gov.in.
The Head of Stores Department is the Controller of
Stores who functions at the same level as other Heads
of departments. The Stores department manages
about 262 stock depots that feed into the repair
workshops and maintenance sheds. A Depot Officer
heads these depots.
The stocking depots form the basic unit of the
materials management organization. Stock depots Figure 5: Materials Management Organization at the Zonal and Depot level
store items that are regularly required for repair,
maintenance, operation and manufacturing activities and that need to be replenished at regular intervals.
The stocking depots are responsible for inspection, receipt, storage and issue of the stock materials to the consuming departments.
The procurement of the stock items is not carried out by the stocking depots. Instead, the stocking depots annually raise indents
based on the rate of consumption and inventory position estimated to Controller of Stores, through online Material Management
Information System (MMIS).
Agencies Involved
All items for stores are purchased centrally and the agencies involved are listed as:
Directorate General of Supplies & Disposals (DGS&D): To get advantage of bulk quantity and standard rate contracts for common
user goods the items which are used by all Government departments are generally purchased through DGS&D using the online
Government e-marketplace. DGS&D is in a position of clubbing the requirements of all Government departments and therefore,
purchase the items at much more economical prices. The DGS&D also maintains long-term contracts with KVIC and ACASH for the
reserved items of recurrent procurement items and lays down terms and conditions therein. With KVIC, IR’s procurements have
increased from 716 crores in 2005-2006 to 1834 crores in 2011-2012. IR relies on KVIC for its textile requirements.
Indian Railways Stores Service (IRSS) manages the procurement, logistics and transportation of materials.
Railway Board: Items of imports involving large sums of foreign exchanges and some critical items are arranged through Railway
Board. These items are not manufactured in adequate quantities in the country.
Other Production Units: Some items are centrally procured by some Railways or production units such as components of diesel
locomotives & ICF coaches are procured through Diesel Locomotive Works -Varanasi and ICF Madras respectively.
Other Agencies: Sleeper Pool Committee for purchasing sleepers, Government Medical Store, Central Organization for Modernization
of Workshops (COFMOW) for machinery and plant items required for workshops modernization.
Research Design & Standards Organization (RDSO) engages in developing standards, technical investigations, testing and inspecting
the items to be procured, and drafting the tender specifications. Currently, RDSO does not address environmental criteria.
Agencies involved in Procurement
Zonal Railways and railway production units mostly procure
materials required by them in a decentralised system. However,
purchase of items which are centralised for procurement at
Railway Board’s level are procured through the Government
e-marketplace portal hosted by DGS&D where common user
goods and services can be procured.
The above figure denotes that out of INR 62,133.74 crore
worth of stores procured in 2018-19, 63% was done by Zonal
Railways and Production Units, 36% by Railway Board and the
balance 1% through other sources.
Stores worth ~10% were bought from Small Scale Sector
and Khadi and Village Industries in 2018-19. Public Sector
Undertakings contributed 20% and other industries contributed Figure 6: Procuring agencies for IR
80% towards supplies.
Existing Procurement System
The public procurement in Indian Railways is governed by the Indian Railway Financial Code (1998), Indian Railway Code for the
Accounts Department (1997), the Indian Railway Code for the Stores Department (1990), and Indian Railways Rolling Stock Code
(2008).
General Financial Rules
Railway Board vide its letter No. 2017/ F(X)II/PW/R dated 9th February 2018 advised all concerned to refer the rules under the
General Financial Rules, 2017 and use them as broad principles while making financial decisions. GFR 2017 are the guiding principle
for Railways for the purpose of categorizing various modes of tenders, such as, Works, Goods, and Consultancy.
Manual for Procurement of Goods and Services and Manual for Procurement of Consultancy and Other Services were revised after a
decade and issued in 2017 by the Department of Expenditure, Ministry of Finance within a month of the release of GFR 2017, which
was followed by issue of Manual for Procurement of Works in 2019.
The Directorate General of Supplies and Disposals Manual on Procurement and the Central Vigilance Commission (CVC) Guidelines
prescribe the procurement procedure to be followed by all central ministries.
Transparency & Digitization – Digital India
Digital transformation of Materials Management on Indian Railways started with roll out of e-procurement system in FY:2011-12 with
limited scope of e-tendering. This has now extended to encompass the complete Materials Management cycle which includes demand
generation, tendering, purchase decision, contracting, inspection, material receipt and payment.
All types of tenders for Goods, Services, Works, Earning/Leasing, and sale of scrap are issued on a single web-portal i.e., www.ireps.
gov.in. An Android app “IREPS” has been launched which enables access to useful information related to Railways procurement and
disposal.
Indigenous Vendor Development – Make in India
In 2017, the government issued the Public Procurement (Preference to Make in India) Order 2017, which grants purchase preference
to local suppliers based on certain conditions to promote the manufacturing and production of goods and services in India.
Indian Railways has fully implemented Public Procurement (Preference to Make in India) Order. The value of Indigenous stores at INR
61,078.07 crore during 2018-19 constituted almost 98% of the total purchases by Indian Railways.
Indian Railway has to depend on imports for high technology components for its locomotives, coaches, signal and telecom equipment
etc. which are not available in adequate quantity with required specifications within the country. Figure 6 provides the share of
Indigenous purchase by IR.
Figure 7: Share of Indigenous Purchase
In 2012, the Ministry of Micro, Small, and Medium Enterprises (MSME) passed an executive order stating that every central government
ministry, department, and public sector unit (PSU) must procure a minimum of 20 percent of its goods and services from Micro and
Small Enterprises (MSE). Although this order does not mandate GPP, it sets a precedent for preferential purchasing practices that could
be similarly formulated to target environmentally preferable products.
Khadi and Village Industries Commission
The Railway Board in January 2019 instructed the Zonal General Managers that Linen items (Two Bed Sheets, Pillow Cover and Face
Towel) were to be procured by KVIC and Association of Corporations and Apex Societies of Handlooms (ACASH). Stores worth INR
6,269.56 crore were bought from Khadi and Village Industries in 2018-19.
Also, instructions to use locally-produced, environment-savvy terracotta products manufactured by the KVIC like kulhads, glasses and
plates for serving catering items like snacks and tea to the passengers at the Varanasi and Raebareily railway stations were issued.
IRCTC
Indian Railway Catering and Tourism Corporation Limited (IRCTC), was incorporated in 1999 as an extended arm of the Indian Railways
to upgrade, professionalize and manage the catering and hospitality services at stations, on trains and other locations and to promote
domestic and international tourism. This is achieved through the development of budget hotels, special tour packages, information &
commercial publicity and global reservation systems.
It may be thus observed that there are several agencies involved in IR’s procurement with varying degrees of procurement, with GFR
playing an important role.
The Sourcing Profile of Indian Railways Procurement System
Classification of Stores
The items procured by the stores include the following:
Raw material and equipment for Production, Operation, & maintenance of a large fleet of Rolling
stock of all types.
Rails, Track machines, and track fittings
Wheels, Axles. Rails, Track machines and track fittings
Steel, Cement
Diesel, oil and lubricants, chemicals
Workshop plants, machines and tools
Rolling stock spares
Electrical, Signaling and Telecom equipments and spares
Staff welfare, healthcare and passenger amenity items
Thebelow
The belowfigure
figure provides
providesaabreak-up
break-upof of
thethe
expenditure on the
expenditure onprocurement of different
the procurement goods bygoods by Indian Railways. The spending on
of different
Indian Railways. The spending on stores for the manufacture of rolling stock and purchase of complete
stores for the manufacture of rolling stock and purchase of complete units is the highest across the last five years.
units is the highest across the last five years.
Figure 8: Expenditure by IR for goods procurement

Figure 8: Expenditure by IR for goods procurement
Procurement Procedure
Indian Railways procurement process various activities via the e-procurement system running www.ireps.gov. The multiple stages of
the procurement process are represented in the below Figure and described in the subsections below.
50
1. Raising of Indents & estimation of needs
All material procured is categorized as Stock and Non-Stock items.
• Stock items have a regular demand, consumption, and recoupment.
• Non-stock items are required occasionally and not regularly.
Procurement Procedure
Indian Railways procurement process various activities via the e-procurement system running
www.ireps.gov. The multiple stages of the procurement process are represented in the below Figure
and described in the subsections below.
1.Raising
For stock items an annual procurement of Indents
system & estimation
is followed. of needs
Stores generate
an indent for stock items based onAll
thematerial
consumption
procuredpatterns of the previous
is categorized as
years. The Controller of Stores (COS) has full authority
Stock and Non-Stock items. to scrutinize every Raising of
Receipt by Indents &
demand, to question the quality of items, and modify the quantities. store estimation of
• Stock items have a regular demand, needs
2. Consolidation of requirements & specifications

consumption, and recoupment.
Items not arranged by the Railway• Non-stock
Board and items
whichare
arerequired
not required to be Contract
Consolidation of
occasionally and not regularly. Execution
requirements &
purchased through the Central Purchase Organisations are procured directly specifications
through the Controller of Stores (COS). The idents generated across all stores
For stock items an annual procurement
and production units are consolidated in the controller of stores office.
system is followed. Stores generate an Evaluation
Vendor
Identification
The Railway Board procures indents indentwith
for items
stock ofitems
Rolling Stock,
based on fuel,
the
consumption
fish plates, cast iron sleepers, wheels, patterns
tyres, axles, of the previous
imported years.
steel, certain
The Controller
nominated critical items like composite of etc.
brake blocks, Stores (COS) has full Issue of Tender
authority to scrutinize every demand, to

3. Vendor Identification question the quality of items, and modify
the quantities. Figure 9: Procurement Procedure for Indian Railways
The significant share of procurement in railways is from approved vendors.
Approval is performed by a centralized agency such as Research Design and
2.Consolidation
Standard Organization (RDSO), Diesel of requirements
Locomotive Works & specifications
or Chittaranjan Loco Works etc.
While approving only technical andItems not arranged
financial capabilityby
of the
the Railway
vendor isBoard
takenand
intowhich are not required to be purchased through the
considerations.
Central Purchase Organisations are procured directly through the Controller of Stores (COS). The idents
4. Issue of Tender generated across all stores and production units are consolidated in the controller of stores office.
The COS arranges purchase through theRailway
The issue ofBoard
the following
procurestenders
indents with items of Rolling Stock, fuel, fish plates, cast iron sleepers,
• Global tenders involving Foreign Exchange.
wheels, tyres, axles, imported steel, certain nominated critical items like composite brake blocks, etc.
• Advertised Tender or Open Tender (Generally
3.Vendor for items valuing over INR 10 lakhs).
Identification
• Limited Tender/ Bulletin tender to approved / registered vendors for demands of value up to INR 10 lakhs.
The significant share of procurement in railways is from approved vendors. Approval is performed by
• Special limited tenders: if the avalue is moreagency
centralized than 10such
lakhs
asand it is desirable
Research to goStandard
Design and for limited Tender due(RDSO),
Organization to vitalDiesel
or safety nature
Locomotive
of item or urgency subject to finance concurrence and competent
Works or Chittaranjan Loco Works etc. authority’s sanction.
• Single Tender if there is only one source of supply (PAC - Proprietary Article Certificate) or if the item is of minimal value
While approving only technical and financial capability of the vendor is taken into considerations.
5. Evaluation
4.Issue of Tender
A tender committee consisting of 3 officers - one from Stores Department, one from the department requiring the item, and one from
The COS arranges purchase through the issue of the following tenders
Accounts Department is formed. The Tender Committee is a recommending body; its recommendations may/may not be accepted by
the COS. ▪ Global tenders involving Foreign Exchange.
▪ Advertised Tender or Open Tender (Generally for items valuing over INR 10 lakhs).
The following points are considered while finalizing a tender
▪ Limited Tender/ Bulletin tender to approved / registered vendors for demands of value up to
• The offer should be technically suitable,INRi.e.,
10 the material offered by the firm should be precisely as per the specification given in
lakhs.
the tender enquiry. ▪ Special limited tenders: if the value is more than 10 lakhs and it is desirable to go for limited
• Tender
Out of all technically suitable offers, the lowest due to vital
offer or safetyfornature
is examined of item or
the feasibility urgency subject to finance concurrence and
of rates.
competent authority's sanction.
• If the rate of the lowest technically suitable offer is considered feasible, terms and location of delivery are verified.
• Background verification on the firm and its previous records is conducted.
Vendors selected are required to arrange an inspection of all consignments from 3rd party inspecting agencies like Rail India Technical
51
and Economic Services Ltd or RDSO before dispatch of material.
6. Contract Execution
A purchase order is issued to the awardee, and a contract is executed. The terms of the contract are as per the “Indian Railways
standard (IRS) Conditions of Contract”. The supplier will dispatch the material at the said time of delivery to the store, raising the
indent directly.
7. Receipt by store
The consignee stocking depot on receipt of the supplies will carry out inspection of material before acceptance and if everything is as
per the prescribed specification will intimate the Controller of Stores (COS) office and accounts personnel designated to make payment.
Details of date of supply, quantities received, rejected, or accepted quantities will be sent to the COS.
Indian Railways Accounts department maintains oversight on procurement issues through financial scrutiny of all procurement
proposals, participation in the tender process and payment.
6.2 Key Features – Goods & Services Manual of Ministry of Defence
Defence Acquisition Procedure
The aim of the Defence Acquisition Procedure (DAP), erstwhile Defence Procurement Procedure (DPP), is to ensure timely acquisition
of military equipment, systems and platforms as required by the Armed Forces in terms of performance, capabilities and quality
standards, through optimum utilisation of allocated budgetary resources. While enabling the same, DAP will provide for the highest
degree of probity, public accountability, transparency, fair competition and level-playing field. In addition, self-reliance in defence
equipment production and acquisition will be steadfastly pursued as a focus of the DAP with an ultimate aim to develop India as a
global defence manufacturing hub.12
The DAP covers all Capital Acquisitions other than Works and Land undertaken by the Ministry of Defence (MoD) and Service
Headquarters (SHQ) both from indigenous sources and ex-import, except for medical equipment. SHQ for the purpose of DAP would
include HQ Integrated Defence Staff, Integrated HQ of the MoD (Army), Integrated HQ of the MoD (Navy), Integrated HQ of the MoD
(Air Force) and the Indian Coast Guard. Defence Research and Development Organisation (DRDO), Ordnance Factory Board (OFB) and
Defence Public Sector Undertakings (DPSUs) will, however, continue to follow their own procurement procedure.13
The Defence Acquisition Procedure 2020 (DAP) which supersedes the Defence Procurement Procedure 2016 (DPP-2016) emphasizes
on Hon’ble Prime Minister Shri Narendra Modi’s clarion call for an ‘Atmanirbhar Bharat’ and ‘Make in India’ which define India’s growth
story and the dream to become USD 5 trillion economy by 2024. Defence is a key sector that will help in achieving these objectives. Due
to the complex and cutting edge technologies in defence manufacturing, a smooth, efficient and well defined acquisition procedure
policy was needed for Defence manufacturing in India.14
Defence Acquisition Procedure-2020
Defence Acquisition Procedure is based on the concept of “Womb to Tomb” and has certain unique aspects such as supplier constraints,
technological complexity, foreign suppliers, high cost, foreign exchange implications and geo-political ramifications and therefore, is
not a standard open market commercial form of procurement. While maintaining highest standards of transparency, probity and public
accountability, a balance between competing requirements such as expeditious procurement, high quality standards and appropriate
costs needs to be established. As a result, decision making pertaining to defence acquisition remains distinctive and complex.
New Reforms articulated in Atmanirbhar Bharat Abhiyan and incorporated under DAP 2020
(a) Notify a List of Weapons/Platforms for Ban on Import
Relevant incorporation has been done in the DAP to ensure that NO equipment as mentioned in the list is procured ex import post
timelines notified.
12 https://mod.gov.in/dod/sites/default/files/wn25423.pdf
13 https://mod.gov.in/dod/sites/default/files/wn25423.pdf
14 https://loksabhadocs.nic.in/Refinput/New_Reference_Notes/English/25012021_104531_1021205239.pdf
high quality standards and appropriate costs needs to be established. As a result, decision making
pertaining to defence acquisition remains distinctive and complex.
New Reforms articulated in Atmanirbhar Bharat Abhiyan and incorporated under DAP 2020
(a) Notify a List of Weapons/Platforms for Ban on Import
Relevant incorporation has been done in the DAP to ensure that NO equipment as mentioned in the
list is procured ex import post timelines notified.
(b)
(b)Indigenisation of Imported
Indigenisation Spares Spares
of Imported
(i) Request for Information
•RFI stage will explore willingness of the prospective foreign vendors to progressively
undertake manufacture and setup an indigenous eco system at the spares/sub
component level.
(ii) New Category of Buy (Global–Manufacture in India)

•The new category incorporates ‘manufacture of either the entire/part of the equipment
or spares/assemblies/sub- 4 assemblies/Maintenance, Repair and Overhaul (MRO)
facility for the equipment, through its subsidiary in India.
(iii) Co-production through Inter Government Agreement (IGA)

•This enables establishment of co-production facilities through IGA achieving ‘Import
Substitution’ and reduce Life Cycle Cost.
(iv) Contractual Enablement

•Buyer’s Right to optimise Life Cycle Support costs and system enhancements through
indigenous eco system incorporated.
(c) FDI (Foreign Direct Investment) in Defence Manufacturing.

With the announcement of new FDI Policy, suitable provisions have been incorporated like new category ‘Buy (Global – Manufacture in
13
https://mod.gov.in/dod/sites/default/files/wn25423.pdf
India)’ done to encourage foreign OEMs to setup ‘manufacturing/maintenance entities’ through its subsidiary in India while enabling
14
https://loksabhadocs.nic.in/Refinput/New_Reference_Notes/English/25012021_104531_1021205239.pdf
requisite protections to domestic industry.
(d) Time Bound Defence Procurement Process and Faster Decision Making.
53 Abhiyan, setting up of a Project Management Unit (PMU) has been
As part of the Defence Reforms announced in the Atmanirbhar
mandated to support contract management. The PMU will facilitate obtaining advisory and consultancy support in specified areas to
streamline Acquisition process.
Policy framework
Like its predecessors, the DAP-2020 contains several statements and provisions that require to be pieced together to get an idea of
its underlying policy orientation. While there is no change in the overarching policy of meeting the armed forces’ requirements by
promoting indigenous production of defence materiel, three shifts are discernible.
• First, in what can be described as ‘forcible indigenisation’, import of certain items is to be disallowed, as per the guidelines and
the list notified by the MoD. The embargo on 100 listed items will come into effect from December 2020 to 2024, with import of
another item – Long-range Land Attack Cruise Missile - being banned in December 2025.
Enforcing the embargo on items already being made/likely to be made shortly, conforming to the specifications/services’
qualitative requirements (SQRs) laid down by the armed forces – such as the Light Combat Aircraft Mk IA Enhanced
Indigenised Content, may not pose any problem. The MoD however will have no option but to waive the embargo if an
indigenously designed and manufactured equipment/platform conforming to the SQRs is not available when the embargo
sets in for that item.
• Second, the DAP-2020 emphasises the use of artificial intelligence, indigenously developed military materials, special alloys,
indigenous software, aero-engines, and silicon wafers. This seems relevant for SQR formulation, but the associated instructions
are tenuous and not well integrated with the procurement procedure.
• Third, the planning system, which forms the basis of capital procurements, has been tweaked. However, in the absence of an
overarching bespoke organisation dedicated to defence planning or a national security strategy document, or even composite
plans covering not just the armed forces but all other MoD instrumentalities like the Coast Guard and Border Roads Organisations,
coupled with lack of financial pragmatism, the problems that beset defence acquisitions in the past may endure.
Plan Period
Integrated Capability Development Plan (ICDP) 10 years
Five years Defence Capital Acquisition Plan (DCAP) 5 years
Annual Acquisition Plan (AAP) – four sections 2-year roll-on
Procurement categories
The procurement categories include (a) substitution of the ‘Buy and Make’ category by ‘Buy (Global-Manufacture in India)’, though
their essential features remain the same, (b) splitting of the ‘Make’ category into three sub-categories, and (c) creation of ‘Innovation’
and ‘Leasing’ as new categories.
Hierarchically arranged categories Special categories

Buy (Indian - Indian Designed, Developed, and Manufactured), or Buy (IDDM) Make – Make I, II & III
Buy (Indian) Innovation
Buy and Make (Indian) Strategic Partnership Model
Buy (Global – Manufacture in India) Leasing
Buy (Global)
Buy (Global – Manufacture in India)

This category entails outright purchase of equipment from a foreign vendor in pre-determined quantities (which may be nil), followed
by indigenous manufacture “of the entire/part of the equipment and spares/assemblies/sub-assemblies/Maintenance along with
Repair and Overhaul (MRO) facility (only in cases these are part of the main contract) for the equipment, through its subsidiary in
India/through a Joint Venture/through an Indian Production Agency (PA) (with ToT of critical technologies as per specified range,
depth and scope to the Indian PA, meeting a minimum of 50 per cent IC [indigenous content] on cost basis of the Base Contract.”
Make I, II & III
Introduced in 2006, the ‘Make’ procedure/category was intended to promote D&D of the prototypes of military equipment. A new
sub-category has now been added to the two that already existed. The essential features of these sub-categories are:
Make-I (government funded): Projects involving D&D of equipment, systems, major platforms or upgrades thereof by the industry
with financial support up to 70 per cent (reduced from 90 per cent) of prototype development cost or maximum of ₹ 250 crores per
Development Agency (DA). The upper limit may vary in individual cases.
Make-II (Industry Funded): Projects involving D&D and innovative solutions by the Indian vendors without any government funding;
solutions offered even by a single individual or a firm as a suo-moto proposal to be progressed as a Resultant Single Vendor case.
Make-III: Products not designed/developed indigenously, but which can be manufactured in India as import substitution for product
support of weapon systems/equipment held by the Services, either in collaboration with, or with Transfer of Technology (ToT) from,
the foreign Original Equipment Manufacturers (OEMs).
Incentives for Micro, Small and Medium Enterprises (MSMEs)
Projects under the Make II & II sub-categories, with procurement cost not exceeding ₹ 100 crore per year, will be earmarked for the
MSMEs. Entities recognised as ‘Start-up’ by Department for Promotion of Industry and Internal Trade (DPIIT) will also be eligible
to participate in Make II cases. After successful development of the prototype under the first two sub-categories, the indigenously
designed and developed equipment with a minimum of 50 per cent IC will be acquired from the successful DAs through the ‘Buy
(IDDM)’ category, and under the ‘Buy (Indian)’ category for products developed under the Make-III sub-category with a minimum of
60 per cent IC.
Innovation
This new category is intended to foster innovation by involving individual innovators, technocrats, professionals, academics, smaller
enterprises, start-ups and MSMEs, who could develop innovative solutions making use of any one of the following routes:
• Innovations for Defence Excellence (iDEX) Scheme under the aegis of the Defence Innovation Organisation (DIO)
• Technology Development Fund (TDF) Scheme managed by the DRDO; and,
• Indigenous Development by Services through Internal Organisations, such as the Base workshops/Dockyards/Base Repair Depots/
Internal Indigenisation organisations/Design Agency, etc.
Leasing
This is ‘an innovative technique’ for possessing and operating assets without owning them, to save on initial capital cost, by making
periodical lease payment to the Lessors, who could be Indian or foreign companies. It could be an operating lease (dry, wet or damp,
depending on the kind of services required) or finance lease, with the MoD retaining the option of owning the asset for a nominal
pre-determined consideration or returning it to the Lessor at the end of the lease. An elaborate procedure has been laid down for this
category.
This will be a useful method for meeting the requirement where
• Procurement is not feasible due to time constraint,
• Asset/capability is needed for a specific period or it would remain underutilised if procured,
• Requirement is limited in number and administrative /maintenance infrastructure cost is likely to be high,
• Paying rent is a better option than incurring one-time acquisition cost,
• Experience is to be gained for operational exploitation of the equipment, or
• If the equipment is considered to be an operational necessity
Category Vendors eligible to participate Indigenous Content

Buy (IDDM) Indian Indigenous design and ≥ 50%
Buy (Indian) Indian In case of indigenous design ≥ 50%, otherwise≥ 60%
Buy and Make (Indian) Indian ≥ 50% of the ‘Make’ portion and transfer of critical
(Buy portion may be nil) technologies from the foreign vendors as per the
specified range, depth and scope
Buy (Global – Manufacture in India) Foreign and Indian ≥ 50%
Buy (Global) Foreign and Indian Foreign Vendor – Nil
Indian Vendor ≥ 30%
Acquisition cycle and procedure

Acquisition cycle comprises the following stages for all prioritised categories:
Solicitation of offers
Formulation of through Request for
Request for Acceptance of
Services Qualitative Proposal (RFP),
Information (RfI) Necessity (AoN)
Requirements (SQRs) including offset offer,
if applicable
Evaluation of the
Evaluation of technical
offset offers by the
offers by the Technical Field Evaluation Trials
Technical Offset Staff Evaluation
Evaluation Committee (FET)
Evaluation Committee
(TEC)
(TOEC)
Contract negotiations
Oversight by Technical Approval of the Award of the
by Contract
Oversight Committee Competent Financial Contract/placing of
Negotiation
(TOC), if required Authority (CFA) Indents
Committee (CNC)
Post-Contract
Management
Significance of DAP-2020 for Mission Atmanirbhar

34
In DAP-2020,
11th Public Procurement Summit 2023: Enhancing Transparency, Efficiency and Accountability
the Ministry of Defence has simplified and clarified several aspects of the offset
framework, including ownership norms of offset partners, flexibility in appointment of offset partners,
indigenous content requirements, etc. The Defence Acquisition Procedure 2020 (DAP) by the Ministry
Significance of DAP-2020 for Mission Atmanirbhar
In DAP-2020, the Ministry of Defence has simplified and clarified several aspects of the offset framework, including ownership norms of
offset partners, flexibility in appointment of offset partners, indigenous content requirements, etc. The Defence Acquisition Procedure
2020 (DAP) by the Ministry of Defence proposes a plethora of vital amendments with the objective of growing domestic capability and
achieving national security objectives.
• A significant change proposed in the DPP is the enhanced viability of Transfer of Technology (TOT) and non-equity investment as
modes for discharge of offsets. Previously, grant of offset credits for TOT was subject to buyback conditions. Further, offset claims
for non-equity investment were also restricted to a percentage of subsequent buyback.
• The non-equity route is proposed to be merged with the equity route, making full offset credits available to vendors subject to
verification. Similar provisions have also been issued for the TOT route. The key impact of these changes would be reduction in
time cost and compliances required to discharge offsets under these routes. Further, vendors would also be relieved of buyback
conditions, which are an additional cost of fulfilling offset obligations.
• Foreign vendors can now expect substantially higher credits for the same quantum of investment.
• Multipliers for discharge of Offsets: Multipliers in conjunction with reforms for discharge of offsets through TOT and non-equity
route will create a major positive impact for vendors. Fulfilling the prescribed quantum of offsets via the available avenues has
always been a challenge even when the vendors are willing to invest into the Indian defence industry.
Chapter 7: Government e-Marketplace (GeM)
7. Government e-Marketplace (GeM)
Hon’ble Prime Minister, based on recommendations of the Group of Secretaries, decided to set up a dedicated e market for different
goods & services procured by Government Organisations / Departments / PSUs. This meant transforming DGS&D to a digital
ecommerce portal for procurement and selling of goods and services.
The Government e Marketplace (GeM) platform was launched on 9th August 2016 as an online, end to end solution for procurement
of commonly used goods and services for all Central Government and State Government Ministries, Departments, Public Sector Units
(PSUs) and affiliated bodies.
Government e Marketplace (GeM), created in a record time of five months, facilitates online procurement of common use Goods
& Services required by various Government Departments / Organisations / PSUs. GeM aims to enhance transparency, efficiency,
and speed in public procurement. It provides the tools of e-bidding, reverse e-auction, and demand aggregation to facilitate the
government users, achieve the best value for their money.
The purchases through GeM by Government users have been authorised and made mandatory by Ministry of Finance by adding a new
Rule No. 149 in the General Financial Rules, 2017.
7.1 Key Statistics and Trends in Government e-Marketplace

This is an overview of the data available on the GEM platform, showcasing the number of buyers, sellers, product and service
categories, order volume, and the involvement of Micro and Small Enterprises.
• Buyer Organisations: There are a total of 68,636 buyer organisations registered in GEM Portal.
• Sellers & Service Providers: The platform has 6,265,374 registered sellers and service providers.
• Product Categories: There are 11,583 different product categories available on the platform.
• Service Categories: The platform offers services in 294 different categories.
• Products: There is a wide range of 3,165,177 products available for buyers to choose from.
• Service Offerings: Sellers and service providers offer a total of 248,376 different service offerings.
• Orders: There have been a total of 15,298,615 orders placed on the platform.
• Order Value: The cumulative value of all orders is 420,457 crores.
• MSE Sellers & Service Providers: Out of the total sellers and service providers, 878,382 are classified as Micro and Small Enterprises
(MSEs).
• MSE Orders Value: The orders placed with MSE sellers and service providers amount to 52.65% of the total order value.
The Government E-Marketplace (GeM) has also witnessed tremendous growth in Gross Merchandise Value (GMV) and is catching up
with E-commerce giants like Amazon and Flipkart. GeM attained an annual procurement of ₹1 lakh crore within FY22, representing
a 160 per cent growth compared to last FY. GeM has taken a host of steps to onboard products of Self-Help Groups (SHGs), tribal
communities, artisans, weavers, and MSMEs. 57 per cent of the total business on GeM has come through the MSME units, and female
entrepreneurs have contributed over 6 per cent.15
7.2 Impact of GeM on Public Procurement

GeM has had a significant impact on public procurement in India. Some of the key impacts include:
• Increased Transparency: GeM provides a transparent platform for conducting procurement transactions. It enables easy access
to information, including product specifications, prices, and seller ratings, ensuring transparency in the procurement process.
• Enhanced Competition: GeM has widened the pool of sellers and increased competition among suppliers. This competition leads
to competitive pricing, improved quality of goods and services, and greater value for money in government procurement.
• Time and Cost Savings: GeM has streamlined the procurement process, reducing administrative burden and paperwork. It offers
features such as online bidding, e-payment, and e-signatures, resulting in time and cost savings for both buyers and sellers.
15 Economic Survey Report 2022-23
• Empowering MSMEs and Startups: GeM has provided a platform for Micro, Small, and Medium Enterprises (MSMEs) and startups
to showcase their products and services. It has facilitated their participation in government procurement, promoting inclusivity
and supporting the growth of these enterprises.
• Reduction in Corruption: The transparent and digital nature of GeM reduces the scope for corruption and malpractices in public
procurement. It ensures that procurement decisions are based on objective criteria and fair competition.
7.3 Major Initiatives and Features of GeM
GeM has introduced several initiatives and features to enhance the efficiency and effectiveness of the platform. Some of the major
initiatives and features include:
• GeM 4.0: GeM 4.0 is the latest version of the platform, which offers an improved user interface, enhanced search options, and
a more intuitive browsing experience. It focuses on user feedback and aims to provide a user-friendly interface for buyers and
sellers.
• GeM Organizational Restructuring: GeM has undergone organizational restructuring to improve governance and service delivery.
This includes the establishment of a GeM Special Purpose Vehicle (SPV) and the appointment of a Chief Executive Officer (CEO) to
oversee the operations and strategic development of the platform.
• GeM Startup Runway: GeM Startup Runway is an initiative to support startups and promote their products on the platform. It
provides a dedicated space for startups to showcase their innovative solutions and gain visibility among government buyers.
• GeM 24x7 Helpdesk: GeM offers a 24x7 helpdesk to assist users with queries, grievances, and technical support. The helpdesk
ensures prompt resolution of issues and provides assistance in navigating the platform and its features.
• Seller Rating System: GeM has implemented a seller rating system based on buyer feedback. This system helps buyers make
informed decisions by considering the ratings and reviews of sellers, ensuring quality and reliability in procurement.
• GeM Performance Monitoring Dashboard: GeM provides a performance monitoring dashboard to track the performance of
buyers and sellers on the platform. It enables monitoring of key performance indicators, such as order placement, fulfillment, and
payment status, to ensure accountability and efficiency in the procurement process.
These initiatives and features aim to continually improve the user experience, increase the participation of sellers, and enhance the
overall effectiveness of GeM as a procurement platform.
The GeM provides opportunity to MSEs, startup and women entrepreneurs to get register on GeM and participate in bids and get
preferences as per procurement policies as applicable and enforceable.
Vivad se Vishwas I16
The Department of Expenditure, Ministry of Finance, has launched the scheme, “Vivad se Vishwas I – Relief to MSMEs” for providing
relief to Micro, Small and Medium Enterprises (MSMEs) for COVID-19 period. The scheme was announced in the Union Budget 2023-24
by Union Finance Minister Smt. Nirmala Sitharaman. Under the scheme, Ministries have been asked to refund performance security,
bid security and liquidated damages forfeited/ deducted during the COVID-19 pandemic. Certain relief has also been provided to
MSMEs debarred for default in execution of contracts during the COVID-19 period.
The Government e-Marketplace (GeM) will facilitate an online portal to grant refunds under the Vivad se Vishwas Scheme I. The
Vivad se Vishwas Scheme I will provide access to institutional financing to MSMEs. The return of the performance guarantee or
bid fee paid to secure government or government undertaking tenders will increase the capital of MSMEs. They can put back the
freed-up capital into their cash flows. It will also support many MSME suppliers inflicted with penalties or forfeited bank guarantees
due to Covid.
Government e-Marketplace (GeM) has developed a dedicated web-page for implementation of this scheme. Eligible claims shall be
processed only through GeM.
Startup Runway 2.0
Startup Runway 2.0 is an opportunity for Startups to showcase their innovative products and services to Government buyers and
engage in public procurement.
GeM has created a dedicated marketplace category for all Startups to list their products and services, irrespective of their DPIIT-
16 https://morth.nic.in/sites/default/files/establishment/Vivad%20se%20Vishwas%20I%20-%20Relief%20for%20MSMEs001.pdf
certification. Startups can list multiple products and services with minimal technical specifications and sell their products to Govt
buyers under 13 globally recognized Startup sub-sectors, namely; Advanced Manufacturing and Robotics, Advertising [AdTech],
Agriculture [AgTech and New Foods], Artificial Intelligence, Big Data and Analytics, Augmented/ Virtual Reality, Blockchain, Clean
Tech/ Renewables, Consumer Home Electronics [+Wearables, Smart Devices], Cybersecurity, Education Tech [EdTech], Fintech, Health
and Life Sciences and WaterTech.
The platform offers Startups all the marketplace functionalities that are available to regular sellers and the objective is to spur “MAKE
IN INDIA” procurement from India Startups. Till date, 15665 Startups have registered on GeM and have processed orders worth
9512.07 Cr in Gross Merchandise Value.
MSME SC/ST entrepreneurs on GeM
GeM is collaborating with various stakeholders from the Micro, Small and Medium Enterprises [MSME] ecosystem with special focus
on entrepreneurs from the Scheduled Caste/ Schedule Tribes [SC/ ST]. The partnership is based on the objective of achieving the
mandatory procurement goal of 25 percent from MSMEs and a sub target procurement of 4 percent goods and services from MSME
entrepreneurs within SC/ ST communities, by all government departments and public sector enterprises [PSE]. This initiative seeks to
encourage active participation of MSE sector in public procurement.17
Till date, nearly 8.16 lakh sellers have registered on GeM and have processed orders worth 152888.19 Cr in Gross Merchandise Value
[GMV], of which approximately 68,286 are MSME sellers who have facilitated orders worth 20,263 Cr, in GMV.
Womaniya
“Womaniya” initiative seeks to showcase products made by women entrepreneurs and women self-help groups [WSHGs], and spur
Women entrepreneurship by aligning them with opportunities to sell their products to various Government ministries, departments
and institutions.
GeM has specially categorized products such as handicrafts and handloom, accessories, jute and coir products, bamboo products,
organic foods, spices, home décor and office furnishings for ease-in-procurement. Womaniya aligns with Government’s initiative of
reserving 3 percent in public procurement from women MSME entrepreneurs and this offers immense potential for procurement.
The Saras Collection
Presenting” The SARAS Collection” ...a pristine handcrafted collection of handicrafts, handloom textiles, office décor, furnishings,
accessories, event souvenirs, personal hygiene and care products from top of the line SHGs in India.
Social inclusion is one of the core values at GeM and we are focused on ensuring participation of women entrepreneurs, self-help
groups, artisans, weavers, and micro entrepreneurs who face challenges in accessing government markets.
17 https://gem.gov.in/gem-exclusive
Chapter 8: Government eProcurement System of NIC (GePNIC)
8. Government eProcurement System of NIC (GePNIC)
National Informatics Centre (NIC), Ministry of Electronics & Information Technology, Government of India has developed eProcurement
software system, GePNIC to cater to the procurement/ tendering requirements of the Government departments and organizations.
GePNIC was launched in 2007 and has matured as a Product over the decade. The system is generic in nature and can easily be
adopted for all kinds of procurement activities such as Goods, Services & Works by across government.
Government eProcurement System of NIC (GePNIC) is an online solution to conduct all stages of a procurement process. GePNIC
converts tedious procurement process into an economical, transparent and more secure system. Today, many Government
organizations and public sector units have adopted GePNIC. Understanding the valuable benefits and advantages of this eProcurement
system, Government of India, has included this under one of the Mission Mode Projects of National e Governance Plan (NeGP) for
implementation in all the Government departments across the country.
8.1 Key Statistics and Trends in Government eProcurement System (2007- Till Now)18
This is an overview of the data available on the Government eProcurement System, showcasing the number of tenders published, the
value of these tenders, the wide geographic coverage, user engagement through mobile app downloads and website visitors, and the
extensive adoption of the platform by various government entities.
• Total Tenders Published: A total of 1,03,98,237 tenders have been published on the platform.
• Value of Tenders: The cumulative value of all tenders is 1,892 billion.
• States and UTs: The platform serve tenders from 31 states and Union Territories.
• Mobile App Downloads: The mobile app associated with the platform has been downloaded over 1,00,000 times.
• Average Monthly Visitors: The platform attracts an average of 89,879 visitors per month.
• Registered Users: There are 6,00,000 registered users on the platform.
• Govt Entities: A total of 710+ government entities are actively using the platform for publishing and managing tenders.
8.2 Impact of GePNIC on Public Procurement

GePNIC has had a significant impact on public procurement in India. Some of the key impacts include:
• Streamlined Procurement Process: GePNIC has transformed the traditional manual procurement process into a streamlined and
efficient electronic system. It enables online submission of bids, evaluation of bids, and contract award, reducing paperwork and
manual intervention.
• Transprency and Accountability: GePNIC promotes transparency and accountability in public procurement. It provides a
centralized platform where all procurement-related information is available, ensuring easy access to bid documents, tender
notices, and contract details.
• Increased Competition: GePNIC has facilitated increased competition among suppliers, as it allows a broader base of suppliers to
participate in government tenders. This leads to improved price competitiveness and quality of goods and services.
• Time and Cost Savings: The adoption of GePNIC has resulted in significant time and cost savings for both buyers and suppliers.
The electronic procurement process eliminates the need for physical document submission, reduces administrative overheads,
and expedites the procurement cycle.
• Enhanced Efficiency: GePNIC automates various procurement processes, such as bid evaluation, contract management, and
invoice processing. This improves efficiency, reduces errors, and enables faster decision-making.
8.3 Key Initiatives and Features
GePNIC offers several key initiatives and features to enhance the effectiveness of the eProcurement system. Some of these include:
• Online Bid Submission: GePNIC allows suppliers to submit bids electronically, eliminating the need for physical submission. This
ensures convenience and ease of participation for suppliers.
• Reverse Auction: GePNIC includes a reverse auction feature, where suppliers can compete in real-time to offer the lowest price
18 https://gepnic.gov.in/index.php?lang=1
for a particular procurement requirement. This promotes price competitiveness and enables buyers to obtain the best value for
money.
• Vendor Performance Evaluation: GePNIC incorporates a vendor performance evaluation system, where buyers can provide
feedback and ratings for suppliers based on their performance in previous contracts. This helps in supplier evaluation and selection
for future procurements.
• Integration with Government Financial Systems: GePNIC integrates with government financial systems, allowing for seamless
payment processing and financial reconciliation.
• Analytics and Reporting: GePNIC provides analytics and reporting features to generate insights and reports on procurement
activities. These tools assist in monitoring procurement trends, identifying areas for improvement, and enhancing decision-
making.
These initiatives and features of GePNIC aim to enhance transparency, efficiency, and competitiveness in public procurement,
ultimately benefiting both buyers and suppliers.
Chapter 9: Responsible and Sustainable Procurement
9. Responsible and Sustainable Procurement
Nowadays, more and more businesses are recognizing the significance of their environmental impact
and9.theResponsible
need for strongandsocialSustainable
responsibility. Procurement
Responsible Procurement is the act of sourcing services,
supplies, and/or
Nowadays, moreworks in abusinesses
and more way that are
takes into account
recognizing ethical and
the significance sustainable
of their considerations,
environmental impact and the need for strong social
including:
responsibility. Responsible Procurement is the act of sourcing services, supplies, and/or works in a and
economic, social, labour, and environmental factors, whilst always aiming to procure act takes into account ethical
way that
in aand
way that is morally right, open, fair, and transparent. 19
Sustainable procurement is the
sustainable considerations, including: economic, social, labour, and environmental factors, whilst alwaysact of aiming to procure and
adopting
act in a social,
way thateconomic and open,
is morally right, environmental factors alongside
fair, and transparent. 19 theprocurement
Sustainable usual price andactquality
is the of adopting social, economic and
considerations
environmentalbyfactors
the organizations handling
alongside the usual price the procurement
and quality processbyand
considerations procedures.20handling
the organizations Thus, the procurement process
prioritizing sustainable procurement has become a critical component of companies' policies; by doing
and procedures. Thus, prioritizing sustainable procurement has become a critical component of companies’ policies; by doing
20
so, so,
organizations
organizationspromote
promote transparency, fairness,resource
transparency, fairness, resource efficiency,
efficiency, and ethical
and ethical practices
practices while their brand image and
while enhancing
competitiveness.
enhancing their brand image and competitiveness.
InIn the
the long
longrun, run,sustainable
sustainableprocurement ensures a better future for the
procurement
The most
Thecommon wayway
most common of having sustainable
of having sustainable business with higher profits, improved customer retention, healthier financial
ensures a better future for the business with
procurement in in
procurement place
placeisisby
by making
making ititmandatory
mandatory to:statements and bright future prospects.
higher profits, improved customer retention,
to:
Key Pillars
healthier of Sustainable
financial statements Procurement
and bright
21
future prospects.
Effective sustainable procurement supports sustainable development.
Sustainable
Key Pillars ofprocurement is hence smart
Sustainable Procurement 21 procurement as it takes a
Have fair labor Have compliance 3-dimensional life cycle approach against the one-dimensional, economics
practices with Effective sustainable procurement supports
focused approach.
followed by environmental sustainable development. Sustainable
the suppliers laws and targets The three-dimensional approach does not mean that the sustainable
procurement is hence smart procurement as it
procurement process will take 3 times longer, nor does it necessarily mean
takes a 3-dimensional life cycle approach
that it will be more expensive. Rather, it means that it undertakes the 3 pillars
against the one-dimensional, economics
of sustainable development for achieving sustainable procurement. Thus,
focused approach.
Removal of hazardous these 3 pillars of sustainable procurement are:
materials and wastes
from the supply chain
The
Socialthree-dimensional
sustainability refersapproach doesandnot
to the ethical social impact of purchasing
mean that the sustainable procurement
decisions on the broader community, including employees, suppliers,
process
customers,willand
take 3 times
other longer,Measures
stakeholders. nor does areittaken to promote fair labor
necessarily meanandthat
practices, diversity it human
inclusion, will be more
rights, and community development.
expensive. Rather, it means that it undertakes the 3 pillars of sustainable development for achieving
sustainable procurement. Thus, these 3 pillars of sustainable procurement are:
Environmental
Social sustainability
sustainability measures
refers to the ethicalfocus on mitigating the impact
and social
of procurement
impact decisions
of purchasing on the natural
decisions on theenvironment.
broader Such measures
aim to reduce
community, carbon emissions,
including conservesuppliers,
employees, natural resources, minimize
waste and pollution, and promote sustainable
customers, and other stakeholders. Measures are practices throughout
theto
taken supply chain.fair labor practices, diversity and
promote
inclusion, human rights,
Economic sustainability refers toand community
the impact of procurement decisions
development.
on the economic well-being of the organization, its suppliers, and the
wider community. For instance, goals in mind might be bolstering
Environmental sustainability measures focus on
the financial value of the company and/or promoting local economic
mitigating the impact of procurement decisions on
development.
the natural environment. Such measures aim to
19 https://www.star-procurement.gov.uk/About-us/Responsible-Procurement-Strategy.aspx
20
https://www.deskera.com/blog/sustainable-procurement/
21 https://www.deskera.com/blog/sustainable-procurement/
19 https://www.star-procurement.gov.uk/About-us/Responsible-Procurement-Strategy.aspx
67
the organization, its suppliers, and the wider community. For instance, goals in mind might be
bolstering the financial value of the company and/or promoting local economic development.
reduce carbon emissions,
Examples conserve
of social, natural resources,
Environmental minimize
and Economic waste andinpollution,
sustainability and promote
procurement include:
sustainable practices throughout the supply chain.
Environmental
Economic sustainability Social refers
Sustainability
to the impact of procurement decisions on the economic Economic
well-beingSustainability
of
Sustainability
the organization, its suppliers, and the wider community. For instance, goals in mind might be
bolstering the•Sourcing
financial value from ofsuppliers
the company and/or •Sourcing fromlocal
promoting suppliers •Using competitive bidding
economic development.
who provide fair wages using sustainable materials processes to ensure value
Examples
Examples ofofsocial, and
social, safe workingand Economic
Environmental
Environmental and Economic and production
sustainability
sustainability inmethods.
procurement
in procurement include: for money.
include:
conditions. •Promoting circular •Sourcing from local
•Including women-owned economy principles.
Environmental suppliers to support the
Social Sustainability
and minority-owned Economic Sustainability
local communities and
•Designing products and
Sustainability
businesses in the supply packing materials in a way save costs on
•Sourcing from suppliers
chain. •Sourcing from suppliers
that minimizes waste •Using competitive bidding
transportation.
who provide fair wages
•Engaging with local using sustainable materials processes to
•Investingvalue
ensure in renewable
and safe working communities to and production methods. for money. energy to reduce reliance
conditions. understand their needs •Promoting circular •Sourcing from on local
fossil fuels and save
•Including women-owned
and support local economy principles. suppliers to money
supportinthethe long run
and minority-owned
development •Designing products and local communities and
businesses in the supply packing materials in a way save costs on
chain. that minimizes waste transportation.
•Engaging Drivers
with local for Sustainable Procurement22 •Investing in renewable
communities to energy to reduce reliance
There are many reasons to practice sustainable procurement. They include the following five key
understand their needs on fossil fuels and save
and support business
local drivers: money in the long run
development Financial: Reduce total operating costs by procuring more efficient and sustainable goods, works or
services that:
Drivers
Drivers for a) develop
forSustainable
Sustainable the market’s
Procurement
Procurement 22 capacities to deliver
22
sustainable solutions;
There are Financial
There aremany
many reasons
reasons
b) increase to practice sustainable
to practice
demand for procurement.
sustainable
sustainable procurement. They include the following five key
solutions
They include
business the following five key business drivers:
drivers:
which in turn increases market
Financial: Reduce
Financial: Reduce total
total
competitiveness; operating
operating costs
costs by by procuring
procuring more efficient and sustainable goods, works or
more
efficient and sustainable goods, works or services
services that:c) strive for innovative and more sustainable that:
Attractiveness Risk management
a)
a) develop
develop thethe market’s
market’s capacities
outcomes; capacities to to deliver
deliver sustainable
solutions;solutions;
sustainable d) cost savings on a long-term basis by Financial
b) increase demand for
b) increase demand
applying for sustainable
sustainable
life-cycle solutions
costing; and which in turn
solutions
which increases
ine)market
turn competitiveness;
minimize increases
disposal costs market
and sustainable
c) strive for impacts
competitiveness; innovativeofand more sustainable
products at their end outcomes;
of life.
c) strive for innovative and more sustainable
d) cost savings on a long-term basis by applying life-cycle Responses to
Attractiveness increasing Risk management
Commitments
costing; and
outcomes; Risk management: Engage in the mapping of stakeholder and goals
d)
e) cost savings
minimize disposal
economic,oncostsa legal,
long-term
and sustainable basis
environmental by ofand
impacts products
social expectations
at their
applying end of life.
life-cycle costing;threats
sustainability and and opportunities, and
e)
Riskminimize
management: disposal
developEngage costs
in the and
approaches tosustainable
mapping manage them.legal, environmental and social sustainability threats and opportunities, and
of economic,
impacts of products
develop approaches at theirthem.
to manage end of life.
Responses to
Commitments and goals: Reflect the purchasing agency’s organizational culture, values, Commitments
increasing and ethics in accordance with relevant
Risk management:
policies. This could Engage
include in the mapping
developing sustainableofprocurement policies that are in harmonyand
stakeholder
22 https://thedocs.worldbank.org/en/doc/788731479395390605- withgoals
a country’s overall strategy; that
economic,
is, commitmentslegal,
andenvironmental
priorities ought toand socialstated in the policy
be clearly
0290022019/original/GuidanceonSustainableProcurement.pdfexpectations
and the operational implementation ought to be reflected in
sustainability threats and opportunities, and
procurement practices.
develop
Responsesapproaches
to increasingtostakeholder
manage them.
expectations: It is important to take account of social responsibility and sustainability issues.
68 environmental and social), these can be further enhanced
Beyond the requirements established by the Bank in its other policies (e.g.:
by using sustainable procurement approaches.
22https://thedocs.worldbank.org/en/doc/788731479395390605-
Attractiveness: Performance in terms of social responsibility and sustainability may impact a Borrower’s or project’s image, enhance
0290022019/original/GuidanceonSustainableProcurement.pdf
competition and provide organizations greater competitive advantage. Implementing sustainable procurement may attract other
financial investors, boost labor markets, attract the best organizations to bid, and further drive development goals.
68
22 https://thedocs.worldbank.org/en/doc/788731479395390605-0290022019/original/GuidanceonSustainableProcurement.pdf
policies (e.g.: environmental and social), these can be further enhanced by using sustainable
procurement approaches.
Attractiveness: Performance in terms of social responsibility and sustainability may impact a

Borrower’s or project’s image, enhance competition and provide organizations greater competitive
advantage. Implementing sustainable procurement may attract other financial investors, boost labor
markets, attract the best organizations to bid, and further drive development goals.
Benefits
Benefits of of implementing
implementing a sustainable
a sustainable procurement
procurement approach
approach
9.1 Promoting Socially Responsible Procurement: Ethical Considerations

9.1 Promoting
Social Socially
responsibility Responsible
is a framework Procurement:
of measurable Ethical
corporate policies Considerations
and procedures and resulting behaviour designed to benefit the
workplace, and by extension, the individual, the corporation, and the community in the following areas: community, diversity, and
inclusiveness (supply base diversity and inclusiveness), workforce, environment, ethics, financial responsibility, human rights, health
Social responsibility is a framework of measurable corporate policies and procedures and resulting
and safety, and sustainability.
behaviour designed to benefit the workplace, and by extension, the individual, the corporation, and
theProcurement
communityServices
in the supports
following“socially
areas: responsible
community,purchasing”
diversity, and
and has adopted the(supply
inclusiveness Institutebase
for Supply Management (ISM)
diversity
definition that it is a framework of measurable corporate policies and procedures and resulting behavior designed to benefit the
and inclusiveness), workforce, environment, ethics, financial responsibility, human rights, health and
workplace and, by extensions, the individual, the organization, and the community.23
safety, and sustainability.
Principals of
Principals of Socially
SociallyResponsible
ResponsibleProcurement
Procurement24 24
Procurement Services supports "socially responsible purchasing" and has adopted the Institute for
•Community initiatives provide resources to support the community in which the
Community
Supply Management (ISM) definition that it or
company is organization
a framework operates.of measurable corporate policies and
procedures and resulting behavior designed to benefit the workplace and, by extensions, the
Diversity
individual, the and and the community.
organization, •Supply base 23diversity and inclusiveness refers to efforts to engage different
Inclusiveness categories of suppliers in sourcing processes an decisions.
Diversity and •Workforce diversity and inclusiveness refers to efforts to attract and retain a
workforce that represents the varied backgrounds of the customer and
Inclusiveness community in which the organization operates.
•Supply management actions and decisions that promote protection and

23
Environment
https://www.gvsu.edu/purchasing/social-responsibility-46.htm
preservation of the health and vitality of the environment within which the
organization operates.
Ethics and Business •Ethical behavior and business conduct is a critical element impacting personal,
business (public and private), supplier and governmental relationships and
Conduct governance. 69
•Financial responsibility refers to understanding and applying financial concepts

Financial Responsibility to supply management decisions to address allocation of funds, accurate
reporting and management of risk.
•Human rights refer to the concept of human beings having universal natural
Human Rights rights, or status, regardless of legal jurisdiction or other localizing factors.
•Health and safety refer to the condition of being protected or free from the
Health and Safety occurrence of risk of injury, danger, failure, error, accident, harm, or loss.
•Sustainability refers to the ability to meet current needs without hindering the
Sustainability ability to meet the needs of future generations in terms of economic,
environmental, and social challenges.
Ethical considerations
23 https://www.gvsu.edu/purchasing/social-responsibility-46.htm
24 https://www.missouristate.edu/Procurement/ism-principles.htm
Promoting socially responsible procurement involves incorporating ethical considerations into
procurement processes to ensure that suppliers adhere to ethical standards and practices. By
prioritizing suppliers11that
th
Public Procurementsocial
demonstrate Summitresponsibility,
2023: Enhancing Transparency, can
organizations Efficiency and Accountability
contribute to positive 43
social impacts, uphold human rights, and support fair and ethical business practices. Here are some
key ethical considerations in socially responsible procurement:
Ethical considerations
Promoting socially responsible procurement involves incorporating ethical considerations into procurement processes to ensure that
suppliers adhere to ethical standards and practices. By prioritizing suppliers that demonstrate social responsibility, organizations can
contribute to positive social impacts, uphold human rights, and support fair and ethical business practices. Here are some key ethical
considerations in socially responsible procurement:
Human Rights and Labor Standards

•Responsible procurement requires organizations to assess and address
human rights and labor standards within their supply chains. This includes
ensuring that suppliers provide fair wages, safe working conditions, and
respect basic human rights. Organizations can implement codes of conduct
and conduct audits to monitor compliance and address any violations.
Supplier Diversity and Fair Trade Practices

•Promoting supplier diversity and fair trade practices is an important aspect
of socially responsible procurement. Organizations can prioritize sourcing
from diverse suppliers, including small and minority-owned businesses,
women-owned enterprises, and social enterprises. Supporting fair trade
practices ensures that producers receive fair compensation and work in
humane conditions.
Supply Chain Transparency and Due Diligence

•ransparency and due diligence are critical in socially responsible
procurement. Organizations should require suppliers to disclose
information about their supply chains, including the origin of raw materials,
labor practices, and environmental impact. Conducting due diligence helps
identify and address any unethical practices, such as child labor, forced
labor, or environmental violations.
Ethical Sourcing and Conflict Minerals

•Organizations should actively avoid sourcing materials or products
associated with conflicts, human rights abuses, or environmental harm.
They can implement responsible sourcing policies to trace the origin of raw
materials and ensure they are not linked to conflict zones or areas with high
social or environmental risks, such as conflict minerals.
Fair Treatment and Equal Opportunities

•Socially responsible procurement promotes fair treatment and equal
opportunities for all individuals involved in the supply chain. Organizations
should ensure that suppliers adhere to anti-discrimination policies, provide
equal opportunities for employment and advancement, and promote
diversity and inclusion throughout their operations.
Collaboration and Capacity Building

•To promote ethical practices in the supply chain, organizations can
collaborate with suppliers and provide support for capacity building. This
can involve sharing best practices, offering training programs, and fostering
long-term relationships based on mutual trust and respect. Collaboration
helps suppliers improve their social responsibility performance and
promotes continuous improvement.
Ethical Product End-of-Life Management

•Considering the ethical aspects of product end-of-life management is also
crucial. Organizations should encourage suppliers to adopt environmentally
friendly disposal methods, such as recycling, reusing, or proper disposal of
products at the end of their lifecycle. This reduces waste and minimizes
negative environmental and social impacts
71
44 11 Public Procurement Summit 2023: Enhancing Transparency, Efficiency and Accountability
th
9.2. Green Purchasing: Driving Sustainability in Procurement Processes
A green procurement or green purchasing policy (GPP) is put in place to guide businesses when
acquiring materials, supplies and services and selecting such products based on their impact on the
9.2. Green Purchasing:
environment and humanDriving Sustainability
health. GPPs can apply into Procurement
both products Processes
bought to run the business internally
(Ex. office supplies and equipment) as well as for producing the goods
A green procurement or green purchasing policy (GPP) is put in place to guide and services
businesses of the business
when acquiring materials, supplies and
itself (Ex. materials used in business products).
services and selecting such products based on their impact on the environment and human health. GPPs can apply to both products
bought to run the business internally (Ex. office supplies and equipment) as well as for producing the goods and services of the
It is a strategy that focuses on integrating environmental considerations into procurement processes.
business itself (Ex. materials used in business products).
It aims to drive sustainability by selecting products and services that have a reduced environmental
It is a strategy
impact that focuses
throughout on lifecycle.
their integrating Green
environmental considerations
purchasing into procurement
encompasses processes.from
various aspects, It aimsselecting
to drive sustainability by
selecting products and services that have a reduced environmental impact throughout their lifecycle. Green purchasing encompasses
sustainable materials to promoting energy efficiency and waste reduction.
various aspects, from selecting sustainable materials to promoting energy efficiency and waste reduction.
Green
Green procurement
procurementbenefits
25
benefits25
Resource and Operational • Buying sustainable products and purchasing from green suppliers and vendors promotes
resource efficiency. Purchasing from a supplier who offers products with eco-friendly
Efficiency packaging or no packaging at all reduces your waste stream.
Improved Employee • Raising employee awareness of and engagement in green purchasing can help build a green
work culture and inspire employees to adopt such practices into their personal lives.
Health and Safety
• Procuring sustainably means evaluating your current products and practices in an innovative
Innovation way. Sometimes choosing the eco-friendly option for products and suppliers may require one
to rethink and redesign the way you operate.
• Continuing to buy truly eco-friendly products and support other sustainable businesses helps
Green Market Support build the green market that is taking hold in economies worldwide.
• A GPP can help one adhere to corporate regulations and avoid the risk of malpractice from
Mitigated Risks using harmful products or partnering with unethical providers. One will also maintain public
trust and avoid lawsuits and legal action.
• Abiding by a green procurement policy looks good in the public sphere in which
Improved Public Image more customers are preferring businesses that are socially responsible and good
environmental stewards. Having a GPP allows one to be transparent with customers,
employees and other stakeholders.
• Green purchasing yields cost savings in the form of energy efficiency and reduced waste. While
Increased Profitability some green products can be more expensive, many are associated with rebate programs such
as those offered by ENERGY STAR.
Benefits
Benefits of
of green
greenpublic
publicprocurement
procurement(GPP)
26
(GPP)26
▪• GPP
GPP can
canbe be
a major driver for
a major innovation,
driver providing industry
for innovation, with incentives
providing industryto develop environmentally
with incentives to friendly
developworks, products,
and services.
environmentally friendly works, products, and services.
• GPP may also provide financial savings for public authorities, especially if one considers the full life-cycle costs of a contract and
not just
▪ GPP maythe purchase
also price.
provide financial savings for public authorities, especially if one considers the full life-
• cycle
Authorities
costs who implementand
of a contract GPPnotwilljust
be better equippedprice.
the purchase to meet evolving environmental challenges, for example to reduce
greenhouse gas emissions or move towards a more circular economy.
▪Areas of good practices
Authorities who for green public
implement GPPprocurement
will be atbetter
national and sub-national
equipped to meet levels 27
evolving environmental
• challenges,
Green Public for exampleLegal
Procurement to reduce greenhouse
and Policy Framework gas emissions or move towards a more circular
• economy.
Understanding Market Capacity and Assessing Costs and Benefits
• Introducing Environmental Standards in Procurement
• Professionalising Green Public Procurement
• https://greenbusinessbureau.com/blog/what-is-a-green-procurement-policy/
25
Raising Awareness
26 https://www.oecd.org/gov/public-procurement/green/
• Monitoring Green Public Procurement
25 https://greenbusinessbureau.com/blog/what-is-a-green-procurement-policy/
26 https://www.oecd.org/gov/public-procurement/green/
27 https://www.oecd.org/gov/public-procurement/green/ 72
9.3 Opportunities for Sustainable Procurement in Government Purchasing
Sustainable procurement in government purchasing is an important practice that can have a significant impact on promoting
sustainability, addressing environmental concerns, and supporting socially responsible initiatives. Here are some opportunities for
sustainable procurement in government purchasing:
Green Product Certification: Governments can establish requirements for products to meet specific environmental standards, such as
energy efficiency, recyclability, or reduced carbon emissions. By adopting green product certifications, governments can ensure that
their purchases align with sustainability goals.
Renewable Energy Procurement: Governments can prioritize purchasing energy from renewable sources, such as solar or wind power,
for their facilities. This can involve entering into long-term contracts with renewable energy providers or investing in on-site renewable
energy installations.
Supplier Sustainability Assessments: Governments can implement supplier sustainability assessments to evaluate potential suppliers
based on their environmental, social, and governance (ESG) practices. This ensures that government contracts are awarded to suppliers
who demonstrate sustainable operations and ethical practices.
Local Sourcing and Fair Trade: Governments can promote sustainability by prioritizing local sourcing of goods and services. This
reduces transportation-related emissions and supports local economies. Additionally, considering fair trade practices can ensure that
suppliers adhere to ethical labor standards.
Waste Management: Governments can implement policies to encourage waste reduction and recycling. They can specify requirements
for suppliers to use recyclable or compostable materials, promote product stewardship, and encourage the use of recycled content in
their products.
Life Cycle Cost Analysis: Governments can adopt life cycle cost analysis methodologies to evaluate the total cost of ownership of
products and services over their entire life cycle, including acquisition, operation, maintenance, and disposal. This approach helps
identify sustainable options that may have higher upfront costs but lower overall costs over time.
Collaborative Initiatives: Governments can collaborate with other entities, such as non-profit organizations, businesses, or other
government agencies, to leverage collective purchasing power. Collaborative procurement initiatives can drive sustainable practices
and foster innovation in sustainable solutions.
Training and Capacity Building: Governments can invest in training and capacity building programs for procurement officers to
enhance their understanding of sustainable procurement practices. This empowers them to make informed decisions and integrate
sustainability considerations into their purchasing processes effectively.
Reporting and Transparency: Governments can establish reporting mechanisms to track and measure the environmental and social
impacts of their procurement activities. Transparent reporting ensures accountability and enables the identification of areas for
improvement.
Continuous Improvement: Governments should continuously review and refine their sustainable procurement policies and practices.
Regular evaluations, benchmarking against industry standards, and incorporating feedback from stakeholders can drive ongoing
improvement in sustainable procurement efforts.
10. Understanding the Complex Nature of Government Procurement
Chapter 10: Understanding the Complex Nature of
Public Procurement in India - A Complex Process 28
Government Procurement
The public procurement process in India is relatively complex given the civil frame for public service
delivery. The indigenous arrangements across the Union and State governments, independent and
10. Understanding
statutory thesector
bodies, public Complex Nature (PSUs),
undertakings of Government Procurement
and the original governments (panchayats and
cosmopolises)
Public demand
Procurement a broad
in India range of Process
- A Complex conditions
28 for furnishing public services. The system in India
has come more complex as the country doesn't have a comprehensive public procurement law guiding
The public procurement process in India is relatively complex given the civil frame for public service delivery. The indigenous
the procurement conditioning.
arrangements across the Union and State governments, independent and statutory bodies, public sector undertakings (PSUs), and the
original governments (panchayats and cosmopolises) demand a broad range of conditions for furnishing public services. The system
10.1 Challenges and Complexity Factors in Public Procurement
in India has come more complex as the country doesn’t have a comprehensive public procurement law guiding the procurement
conditioning.
10.1 Challenges in
Key Challenges andtheComplexity Factors in Public Procurement
Public Procurement
Key Challenges in the Public Procurement
Procurement is a highly collaborative function that sits at the intersection of internal and external
Procurement
operations.isFrom
a highly collaborative function
communicating withthat sits at the
vendors to intersection of internal and
running compliance externalprocessing
checks, operations. From communicating
payments,
with vendors to running compliance checks, processing payments, and analysing market trends, a lot goes into running a function with
and analysing market trends, a lot goes into running a function with such high stakes.
such high stakes.
Following
Following areare
the the
mainmain key challenges
key challenges in the
in the Public Public Procurement:
Procurement:
The Absence of a Comprehensive Procurement Act
Lack of Standard Bid Documents
Delays in Activities in Procurement Cycle
Unfair Practices and Corruption
Presence of Anti-Competitive Elements
Low Participation of the Domestic MSEs
Competency and Skill of the Procurement Officials
• The
• absenceofofa acomprehensive
The absence comprehensive procurement
procurement Actabsence of a comprehensive procurement Act, GFRs allow the
Act: In the
government
In realities
the absence of to frame procurementprocurement
a comprehensive process with its Act,
own perception of public
GFRs allow interest. It hasrealities
the government redoundedtoinframe
miscellaneous
procedures and multifariousness of rules across the earning realities.
procurement process with its own perception of public interest. It has redounded in miscellaneous
Although GFRsand
procedures and multifariousness
other procurement primers areacross
of rules total, they’re prone torealities.
the earning illegal practices in the absence of legislative backing.
numerous times, bearing comprehensive conduct against the stakeholders involved in illegal practices become challenging in the
Although GFRs and other procurement primers are total, they're prone to illegal practices in the
absence of a strong legislation.
absence of legislative backing. numerous times, bearing comprehensive conduct against the
• Lack of standard bid documents: In spite of the enterprise for normalizing the bid documents and law of contract following the
stakeholders involved
transnational agencies in illegal
similar practices
as IMF and become
the World challenging
Bank, there continues in
to the
be a absence of a strong
multifariousness legislation.
of bid documents across the
realities in terms of addition paraphrase/ reiteration of clauses provisions. similar inscrutability and contradictions in the bid
• Lack of standard
documents bid the
stand against documents
principles of standardization, translucency, and responsibility.
28 https://www.nipfp.org.in/publications
https://www.nipfp.org.in/publications 47
28
11th Public Procurement Summit 2023: Enhancing Transparency, Efficiency and Accountability
76
GFR 2017 asks to give clarity on the evaluation criteria on the base of which the evaluation of bids must be carried out. Indeed also,
numerous bid documents don’t have clarity on the evaluation criteria which gives a rise in the complexity in the evaluation process.
• Delays in activities in procurement cycle: The introduction of e-procurement has managed to reduce the procurement cycle
especially in the stages of publication, submission, opening, and evaluation of flings. still, the procurement process is frequently
delayed in the stage of need assessment, budget medication, and approval. also, attainability of sufficient procurement
professionals and nonrealization of the required information generally appear responsible for the detention in preparing the
specialized specifications.
Many other issues similar as applicable need assessment, the involvement of people who are being affected primarily in the
construction procurements, and environmental impact assessment are frequently overlooked. The construction and structure
procurements frequently suffer from the detention in land acquisition and the nonsupervisory/ executive approvals from multiple
authorities.
• Unfair practices and corruption: Given the size and the interests of the stakeholders, public procumbent is vulnerable to illegal
practices assessing high costs on both the government and the society. Despite the procedural safeguards, corruption position in
India is perceived to be high in recent times leading to low quality of public services which eventually hampers the development
process (World Bank, 2016).
As supported by the CVC, GFR 2017 prescribes relinquishment of Integrity Pact towards bridling corruption and illegal practices.
Although CVC guidelines prompt for appointing an external examiner to alleviate the corruption and ethical pitfalls, GFR 2017 has
not specified the same implicitly to apply the law of Integrity. The absence of comprehensive legislation, violation of procedural
morals, and weak monitoring procedures has surfaced as the major reason behind the loose practices.
In numerous cases, an earning reality itself encloses speeding and non-competent clauses in the bidding documents to favour
a particular endeavours which opens up a compass for illegal practices. While every tender incorporates clauses on proscribing
loose practices in the bidding process, there’s no clear provision for a penalty if someone is set up to engage in the illegal
practice.
• Presence of anti-competitive elements: The actuality of anti-competitive practices by the bidders ’community tends to hinder
the procurement process by negating the stylish value of plutocrat. Competition issues in India substantially concern with
collusive bidding, bid apparel, cartelization, and abuse of dominance. Similar anti-competitive elements have mischievous
goods on the public procurement through colourful means similar as barring competition, denying fair/ minimal price,
variation in the tender specifications, paying for fabricated work, and poor- quality procurement, which eventually undercut
the development prospects.
In numerous cases, the medium itself facilitates illegal practices through addition of anti-competitive clauses in the bid documents.
While specifying the product characteristics, numerous tenders concentrate on product description rather of functional
performances, which gives rise to specification inscrutability. Occasionally an earning reality restricts the number of bidders to
reduce the cost of bid evaluations or/ and get quality force and stability in the procurement process. similar entry walls may lead
to hamstrung issues.
• Low participation of the domestic MSEs: Despite the MSEs provisions, the participation of domestic MSEs in the public
procurement conditioning remains low in India. Apart from resource related entry walls including anti-competitive elements,
numerous MSEs don’t also take part in public procurement due to a perception that government earning realities frequently delay
in releasing the contract payments. This perception affects the financial stability of the MSEs.
• Competency and skill of the procurement officials: There are implementation challenges concerning the expertise and faculty of
the government procurement officers as these conditioning want professional expertise. The officers need to be more acquainted
with the procurement operation, rules and regulations, legal issues, contract operation issues, and others. They also need further
exposure to manage with the stylish procurement morals and practices of the developed countries and the transnational agencies
like World Bank, IMF, ADB, and UNICEF as well as the WTO GPA and UNCITRAL Model. Technological faculty and capabilities of the
officers should also be enhanced for proper perpetration of e-procurement.
It’s set up that the procurement officers are frequently reticent to take a financial / executive decision, especially while
performing procurement of services due to the possible trials for any procedural error wherever specific guidelines on similar
procurement are absent. In addition, numerous realities warrant in experience in preparing specialized specifications and
applicable evaluation criteria for a competitive bidding. In order to overcome similar issues, they tend to employ temporary
advisers to carry out procurement conditioning. This dependence on external capacity may reduce the credential and public
confidence.
10.2 Risk Management and Mitigation Strategies
Risk Management
Risk management is an essential part of the procurement cycle because it ensures that risks to quality, cost, and sustainability are
identified and mitigated so that value for money and project objectives are more likely to be achieved.
Procurement Risk
processes and lack of visibility into the process. Procurement risks can include financial losses,
Procurement risk is the potential for losses due to the failure of a company to properly manage and control its procurement process.
reputational damage, legal liabilities, and disruptions to the supply chain.
Additionally, it can also arise from inadequate risk management processes and lack of visibility into the process. Procurement risks can
include financial losses, reputational damage, legal liabilities, and disruptions to the supply chain.
Types of Procurement Risk29
Types of Procurement Risk29
Financial Risk
Supplier Risk
Legal Risk
Operational Risk
Reputational Risk
• Financial Risk: This type of risk is related to the financial losses that could occur due to mismanagement of the procurement
• Financial Risk: This type of risk is related to the financial losses that could occur due to
process. This could include budget overruns, inaccurate financial reporting, and lack of visibility into the process.
mismanagement of the procurement process. This could include budget overruns, inaccurate
• Supplier Risk: This type of risk is related to the potential for disruption of the supply chain due to supplier issues, such as supplier
financial reporting, and lack of visibility into the process.
insolvency, quality issues, and breach of contract.
• Legal Risk: This type of risk is related to potential legal issues that could arise due to mismanagement of the procurement process,
• Supplier Risk: This type of risk is related to the potential for disruption of the supply chain due to
such as contract disputes, intellectual property infringement, and antitrust violations.
supplier issues, such as supplier insolvency, quality issues, and breach of contract.
• Operational Risk: This type of risk is related to the potential for operational issues, such as delays, cost overruns, and quality
issues.
• Legal Risk: This type of risk is related to potential legal issues that could arise due to
• Reputational Risk: This type of risk is related to the potential for damage to a company’s reputation due to mismanagement of
mismanagement of the procurement process, such as contract disputes, intellectual property
the procurement process.
infringement, and antitrust violations.
Procurement Risk Framework30
• OperationalThe
Risk: This typerisk
procurement of framework
risk is related to to
applies the potential
different for operationallevels
entity/organizational issues, such as delays, Identify Risks
andand
cost overruns, to each stageissues.
quality of the project life cycle – a continuous process that cascades
through the project and procurement cycles. Update Risk
Assess Risks
Assessment
• Reputational Risk:
The This typerisk
procurement of risk is related
framework to the potential
is structured around for
thedamage to a company's reputation
risk management
process beginning with the identification
due to mismanagement of the procurement process. of risks:
The procurement risk framework shows the inputs used for the identification
Procurement Risk Framework
of risks 30
at each stage of the procurement cycle. These inputs are used to assist
Monitor Identify Mitigation
in the identification of risks at each stage. Risks are then assessed in terms Implementation Measures
The procurement of likelihood and consequence.

risk framework applies to The outputentity/organizational
different of the risk assessmentlevels
process
and to each stage of
is the identification and implementation of measures to mitigate the risks.
the project life cycle—a continuous process that cascades through the project and procurement cycles. Assign Ownership
of Measures
Implementation of the mitigation measures happens via the measures being
assigned to the appropriate party to action as required. Progress on the Figure 10: Procurement Risk Framework
Figure 10: Procurement Risk Framework
The procurement risk framework is structured around the risk management process beginning with
The procurement risk framework shows the inputs used for the identification of risks at each stag
the identification
29 of risks:
https://www.gep.com/blog/strategy/identifying-and-mitigating-procurement-risks
the procurement cycle. These inputs are used to assist in the identification of risks at each stage. R
30 https://www.adb.org/sites/default/files/procurement-risk-framework.pdf
are then assessed in terms of likelihood and consequence. The output of the risk assessment pro
is the identification and implementation of measures to mitigate the risks. Implementation of
mitigation
11 Public Procurement Summit 2023: Enhancing
th measuresEfficiency
Transparency, happens via
andthe 49
measures being assigned to the appropriate party to actio
Accountability
required. Progress on the mitigation measures should be monitored on a continuous basis to en
that they are implemented and effective. Finally, risk assessments should be updated to reflect
changes to risks or any new risks.
29 Simply identifying and assessing risks is not sufficient. To reduce risks to an acceptable level, mitiga
mitigation measures should be monitored on a continuous basis to ensure that they are implemented and effective. Finally, risk
assessments should be updated to reflect any changes to risks or any new risks.
Simply identifying and assessing risks is not sufficient. To reduce risks to an acceptable level, mitigating measures must be identified
that are effective in reducing the risk, and these measures must be implemented. To ensure that the measures are implemented,
progress of implementation of the measures needs to be monitored and managed.
Risk management is not a one-time exercise. Following the initial risk assessment, risks may change, or new risks may become
apparent. The risk assessment should be updated in response to changed conditions, or new information on risks, and at key points in
the procurement process to ensure that risks are effectively managed.
Risk Management through Planning, Bidding, and Implementation:
Figure 11: Risk Management through Planning, Bidding, and Implementation

CMP = contract management plan, PPRA = project procurement risk assessment.
Source: Asian Development Bank
Risks identified in the PPRA are managed through the selection of procurement arrangements, e.g., the procurement method, contract
structure, contract terms and performance measures, and other mitigating actions. Mitigating measures and action owners should be
documented in the PPRA and any associated risk register.
Risk Treatment Options31
Each risk should be treated in one of the four ways as described below: “avoid,” “reduce,” “transfer,” or “accept.”
In some cases, the only available mitigation measure may be “avoidance.” Risk mitigation measures should balance their effectiveness
for reducing the risk against their costs and effort to implement. Risks rated “High” may warrant additional resources and a specific
risk management plan.
31 https://www.adb.org/sites/default/files/procurement-risk-framework
In some cases, the only available mitigation measure may be “avoidance.” Risk mitigation measures
should
In somebalance their
cases, the effectiveness
only for reducing
available mitigation the risk
measure mayagainst their costs and
be “avoidance.” Risk effort to implement.
mitigation measures
Risks rated
should “High”
balance may
their warrant additional
effectiveness resources
for reducing and against
the risk a specific riskcosts
their management plan.
and effort to implement.
Risks rated “High” may warrant additional resources and a specific risk management plan.
•Avoid the risk by deciding not to proceed with the project or activity.
Avoid •Avoid the risk by deciding not to proceed with the project or activity.
Avoid
•Reduce the likelihood of the occurrence, e.g., procurement approach,
•contract terms
•Reduce the and conditions,
likelihood contract management
of the occurrence, activities,
e.g., procurement quality
approach,
•control manuals, training, etc.
•contract terms and conditions, contract management activities, quality
Reduce •Reduce the consequence
•control manuals, training,of the occurrence, e.g., contingency planning,
etc.
Reduce •relocation of an activity or operation,
•Reduce the consequence of the occurrence,etc. e.g., contingency planning,
•relocation of an activity or operation, etc.
•Transfer the risk to another party, e.g., contract terms, regarding liability and indemnity,
insurance,
•Transfer etc.
the risk to another party, e.g., contract terms, regarding liability and indemnity,
Transfer
insurance, etc.
Transfer
•Accept the risk without mitigation. This may occure because
•the riskthe
•Accept rating
riskiswithout
so low as to not warrant
mitigation. mitigation,
This may occure because
•there
•the is rating
risk no treatment
is so lowavailable,
as to notand/or
warrant mitigation,
Accept
•the costs
•there is nooftreatment
treatmentavailable,
outweighand/or
the benefits
Accept
•the costs of treatment outweigh the benefits
Best Practices for Procurement Risk Mitigation

Best
Best Practices forProcurement
Practices for ProcurementRisk
Risk Mitigation
Mitigation
In order to manage the procurement risk effectively following practices should be adopted:
In
Inorder
ordertotomanage
managethethe
procurement risk effectively
procurement following
risk effectively practicespractices
following should beshould
adopted:
be adopted:
•This involves developing an in-depth program to identify,
Develop a Comprehensive Risk assess, and mitigate the risks associated with procurement.
Management ProgramRisk •This involves developing an in-depth program to identify,
Develop a Comprehensive assess, and mitigate the risks associated with procurement.
Management Program
•Make a team of individuals responsible for the oversight and

Establish a Risk Management Team management
•Make of individuals
a team of the procurement process.
responsible for the oversight and
Establish a Risk Management Team management of the procurement process.
•Define policies and procedures to ensure that the

Establish Policies and Procedures procurement
•Define policiesprocess is managed
and procedures to effectively
ensure thatand
theefficiently.
Establish Policies and Procedures procurement process is managed effectively and efficiently.
•Leverage procurement technology to effectively monitor

Utilize Technology and manage
•Leverage procurement
procurement risks. to effectively monitor
technology
Utilize Technology and manage procurement risks.
•Promote a culture of risk awareness and ensure that all

Establish a culture of risk awareness employees
•Promote understand
a culture the
of risk importance
awareness andofensure
managing
that all
Establish a culture of risk awareness procurement
employees risks.
understand the importance of managing
procurement risks.
82
82
Chapter 11: Best Practices for
Enhancing Efficiency and Transparency
1. Best Practices for Enhancing Efficiency and Transparency
1.1 Streamlining11. Best Practices
Processes for Enhancing
and Automation:32
Efficiency and Transparency
11.1 Streamlining
public procurement Processes
teams face increasing and Automation
pressure
32
to improve efficiency while upholding
mpliance and transparency, it’s essential that they have the right strategies in place.
As public procurement teams face increasing pressure to improve efficiency while upholding compliance and transparency, it’s
reamlining public procurement is no small feat—it requires buy-in from stakeholders across multiple
essential that they have the right strategies in place.
epartments and a commitment from leadership to invest in necessary resources like technology and
Streamlining
aining. However, with public procurement
an understanding is no
of regulatory small feat – itcoupled
requirements requires buy-in
with from stakeholders
strategies such as across multiple departments and a commitment
fromcollaboration,
alability, automation, leadership toand
invest in necessary
data insights, resources
any team can buildlikeantechnology and training.
efficient workflow that However, with an understanding of regulatory
ioritizes compliance while meeting
requirements the needs
coupled of its customers.
with strategies such as scalability, automation, collaboration, and data insights, any team can build an efficient
workflow that prioritizes compliance while meeting the needs of its customers.
llowing are six key strategies to help public procurement teams optimize their workflows while
Following
aintaining regulatory are six key strategies to help public procurement teams optimize their workflows while maintaining regulatory compliance:
compliance:
Processes and Compliance
The first step in streamlining public procurement processes is
Processes
and to ensure that existing protocols are compliant with applicable
Compliance laws. Having a comprehensive understanding of the rules and
regulations surrounding public procurement can help teams better
Improving manage their workflow by allowing them to identify areas where
Scalability
Collaboration improvements can be made. While regulations are established
to prevent fraud, mismanagement, and cronyism, it is imperative
Strategy for that organizations comply with the regulations without adding
Enhancing
Efficiency and additional requirements that make the process cumbersome
Transparency and eroding service levels. To avoid this pitfall, it is necessary for
public procurement teams to routinely review the entire process
Adopting Data Insight and challenge steps to ensure that requirements are necessary to
Automation Strategy
meet rules or requirements and/or deliver real value.
Modernizing Automation alone does not transform a cumbersome work

Technology process. Once the business process has been validated, Public
Systems Procurement teams should invest in a system that allows them
to digitize these processes to deliver compliance, efficiency, and
complete transparency. When it comes to managing ongoing
regulatory compliance, having a dynamic platform is key. Outdated systems that can’t keep up with changes in the law will lead to
audit risks and could result in costly workarounds – so stay agile for optimal efficiency, trustworthiness and cost-effectiveness.
ocesses and Compliance
Scalability
he first step in streamlining public procurement processes is to ensure that existing protocols are
mpliant with applicable laws. Having a comprehensive understanding of the rules and regulations
One major challenge faced by public procurement teams is scalability—or the ability to quickly adapt processes as workloads increase
rrounding public procurement can help teams better manage their workflow by allowing them to
or decrease. To maintain efficiency during times of high demand, teams must have a system in place that allows them to easily scale
entify areas where improvements can be made. While regulations are established to prevent fraud,
up their processes as needed. This could include automating routine tasks, introducing self-service solutions, or leveraging cloud
ismanagement, and cronyism, it is imperative that organizations comply with the regulations without
computing solutions. For example, adequately enabling item catalogues and service contracts allows individuals to take advantage
dding additional requirements that make the process cumbersome and eroding service levels. To
oid this pitfall, it of existing commercial
is necessary relationshipsteams
for public procurement driving value andreview
to routinely efficiency. Another
the entire aspect of scalability is ensuring a solution can match
process
organizations’ appetite for change.
Data Insight Strategy
It is vital that public procurement teams develop a data insight strategy
to gain visibility into their operations. By gathering data on
https://www.ivalua.com/blog/streamlining-public-procurement-6-strategies-for-efficiency-and-compliance/
process performance, costs associated with each task, and other metrics related to the team’s overall performance, leaders can make
more informed decisions about how best to streamline their processes and improve collaboration across departments.
84
32 https://www.ivalua.com/blog/streamlining-public-procurement-6-strategies-for-efficiency-and-compliance/
An effective data insight strategy should also incorporate analytics tools that allow stakeholders to monitor progress in real-time and
make adjustments as needed. This is strategically important and can be a valuable tool for quick wins.
Modernizing Technology Systems
One of the most effective ways to optimize efficiency in public procurement is by modernizing technology systems. This could be
anything from moving away from paper-based processes and into more automated ones, or introducing cloud-based systems that
allow for greater collaboration across departments and system landscapes. Either way, it is essential that your new solutions can work
well with your existing systems and processes.
Further, the right solution can integrate data from various systems and sources of data to expose organization wide insights that can
drive strategic planning and generate considerable value.
Adopting Automation
Implementing technology alone does not guarantee success, measuring and driving user adoption of the solution is critical. This
will require a robust training program for users complete with key performance indicators to drive continuous improvement. It may
also require the public agency to re-evaluate the skills required to manage these digital processes and solutions. Additionally, using
automation can help ensure compliance with regulations by providing real-time visibility into each step of the process which drives
trust and goodwill.
Improving
Improving Collaboration
collaboration between departments, stakeholders, and suppliers is the key to increasing
efficiency and innovation in public procurement. Staying informed is the key to preventing delays and
Improvingopportunities.
uncovering collaboration between
By granting departments,
everyone stakeholders,
in the loop real-time data,and suppliers
potential is the
setbacks can key
be to increasing efficiency and innovation in public
procurement. Staying informed is the key to preventing delays and uncovering opportunities. By granting everyone in the loop real-
quickly avoided and any chances for progress discovered and maximized.
time data, potential
Streamlining setbacks
communication can can be quickly
be essential to avoided
avoiding and
costlyany chances
delays and for progress
identifying newdiscovered and maximized.
opportunities. By utilizing a centralized system, all involved parties are kept up-to-date on
Streamliningorcommunication
requirements changes that come can be essential
down the pipelineto–avoiding
this way nocostly
one delays and
is missing anyidentifying
crucial new opportunities. By utilizing a centralized
system, allfor
information involved parties
the project’s are kept up-to-date on requirements or changes that come down the pipeline – this way no one is missing
success.
any crucial information for the project’s success.
11.2 Strengthening Transparency and Accountability Measures
11.2 Strengthening Transparency and Accountability Measures
Transparency provisions enable processes and decisions to be monitored and reviewed, helps ensure
Transparency
that provisions
decision-makers can be enable processesand
held accountable andalso
decisions to be
helps open monitored
public and reviewed,
procurement to more helps ensure that decision-makers can be held
competition. Transparency needs to pervade all steps in the procurement cycle, from the earliest
accountable and also helps open public procurement to more competition. Transparency needs to pervade all steps in the procurement
decisions on needs assessments, to the development of procurement plans and budget allocations, to
cycle,
bid from the
evaluations, earliest decisions
to implementing on needs
the contracts assessments,
and auditing to the development of procurement plans and budget allocations, to bid
performance.
evaluations, to implementing the contracts and auditing performance.
To promote transparency throughout the procurement cycle following parameter should be
To promote
adopted: 33
transparency throughout the procurement cycle following parameter should be adopted:33
Governments should publish selection criteria and details of the method of award in a timely
manner before the procurement process commences. Upon award, governments should publish a
clear justification against the agreed criteria.
Governments should disclose awarded contracts, including schedules or reference documents.

Any contract alterations or sanctions, including debarment from future tenders must be
disclosed.
Governments should collect and disclose the identity and beneficial ownership of all bidders.
Governments should ensure independent monitoring of all stages of the procurement process
and a robust, independent and effective appeals processes should be available and accessible for
aggrieved bidders.
Information on public procurement should be made available for free in widely used open and
structured formats that are non-proprietary, searchable, sortable, platform-independent, and
machine-readable.
33 https://www.transparency.org/files/content/activity/2015_TI_G20PositionPaper_PublicProcurement.pdf
33
https://www.transparency.org/files/content/activity/2015_TI_G20PositionPaper_PublicProcurement.pdf
86
11.3 Capacity Building and Training
Capacity Building
Capacity building is an investment in the future sustainability of the financial and governance system of a country for better performance
of the public sector, all countries need staff with the requisite knowledge, skills, behaviours, and competencies to enable them to fulfil
their policies and goals. Therefore, it is of utmost importance to strengthen capacity in the context of emerging economies aiming to
deliver satisfactory services under financial constraints.
Capacity Development Process34
It is a process whereby people, organizations and society as a whole unleash, strengthen, create, adapt and maintain capacity over
time.
These steps broadly coincide with the steps of a planning or programming cycle. Approaching capacity development through this
process makes a rigorous and systematic way of supporting it, without using a blueprint and improves the consistency, coherence and
impact of efforts. It also helps promote a common frame of reference for a programmatic response to capacity development including
for procurement.
The five steps of the capacity development process are:
Procurement Capacity Assessment Methodology

Effective support of the procurement capacity development process begins with identifying what key capacities already exist and what
additional capacities may be needed to reach objectives.
A capacity assessment is an analysis of desired capacities against existing capacities, which generates an understanding of capacity
assets, gaps and needs that can serve as input for formulating a capacity development response or strategy.
The capacity response should address those capacities that are a priority to strengthen and optimises existing capacities that are
already strong and well founded. It sets the baseline for continuous monitoring and evaluation of progress against relevant indicators
and helps create a solid foundation for long-term planning, implementation and sustainable results in public procurement.
Procurement capacity assessments can be conducted as a response to a variety of different triggers. Often, they are conducted as a
response to a felt and expressed need for procurement capacity development, for example, at the level of the government as a whole,
a specific sector, or a procuring entity (ministry, district or municipality). Such assessments are conducted to determine or clarify what
types of capacity need to be addressed and how. If a capacity assessment was not conducted during formulation of a procurement
capacity development strategy or reform programme it can be initiated during the implementation and/or as part of an evaluation
process.
34 https://www.undp.org/sites/g/files/zskgke326/files/publications/Procurement%20Capacity%20Assessment%20Guide.pdf
development, for example, at the level of the government as a whole, a specific sector, or a procuring
entity (ministry, district or municipality). Such assessments are conducted to determine or clarify what
types of capacity need to be addressed and how. If a capacity assessment was not conducted during
formulation of a procurement capacity development strategy or reform programme it can be initiated
during the implementation and/or as part of an evaluation process.
Procurement Capacity Assessment Methodology provides a structure for discussion about the scale,
scope and process of a capacity assessment exercise and about the capacity development agenda
more generally.
Procurement Capacity Assessment Methodology provides a structure for discussion about the scale, scope and process of a capacity
assessment exercise
It consists of: and about the capacity development agenda more generally.
It consists of:
a) Capacity Assessment Framework
a) Capacity Assessment Framework
b) A process for conducting a capacity assessment.
b) A processc)for conducting
Supporting a capacity
tools assessment.
c) Supporting tools
Capacity Assessment Framework
Capacity Assessment Framework
Capacity
Capacity Assessment
Assessment Framework
Framework has threehas three dimensions:
dimensions:
Points of Entry
•Capacity resides on different levels: 1) the enabling environment. 2) the organisational;

and 3) the individual
•Each of these levels can be the point of entry for a capacity assessment.
Core Issues
•These are the four capacity issues that suggest to be the most commonly encountered
across sectors, including procurement, and levels of capacity: 1) institutional
arrangements; 2) leadership; 3) knowledge; and 4) accountability.
Functional & Technical Capabilities
•These are the capacities necessary for the successful creation and management of
policies,
The Process legislations,
for Conducting strategies and/or
a Procurement Capacityprogrammes.
Assessment
Following a three-stage process to conduct a procurement capacity assessment. The activities in each
The Process
stage aim atfor Conducting
deepening a Procurement
engagement Capacity
of partners Assessment
and promoting dialogue among key stakeholders
88
around the
Following capacity assessment
a three-stage process.a procurement capacity assessment. The activities in each stage aim at deepening
process to conduct
engagement of partners and promoting dialogue among key stakeholders around the capacity assessment process.
The design is driven by

Engaged stakeholders and three guiding questions:
a clear design are key to a
Mobilise and Design successful capacity
1) capacity for why?
assessment. 2) capacity for whom?
3) capacity for what?
This data and information

During the capacity
can be gathered by a
Conduct the Capacity assessment data and
variety of means, including
information are collected
Assessment on desired and existing
self-assessment,
interviews and focus
capacity.
groups
Also, provides the basis for

Summarise and It determines the level of
the formulation of a
effort required to bridge
Interpret Results the gap between them
capacity development
response.
Supporting Tools 11th Public Procurement Summit 2023: Enhancing Transparency, Efficiency and Accountability 55
A number of supporting tools are available as resources for a procurement capacity assessment.
These include:
• Sample terms of reference for scoping missions
Supporting Tools
A number of supporting tools are available as resources for a procurement capacity assessment.
These include:
• Sample terms of reference for scoping missions
• Data collection worksheets Legal
• Interview guides etc Complianc
es
Procurement Training Practices Improved
Risk
Procurement
The world is continuously changing which means employees Management
Practices
within the procurement function require refresher courses
and training to keep them-up-to date with the trends in the
profession. Trained employees are a vital to the success of any
organisation as the procurement function is done effectively
Enhanced
and efficiently to save the firm unnecessary expenses where Continuous Transparency
needed. Improvement and
Accountability
Training plays a crucial role in public procurement for several
reasons. Public procurement refers to the process by which
government entities and public organizations acquire goods, Supplier Efficient
services, and works from external suppliers. Relationship Resource
Management Allocation
Effective training in public procurement helps to ensure
transparency, fairness, efficiency, and accountability
throughout the procurement process. Here are some key reasons why training is important in public procurement:
1. Legal Compliance: Public procurement is subject to a complex framework of laws, regulations, and
1. Legal Compliance: Public procurement is subject policies
to a complex framework of laws, regulations, and policies that vary across
that vary across jurisdictions. Training provides procurement professionals with a
jurisdictions. Training provides procurement professionals with aunderstanding
comprehensive comprehensive understanding
of these of theseensuring
legal requirements, legal requirements,
compliance and minimizing
ensuring compliance and minimizing the risk of legal
thechallenges
risk of legalorchallenges
irregularities.
or irregularities.
2. Improved Procurement Practices: Training programs help procurement professionals develop the necessary skills and knowledge
2. Improved Procurement
to carry out their duties effectively. This includes understanding Practices:
the procurement Training
cycle, marketprograms
analysis,help procurement
specification professionals develop the
development,
necessary skills and knowledge to carry out their duties effectively.
bid evaluation, contract management, and negotiation techniques. By enhancing their capabilities, training improves overall This includes understanding the
procurement cycle, market analysis, specification development, bid evaluation, contract
procurement practices and ensures better value for money.
management, and negotiation techniques. By enhancing their capabilities, training improves
3. Enhanced Transparency and Accountability: Transparency and accountability
overall procurement practicesare
andfundamental principles
ensures better value forin public procurement.
money.
Training educates procurement practitioners on the importance of maintaining transparency, documenting processes, avoiding
conflicts of interest, and ensuring fair competition. By promoting
3. Enhanced transparency
Transparency and accountability,
and Accountability: Transparencytraining helps prevent
and accountability are fundamental
corruption, fraud, and favouritism in procurement principles
processes.in public procurement. Training educates procurement practitioners on the importance
of maintaining transparency, documenting processes, avoiding conflicts of interest, and ensuring
4. Efficient Resource Allocation: Effective training equips procurement professionals with the skills to identify cost-effective
fair competition. By promoting transparency and accountability, training helps prevent corruption,
solutions, analyse market trends, and evaluate supplier capabilities. This knowledge enables them to make informed decisions,
fraud, and favouritism in procurement processes.
negotiate better terms, and achieve optimal outcomes. By enhancing efficiency, training helps allocate public resources wisely,
maximizing their impact and value. 4. Efficient Resource Allocation: Effective training equips procurement professionals with the skills to
identify
5. Supplier Relationship Management: Training in public cost-effective
procurement solutions,the
emphasizes analyse market of
importance trends, andstrong
building evaluate supplier capabilities. This
relationships
with suppliers. Procurement professionals learnknowledge
techniquesenables them to make
for effective informed decisions,
communication, negotiateand
negotiation, better terms, and achieve optimal
performance
outcomes.
management. By fostering positive supplier relationships, By enhancing
training efficiency,
helps ensure training
reliable helps
delivery of allocate
goods andpublic resources
services, wisely, maximizing their
encourages
impact and value.
innovation, and promotes long-term partnerships.
6. Continuous Improvement: Public procurement5.is Supplier
an evolving field influenced
Relationship by changing
Management: Trainingregulations, emerging emphasizes
in public procurement technologies,
the importance of
and best practices. Training programs provide professionals with relationships
building strong opportunitieswith
to stay updated
suppliers. with the latest
Procurement developments
professionals learn techniques for
and advancements in the procurement domain. Continuous training fostersnegotiation,
effective communication, a culture ofand
learning, innovation,
performance and continuous
management. By fostering positive
improvement within procurement organizations.
7. Risk Management: Public procurement involves inherent risks such as supplier non-compliance, delivery delays, quality issues,
and contract disputes. Training equips procurement professionals with risk management techniques, enabling them to identify,
90
assess, mitigate, and respond to potential risks effectively. By minimizing risks, training contributes to successful procurement
outcomes.
About ASSOCHAM
The Knowledge Architect of Corporate India
The Associated Chambers of Commerce & Industry of India (ASSOCHAM) is the country’s oldest apex chamber. It brings
in actionable insights to strengthen the Indian ecosystem, leveraging its network of more than 4,50,000 members, of
which MSMEs represent a large segment. With a strong presence in states, and key cities globally, ASSOCHAM also has
more than 400 associations, federations, and regional chambers in its fold.
Aligned with the vision of creating a New India, ASSOCHAM works as a conduit between the industry and the
Government. The Chamber is an agile and forward-looking institution, leading various initiatives to enhance the global
competitiveness of the Indian industry, while strengthening the domestic ecosystem.
With more than 100 national and regional sector councils, ASSOCHAM is an impactful representative of the Indian
industry. These Councils are led by well-known industry leaders, academicians, economists and independent
professionals. The Chamber focuses on aligning critical needs and interests of the industry with the growth aspirations
of the nation.
ASSOCHAM is driving four strategic priorities – Sustainability, Empowerment, Entrepreneurship and Digitisation. The
Chamber believes that affirmative action in these areas would help drive an inclusive and sustainable socio-economic
growth for the country.
ASSOCHAM is working hand in hand with the government, regulators, and national and international think tanks
to contribute to the policy making process and share vital feedback on implementation of decisions of far-reaching
consequences. In line with its focus on being future-ready, the Chamber is building a strong network of knowledge
architects. Thus, ASSOCHAM is all set to redefine the dynamics of growth and development in the technology-driven
‘Knowledge-Based Economy. The Chamber aims to empower stakeholders in the Indian economy by inculcating
knowledge that will be the catalyst of growth in the dynamic global environment.
The Chamber also supports civil society through citizenship programmes, to drive inclusive development. ASSOCHAM’s
member network leads initiatives in various segments such as empowerment, healthcare, education and skilling,
hygiene, affirmative action, road safety, livelihood, life skills, sustainability, to name a few.
About Nangia Andersen LLP
For the last 4 decades, Nangia Group has been adding value to the business of its expansive clientele, which includes
some of the largest Indian business houses and Fortune 500 multinational companies.
Nangia Andersen LLP is a premier business advisory firm offering a full suite of professional services across the realm
of Growth strategy & Transaction advisory, Government & Public-sector advisory, Tax & Regulatory, Environmental
Sustainability Growth, Start-up support, Risk advisory, and Cyber and Forensic services.
Nangia Andersen is a member firm of Andersen Global in India. This defines our capability to provide seamless
cross-border services through offices across the globe, in more than 170 countries. The Firm has a marked domestic
presence with offices located in 8 cities, viz. Noida, New Delhi, Gurugram, Bengaluru, Mumbai, Chennai, Dehradun,
and Pune.
Our core strength is our team of 1000+ qualified professionals who possess significant national and international
experience, having worked with large global consulting firms as well as with the government and private sectors in
India.
Contributors
Poonam Kaura Sudha Kant
Partner Director
poonam.kaura@nangia-andersen.com sudha.kant@nangia-andersen.com
More than 6 decades of
Responsible Mining and
Sustainability
> One of the best performing Public Sector
Enterprises of India
> The single largest producer of iron ore in India
> Venturing into steel by commissioning 3.0
MTPA Steel Plant at Nagarnar, Chhattisgarh
> Sole producer of Diamonds in India
> Bringing socio-economic transformation
through innovative and impactful CSR
initiatives in the less developed regions of the
Country.
NMDC re-dedicates itself with a fresh zeal and

renewed enthusiasm, energy and strategy to
achieve greater heights in delivering value
for all its stakeholders.
Khanij Bhavan, 10-3-311/A, Castle Hills,

Masab Tank, Hyderabad -500 028, Telangana, India
/nmdclimited | www.nmdc.co.in
Eco-Friendly Miner

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Public Procurement

Enhancing Transparency, Efficiency and Accountability

The Associated Chambers of Commerce and Industry of India

1. Introduction to Public Procurement..................................................................................................................... 1

Figure 1: Public Procurement Framework in India.............................................................................................................. 1

Open Tender Enquiry (OTE)

3.2 Standard Bidding Documents and Templates

3.3 Pre-Qualification and Post-Qualification Processes

3.4 Evaluation of Bids: Techno-Commercial and Price Assessment

3.5 Ensuring Reasonableness of Prices

3.6 Bid Evaluation Committee Proceedings

3.7 Make in India and Purchase Preference Policies

7 Niti Aayog OM No. N-14070/14/2016-PPPAU dated September 05, 2016

5.2 Manual for Procurement of Consultancy Services

8 Rule 177 of GFR 2017

Figure 7: Share of Indigenous Purchase

Rails, Track machines, and track fittings

Wheels, Axles. Rails, Track machines and track fittings

Diesel, oil and lubricants, chemicals

Workshop plants, machines and tools

Rolling stock spares

Electrical, Signaling and Telecom equipments and spares

Staff welfare, healthcare and passenger amenity items

Figure 8: Expenditure by IR for goods procurement

2. Consolidation of requirements & specifications

authority to scrutinize every demand, to

(a) Notify a List of Weapons/Platforms for Ban on Import

(ii) New Category of Buy (Global–Manufacture in India)

(iii) Co-production through Inter Government Agreement (IGA)

(iv) Contractual Enablement

(c) FDI (Foreign Direct Investment) in Defence Manufacturing.

Hierarchically arranged categories Special categories

Buy (Global – Manufacture in India)

Category Vendors eligible to participate Indigenous Content

Acquisition cycle and procedure

Significance of DAP-2020 for Mission Atmanirbhar

7.1 Key Statistics and Trends in Government e-Marketplace

7.2 Impact of GeM on Public Procurement

15 Economic Survey Report 2022-23

8.2 Impact of GePNIC on Public Procurement

Attractiveness: Performance in terms of social responsibility and sustainability may impact a

9.1 Promoting Socially Responsible Procurement: Ethical Considerations

•Supply management actions and decisions that promote protection and

•Financial responsibility refers to understanding and applying financial concepts

Human Rights and Labor Standards

Supplier Diversity and Fair Trade Practices

Supply Chain Transparency and Due Diligence

Ethical Sourcing and Conflict Minerals

Fair Treatment and Equal Opportunities

Collaboration and Capacity Building

Ethical Product End-of-Life Management

The Absence of a Comprehensive Procurement Act

Lack of Standard Bid Documents

Delays in Activities in Procurement Cycle

Unfair Practices and Corruption

Presence of Anti-Competitive Elements

Low Participation of the Domestic MSEs

Competency and Skill of the Procurement Officials

The procurement of likelihood and consequence.