Section A - Group 9

Chetan Umrao M080-19

Deepanshu Purwar M081-19
Sagar Raj Singh M109-18
Soumen Mukherjee M116-18
 Public Procurement
Definition:- Public procurement involves purchasing of goods or services by different entities such as
ministries and departments of the government for public service delivery, and it encompasses activities
ranging from assessment of procurement needs to awards of contract and final payment

Public Procurement vs Business Procurement

https://www.youtube.com/watch?v=O6PDt07JJKI
Factors underlying similarities and differences between public and business
procurement

Three classes of buying activity Conditions responsible for difference

between business and government buying

Differences in • Larger system vs smaller system

objective and
philosophy • Profit vs service objective
Routinized Limited Extensive
Response Problem Problem Different degrees of • Purchases made from taxpayer’s money
accountability • Less flexibility and freedom
Behaviour Solving Solving
• Buyers well • New options • Unfamiliar Different disclosure
• Confidentiality between buyer and seller
known about within a product class rules
product familiar and need to
class,attributes product class establish use Procedural detail
of brand etc. criteria mandated by different Plethora of laws and executive orders
legal constraints
Differences between Government and Business Buying Behaviour

Size of the average purchase • Costly purchases (defence,space systems)-constituting 66% of government purchase by value

• Specific laws and restrictions requiring competitive bidding,fixed budgetary limitations, rigid auditing
Legal Instructions of accounts

Compliance reviews • Centralized purchases leads to standardization requiring specialists and inspectors

Solicitation of sellers • Government buyers go to greater lengths to find sellers than is typical of their colleagues in business

• Competitors, as well as customers of supplying firms, can not only discover the prices at which
Security awards have been made but can obtain the prices which were proposed by various bidders
• Level of procurement expertise not present within the contracting activity is available to assure that
Diffusion of Authority the government's requirements are met fairly and reasonably

Leverage • Lower than business counterparts

Procedural Detail • Voluminous government purchasing detail results in requirement to use formal advertised
procurement whenever possible

Instrument of Social Policy • Too much attention to the limitations imposed by social policy in public procurement system

Government Power •Government is a sovereign power and determines the conditions under which business is conducted with it
Public Procurement in India: Facts and Figures
20-30% of GDP vs 15% of GDP across the
world
 Major contributors-Defence, Railways
and Telecom (50% of budgets for public
procurement)
 Government expenditure in India- 11,973 to
16,637 billion in 2012 -17 (Ministry
of Finance,2017)
https://www.youtube.com/watch?v=4SEuZRUHS4w
Problems in Indian Public Procurement scenario
No comprehensive public procurement law
guiding procurement activities
Complex constitutional arrangement-Union
and State Govt.,PSU’s and local governments
(panchayats and municipalities)
Presence of GFR’s (General Financial Rules)
allowing independent procurement for each
body
Different procurement manuals
administering public procurement activities
(Defence, Railway,PWD)
Multiple interpretations of rules and
regulations due to socio-economic
developmental objectives
Public Procurement Framework in India
Planning procedure
http://procurement-india.org/
https://procurement-india.org/index.php/laws-
regulations/
https://procurement-india.org/index.php/key-
institutions/

Procurement provisions under

reservation/preferential mode

Reserved Preference
Procurement from Policy for The Public Procurement
Khadi Reserved Domestically Policy for MSE Order 2012
Goods/Handloom Procurement Manufacture Minimum annual
Textiles from d Electronic procurement target of 20
Pharmaceutical Products percent from the MSEs
a) Khadi & Village
Industries Commission
CPSEs Ministry of MSE quoting price within
(KVIC) National Electronics the price band of L1+15
Pharmaceutical and percent will be allowed to
b) Association of Information
Corporations and Apex Pricing Authority supply by bringing down its
Technology price to L1 price
Societies of (MeitY)
Handlooms (ACASH
 General Financial Rules 2017: Procurement Features
Introduction
• First enacted in 1947, evolved as GFR 1963,GFR 2005 and GFR 2017
• Compilation of general rules and orders to be followed by the government entities dealing with the
matters involving public financial management
• Prescribes the use of a standard procurement method (limited tender enquiry, advertised/open tender
enquiry, single tender enquiry, two-stage bidding, or electronic reverse auctions) depending on type
(works/goods/services) and volume of procurement (in monetary terms)

Defines works, Prescribes monetary

thresholds for using
goods, and Outlines
specific procurement
services to be methods across the general
procured and categories of principles and
the scope of procurements, i.e., Prescribes rules of
Features of public
procurement
works, goods, and
services
Code of
Integrity
contract
management

GFR,2017
Outlines the fundamental Describes Specifies
principles of public different tender award
procurement like procurement criteria
enhancing transparency methods and
and efficiency, instilling their
fair practice, and applicability
promotion of
competition
 Electronic Portals for Public Procurement in India
 Promotes transparency, efficiency, and accountability

 Publish and accept the tender and related documents Select supplier directly
with the lowest price on
 Free access to bid documents & submission An entity searches in
portal for procurement
 Communications for clarifications & access to bid opening portal
value of up to INR 30
lakhs

Upon receipt of goods

More than INR 30 lakhs
and services payment is
bid/reverse auction used
made electronically

https://eprocure.gov.in/eprocure/app https://gem.gov.in/
Green Public Procurement In India
 Objective- Deal with the climate change issues and promote
sustainable development programs through environment friendly
procurement
 Thematic Representation of Public Procurement System in India
• Need assessment of the procuring entity
• Internal research for technical and financial specifications
Planning of • Preparation of bid document with evaluation criteria
Procurement • Weightages to cost & quality parameter

• After selection ,tender awarded

by criteria (Lowest Price)
• Unsuccessful bidders can obtain
the feedback on request
• Deposit a performance security,
5-10 percent of the contract value • Critical info - Bid fee, earnest money de-
posit security, performance security
PowerPoint Award & Redressal Preparation
PowerPoint • Avg. validity 45 days beyond the final
PowerPoint
Presentation & Publication
Presentation bid validity period
Presentation
Execution Mechanism • EMD returned to unsuccessful bidder
of Bids • Time-frame of the procurement process
• Published through channels e-portals

Two-tier review system

• Bidder submits a bid & stakeholders use digital
signature certificate to access e-portals
• Timeframe for withdrawal of bidder
• 2 envelope system -Bidders submit technical &
financial bid separately
• Opened in the presence of the bidders &
evaluated for compliance with specifications
• Technical evaluation followed by financials
• First- Bidder report irregularities to concerned
officials of the procuring entity
Submission & Tenders engage arbitrator (Dispute Review Expert)
to resolve
Evaluation of • Second -Bidder can move to the courts for
Bids settlements
On guilty debarred indefinitely/period from
participating in public procurement
 Issues in the Public Procurement in India
01 The absence of a comprehensive procurement Act
Government entities frame procurement process own perception
Results into heterogeneous procedures and multiplicity of rules

02 Lack of standard bid documents

Multiplicity of bid documents across the entities in terms of
addition/rephrase/repetition of clauses/provisions

03 Delays in activities in procurement cycle

Delayed in stage of need assessment, budget preparation & approval
Unavailability of sufficient procurement professionals

04 Unfair practices and corruption

Absence of comprehensive legislation, violation of procedural norms,
and weak monitoring procedures

05 Presence of anti-competitive elements

Hamper procurement process by negating the best value of money
Collusive bidding, bid rigging, cartelization, and abuse of dominance

06 Low participation of the domestic MSEs

Government procuring entities delay in releasing contract payments

07 Absence of an independent grievance redressal mechanism

Lack of Independent Grievance Redressal Mechanism
Hierarchy of judicial process is time consuming & costly

08 Competency and skill of the procurement officials

Officials are reluctant to take decision due to possible trial for procedural error
Employ temporary consultant that reduces credentials & public confidence
 The Draft Public Procurement Bill 2012

Need-based assessment for the Incorporates the provisions made in

procurement by the entities MSMEs Order 2012
Defining Code of Integrity for the
procuring entities as well as the bidders

Setting up of CPPP to ensure Draft Public Constituent of one or more independent

transparency where the entire Procurement procurement redressal committees &
bidding process will be done No provision for price negotiation with
Bill 2012
the bidders except in a few circumstances

Open bidding to be the preferred Different degree of penalties/punishments

method of procurement and thus, for offences such as corruption, making
streamlining the bid-ding process vexation, interference with the process,
for foreign participants too malicious complaints, and abetment of
offences
Objective
 To regulate the public procurement and
bring more accountability and fairness in
the system
 Regulate procurement activities valued
over INR 50 lakhs by the government
procuring entities
 Towards a Transparent and Efficient Procurement Regime in India
Enactment of procurement Act
• Provide a structured competitive
process to public money and
confidence
• Preparing standard and uniform
bid documents for identical
procurement
• Specify the criteria along with the
relative weightages of the
different parameters
Adoption of e-procurement portals
• Extract full benefits : e-opening of
bids, e-deposit of the tender-related
pay-ments, e-filing for contract
payment, and e-payment to the
suppliers
• Digital India campaign should be
promoted at a large scale
Procurement management information
system (PMIS)
• Data centre to assess and track past
tenders to identify and remove anti-
competitive elements
• Narrow down the procurement cycle
• Developing a prototype Corruption Risk
Dashboard to identify anti-competitive
elements
Participation of MSEs
• Provide access to information,
technology, credit facilities and
training
• Link the price and purchase
preferences to the government
policies
• Relax norms with regards to prior
experience and financial capac-ity.
Grievance redressal system & KPI
• Independent and decentralized
system
• Allowance to lodge complaints at
each stage of the procurement
cycle
• To assess ,monitor efficiency and
benchmarking
Training officials
• Exposure to the best procurement
mechanisms used in international
agencies
• Training institutions for government
officials at all levels should introduce
specific modules on public procurement
Thank You