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Public procurement: Reforms to make procurement professional

Public procurement: Reforms to make procurement professional

Public procurement has been under scrutiny because it is suspected for poor material quality and corruption. Vinod Dhall explains how a new department in the making, hopes to clean up and bring about systemic reforms in public procurement.

The volume of public procurement is around Rs 11 lakh crore per annum out of which Rs 3 lakh crore is directly by the government and the rest by Public Sector Undertakings (PSUs). Given this magni­tude, it needs proper administrative and legal framework. The activity is governed by General Financial Rule (GFR), where only two of the seven chapters deal with procurement, and there is very little on works procure­ment, the major component today.

Although we have not drafted the Act (the gov­ernment has announced the sequential drafting of the policy and law), we have laid down the major pri­nciples which should be incorporated in the Act, inc­luding tra­nsparency, competition, effici­ency, accoun­tability and redressal.

Department of Public Procurement: Our aim is to see that public procurement is handled in a professional manner, and have recommended that a new department should provide real time leadership to the whole procu­rement process. The department will be a nodal point, not a central procurement agency. The depart­ment will train personnel and prepare model documents – we have recommended model documents for all sectors. While it will be a government department, its staff will be profe­ssionally trained in public procurement.

As we understand, the finance ministry has started (not a department, but) a division within the ministry. We hope that in time, the division will grow into a fully equipped department.

Transparency: E-procurement forms a major part of our recommendations. Our opinion is that there should be an overarching public procurement portal, acquiring information on what and who is bidding, who wins a bid, how are complaints being handled, etc.

Addressing corruption: The procurer / government has a right to obtain information about the vendor, and vendors have the right to expect that once we have given our bid it will happen in an equitable and non discri­minatory manner. This demands that document­ation such as RFQs and RFPs are compre­hensive.

Negotiations become the sou­rce of corruption and negate the process of bidding. and should be strongly discouraged even if it is with the lowest bidder. If at all the negotiations are to be held, they should happen in the presence of a higher authority.

Monitoring: There may be needless delays in pro­jects – notoriously so in highways. We have recom­me­nded that the Department of Public Procurement can constantly monitor projects, especially as against the documentation. So it also becomes an MIS tool.

EPC: We have not gone into details of concession models, but we have recommended that EPC should be the preferred mode of procurement. We have also recom­m­ended training, capacity buil­ding and courses in man­agement institutes for staff.

Redressal: In case of a dispute, there should be a proper and known process – in how many days it must be settled, higher authority to appeal to. If a party seek redressal, there should be tribunals for appeal. Currently, there is a plethora of cases going on all the time in vari­ous courts from lower to higher level, with stay orders that are operating, composition claims pending.

Vinod Dhall, Managing Partner at Noida-based Dhall Law Chambers, chaired an expert committee constituted on 1 February this year by the Secretariat at the instance of a Group of Ministers headed by the Finance Minister Pranab Mukherjee, to identify measures the government can take against corruption and frame the Public Procurement Act.

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