Facebook Pixel Code

FE Editorial : Tendering change

Given that 7 of the 11 members of the Vinod Dhall committee on public procurement submitted dissent notes, it is to the government?s credit that it still managed to come up with a draft Bill.

Procurement Bill a good start, uphill task ahead

Given that 7 of the 11 members of the Vinod Dhall committee on public procurement submitted dissent notes, it is to the government?s credit that it still managed to come up with a draft Bill, and got the Cabinet to approve it?such wide dissent, from the Railways for instance, suggests the task of implementation will be an uphill one. Since public procurement accounts for about 15% of GDP, and is generally believed to be a big source of corruption, fixing this has been one of the big promises the government made when scam-season began. The government has made a good start with the public procurement bill saying that all purchases above R10 lakh will have to be made through an e-portal. But, beyond this, what? Will the large purchases, of planes for Air India or Rafale jets for the Air Force be done through the e-portal? Unlikely, but that?s where the real big deals are. Since government procurement is not an easy task, the Bill has tried to play it safe?in many places this has ensured the bill is vague and subject to different interpretations. On various non-price criterion, the Bill says they have to be objective and quantifiable to the extent practicable. Similarly, the description of what has to be procured has to be objective and quantifiable to the extent practicable. An even greater problem is created by the definition of what the procurement process is. In most negotiations, other than simple purchase of staplers for instance, corruption takes place in how the contracts are fulfilled after they are awarded?the draft Bill, however, ends the procurement process after the tender has been awarded. A large body of work still remains to be done to fix this part of the Bill.

Even the e-portal is just one part of the story?it will create transparency in terms of the tenders issued and in tracking them, but what happens when a bidder loses out on a tender? The e-procurement plan does not give details of why he was not successful other than the obvious difference on the price point. Yet as successive committees encourage the government to move from a blind adherence to a lowest cost principle in selecting bidders for large projects, this sort of clarity is more necessary. In this context the government also needs to move away from its over dependence on rate contracts for major projects ( breaking up a project into several components and then bidding). As the Dhall committee pointed out, rate contracts are at the root of most corruption charges. So we have a good start, but a lot of work ahead if the Bill is to amount to anything useful in the fight against graft.

Get live Share Market updates, Stock Market Quotes, and the latest India News and business news on Financial Express. Download the Financial Express App for the latest finance news.

First published on: 14-04-2012 at 01:56 IST
Market Data
Market Data
Today’s Most Popular Stories ×