Procurement: Seismic Shift!
ECONOMY & POLICY

Procurement: Seismic Shift!

Prime Minister Modi has retreated and withdrawn the proposed farm laws. A step back for progressive reforms for the farm sector, but a step forward for democracy. Meanwhile, critical reforms are underway, although silently, that can have a cascading impact on our ...

Prime Minister Modi has retreated and withdrawn the proposed farm laws. A step back for progressive reforms for the farm sector, but a step forward for democracy. Meanwhile, critical reforms are underway, although silently, that can have a cascading impact on our national assets on which we have proposed to spend Rs.110 trillion over the next five years under the National Infrastructure Pipeline (NIP). Public procurement policy norms have been tweaked to allow for quality-oriented procurement. The guidelines issued by the Department of Expenditure’s Public Procurement Division have now allowed the selection of bidders for works and non-consultancy services through alternative procurement methods like quality-cum-cost-based selection (QCBS). So far, under the General Financial Rules (GFR), 2017, which government agencies and ministries had to follow, QCBS was used only for procurement in cases where the quality of consultancy services was of prime concern. Two other additional methods— L1 and single-source selection — were also recommended in GFR 2017. According to the revised guidelines, L1 or ‘least cost selection’, will no longer be the only tendering format to select bidders for projects. L1 was so far the preferred method used by ministries, public agencies and PSUs to select the lowest bidders to carry out standard or routine works/non-consultancy services like audit and engineering design of non-complex works. In times of early infrastructure development during UPA 1 and UPA 2, L1 has driven several private companies to make ridiculous bidsendangering their sustainability. In the L1 system, a bidder is selected only on the basis of the lowest cost with no ‘technical score’ qualification requirement while QCBS evaluates a bidder based on a combination of technical and quality scores. However, the maximum weightage for non-financial parameters should not exceed 30 per cent. The revised guidelines allow procurement agencies to use QCBS where the procurement has been “declared to be a quality-oriented procedure by the competent authority” and where the estimated value of procurement does not exceed Rs.100 million or Rs.10 crore. To declare a project fit for QCBS, a competent authority has been defined and the need for a technical committee comprising independent technical and financial members laid out. QCBS is also the preferred mode for international competitive bidding.The recent arrest of former SBI chairman Pratip Chaudhuri in relation to a complaint by a loan defaulter caused a protest against undue vigilance action in bona fide commercial decisions. This was despite an assurance by FM Nirmala Sitharaman last year while announcing that banks should automatically extend loans to eligible micro, small and medium enterprise sector borrowers without the fear of 3Cs: CBI, CVC and CAG. In a similar vein, the review of decisions taken by the competent authority in procurement deserves proper guidelines to be followed.The Centre has instructed public authorities to refrain from ‘routinely’ appealing against arbitration/court awards relating to disputes involving publicly funded projects, unless there is a compelling case, including a realistic probability of success in court as per the new ‘General Instructions on Procurement and Project Management’,issued on October 29. “There is a perception that such appeals are sometimes resorted to postpone the problem and defer personal accountability. Casual appealing in arbitration/court cases has resulted in payment of heavy damages/compensation/additional interest cost, thereby causing more harm to the exchequer, in addition to tarnishing the image of the government,” the Government said. CW has been seeking this change since September 2016 when I chose to flag this issue under the headline “Unclogging legal and land blocks” in this column.Indeed, with an ever-growing chasm between estimated and actual expenditure, procurement reform maybe truly seismic.This month, our cover story forecasts what lies ahead for the industry. Best wishes for a happy and safe 2022!Links: Open letter to PMUnclogging legal and land blocks

Next Story
Infrastructure Energy

Mahi-Banswara Nuclear Project Siting Transferred to ASHVINI

India’s nuclear regulator, the Atomic Energy Regulatory Board (AERB), has transferred the siting consent for the Mahi-Banswara Atomic Power Project from the Nuclear Power Corporation of India Limited (NPCIL) to Anushakti Vidyut Nigam (ASHVINI), a joint venture company developing the 2,800 MWe project.Prime Minister Narendra Modi is scheduled to lay the foundation stone for the Mahi-Banswara Rajasthan Atomic Power Project (MBRAPP) on 25 September. The project marks the entry of the National Thermal Power Corporation (NTPC) into India’s nuclear power sector.ASHVINI, a joint venture between N..

Next Story
Infrastructure Energy

PM Modi Launches Rs 5.1 Billion Projects in Arunachal Pradesh

Prime Minister Narendra Modi today launched infrastructure projects worth over Rs 5.1 billion in Arunachal Pradesh, underscoring the state’s growing role in energy and regional development. He virtually laid the foundation stones for two major hydropower projects in Shi Yomi district, as well as a convention centre in Tawang. Additional projects worth over Rs 1.29 billion were rolled out across road connectivity, healthcare, and fire safety sectors.Addressing a public gathering at Indira Gandhi Park in Itanagar, PM Modi described Arunachal Pradesh as both the land of the rising sun and a cra..

Next Story
Infrastructure Energy

Power Ministry Forms Committee to Standardise Smart Meter Training

The Ministry of Power is establishing a steering committee and a sub-working group of domain experts to standardise training modules and create standard operating procedures (SOPs) and guidelines for smart meter data analytics, adoption of standards-based regimes, and cybersecurity practices for distribution companies (DISCOMs).The National Data Analytics and Reporting Centre at the National Power Training Institute, Faridabad, will conduct training programmes for DISCOM officials and provide guidance on customising use case analytics. It will also offer a “Leadership and Strategic Managemen..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?