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Prime Minister Modi has retreated and withdrawn the proposed farm laws.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Prime Minister Modi has retreated and withdrawn the proposed farm laws.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
Technology

HCL-Foxconn to invest Rs 37 billion in chip plant near Jewar airport

The Union Cabinet has approved the establishment of a new semiconductor unit near Jewar airport in Uttar Pradesh under the India Semiconductor Mission. This sixth plant, a joint venture between HCL and Foxconn, marks further progress in India’s semiconductor journey. The project will see an investment of Rs 37 billion.The facility will produce display driver chips for mobile phones, laptops, automobiles, PCs, and other digital devices. It is designed for a monthly capacity of 20,000 wafers and an output of 36 million units.Five semiconductor units are already in advanced stages of constructi..

Next Story
Real Estate

Brigade acquires Velachery land for Rs 16-billion project

Brigade Enterprises has acquired a 5.41-acre land parcel on Velachery Road, Chennai, through an outright purchase for Rs 4.417 billion. Located next to Phoenix Market City, the site will be developed into a premium residential project with a gross development value of approximately Rs 16 billion and a development potential of 0.8 million square feet.The project offers strategic access to both the OMR IT Corridor and Chennai’s Central Business District, promising strong connectivity and premium lifestyle offerings. Brigade plans to create signature residences focused on aesthetics, functional..

Next Story
Equipment

Liebherr marks 10,000th XPower wheel loader milestone

Liebherr-Werk Bischofshofen has rolled out its 10,000th XPower wheel loader, marking a major production milestone. The anniversary L 580 XPower model, featuring a power-split travel drive developed with ZF Friedrichshafen AG, was handed over to the BERGER Group in Passau.“The transmission from our partner ZF is a key component of the drivetrain in our XPower wheel loaders,” said Gerhard Pirnbacher, Head of Quality Management at Liebherr. “With an impressive total of around 64 million operating hours already clocked up by XPower models, this transmission has proven its exceptional robustn..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?