Will QCBS phase out L1 for Infrastructure Procurement?

29 Jan 2024 CW Team

How do you select a contractor without issuing a tender? A private company does not have any such issue doing so, but a State Government or Central Government body has to follow mandated procedures. Then how does the government manage to allot and award contracts to companies that will surely deliver without having to issue tenders? The Motera stadium was awarded to L&T by the Gujarat Cricket Association, whose President was Amit Shah, and they wanted it to be ready with a seating capacity of 1,32,000, which would make it bigger than the Melbourne Cricket Ground, holding 1,00,024, making it the world’s biggest in capacity. Built at a cost of Rs 800 crores within five years, it was first opened to the public in 2020 amid the Namaste Trump event, organized for President of the United States Donald Trump, a critical event. Similarly, the Ram Temple contract was awarded to L&T and Tata Consulting Engineers by the Ram Janmabhoomi Teertha Kshetra, a trust set up in 2020. The criticality of completing the land acquisition and then the construction so that it met the deadline of January 2024 and completed it with its magnificence, probably was a key consideration over the cost. The construction of the Ram Mandir will be completed by December 2024. Right now, only the ground floor has been built. Work on the other two floors was resumed after the Pran Pratishtha ceremony. So, when quality and criticality are of utmost importance, an autonomous body is a great vehicle to grant contracts and move the project at great speed.

In my article of December 2021, I had headlined that a ‘Seismic Shift’ had taken place in the procurement process. The revised guidelines issued on 29 October 2021 allowed procurement agencies to go beyond the L1 or ‘lowest cost selection method’ and use the Quality-cum-Cost Based Selection (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 ₹ 100 million or ₹ 10 crores. In my editorial in November 2022 ‘Private capital is pivotal’, I reiterated that a good idea is being defeated by limiting its applicability to only under Rs 10 crores. I raised this issue with the International Road Federation too, and they promised to support the recommendation. Now finally, in its notification dated 1st November 2023, a clarification has emerged where the limits for applicability of the QCBS system have been withdrawn, and now QCBS system can be applied for all non-consultancy contracts that qualify for Quality-Oriented Procurement (QOP) too, irrespective of the amount, as long as the procedure mandated by QOP is followed. This means that all infrastructure projects, including road projects, can now follow a QCBS system where up to 30% weightage can be given to non-financial parameters. The introduction of QCBS, in addition to the L-1 system, as a method of procurement will ensure that complex infrastructure projects offer the desired value for money, without compromising on the quality of the works. The firms having the requisite technical aptitude that did not participate in the bids earlier, for not being in a position to quote the lowest price, will now be encouraged to take part in the procurement process as well. For consultancy services, a weightage of up to 80% can be provided for non-financial parameters. In keeping with the commitment for building quality infrastructure, FIRST Construction Council and Construction World at the 10th India Construction Festival scheduled on October 9-10, 2024, are also hosting RAHSTA Expo, a one-stop exhibition for road construction solutions. Courses on Highway Construction are also planned this year. All roads are leading to building quality infrastructure. Join us. Register.

The limits for QCBS system of procurement have been lifted says Pratap Padode, Founder & President, FIRST Construction Council who has been a strong proponent of the QCBS system of procurement. Read on… How do you select a contractor without issuing a tender? A private company does not have any such issue doing so, but a State Government or Central Government body has to follow mandated procedures. Then how does the government manage to allot and award contracts to companies that will surely deliver without having to issue tenders? The Motera stadium was awarded to L&T by the Gujarat Cricket Association, whose President was Amit Shah, and they wanted it to be ready with a seating capacity of 1,32,000, which would make it bigger than the Melbourne Cricket Ground, holding 1,00,024, making it the world’s biggest in capacity. Built at a cost of Rs 800 crores within five years, it was first opened to the public in 2020 amid the Namaste Trump event, organized for President of the United States Donald Trump, a critical event. Similarly, the Ram Temple contract was awarded to L&T and Tata Consulting Engineers by the Ram Janmabhoomi Teertha Kshetra, a trust set up in 2020. The criticality of completing the land acquisition and then the construction so that it met the deadline of January 2024 and completed it with its magnificence, probably was a key consideration over the cost. The construction of the Ram Mandir will be completed by December 2024. Right now, only the ground floor has been built. Work on the other two floors was resumed after the Pran Pratishtha ceremony. So, when quality and criticality are of utmost importance, an autonomous body is a great vehicle to grant contracts and move the project at great speed. In my article of December 2021, I had headlined that a ‘Seismic Shift’ had taken place in the procurement process. The revised guidelines issued on 29 October 2021 allowed procurement agencies to go beyond the L1 or ‘lowest cost selection method’ and use the Quality-cum-Cost Based Selection (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 ₹ 100 million or ₹ 10 crores. In my editorial in November 2022 ‘Private capital is pivotal’, I reiterated that a good idea is being defeated by limiting its applicability to only under Rs 10 crores. I raised this issue with the International Road Federation too, and they promised to support the recommendation. Now finally, in its notification dated 1st November 2023, a clarification has emerged where the limits for applicability of the QCBS system have been withdrawn, and now QCBS system can be applied for all non-consultancy contracts that qualify for Quality-Oriented Procurement (QOP) too, irrespective of the amount, as long as the procedure mandated by QOP is followed. This means that all infrastructure projects, including road projects, can now follow a QCBS system where up to 30% weightage can be given to non-financial parameters. The introduction of QCBS, in addition to the L-1 system, as a method of procurement will ensure that complex infrastructure projects offer the desired value for money, without compromising on the quality of the works. The firms having the requisite technical aptitude that did not participate in the bids earlier, for not being in a position to quote the lowest price, will now be encouraged to take part in the procurement process as well. For consultancy services, a weightage of up to 80% can be provided for non-financial parameters. In keeping with the commitment for building quality infrastructure, FIRST Construction Council and Construction World at the 10th India Construction Festival scheduled on October 9-10, 2024, are also hosting RAHSTA Expo, a one-stop exhibition for road construction solutions. Courses on Highway Construction are also planned this year. All roads are leading to building quality infrastructure. Join us. Register.