public procurement bill-2012 an overviewwtocentre.iift.ac.in/cbp/public procurement bill-2012-1_shri...

Presented by Keshav Prasad Varma

4th June 2012

Public Procurement Bill-2012An overview

Part –I : The Public Procurement Bill

2 Seminar on Public Procurement Bill 2012

Public Procurement Bill 2012 restates the principles and procedures of GFR 2005, Chapter 6

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• The subject matter is arranged in a more logical format

• Minor modifications made in existing provisions

• New topics added

→Integrity Pact

→Grievance RedressalCont..

Introductory Remarks

Seminar on Public Procurement Bill 2012

Introductory Remarks

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→Offences, Penalties and Debarment→Professionalisation →etc.

Rules on works (Chapter 5 of GFR) have been dropped, also those for services (Chapter 6, Part II of GFR)

Contract management (Chapter 8 of GFR) has also been dropped


“to regulate public procurement with the objectives ofensuring transparency, accountability and probity in theprocurement process, fair and equitable treatment ofbidders, promoting competition, enhancing efficiency andeconomy, maintaining integrity and public confidence inthe public procurement process and for mattersconnected therewith or incidental there to”


Arrangement of clauses in the Bill

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The clauses have been organised under four chaptersand similar topics have been put together; repetition hasbeen avoided. This is a major improvement over GFR.

Chapter One- Objectives, definitions of terms & applicability

Chapter Two- Principles and Methods of Procurement,subdivided into –

A. General Principle of ProcurementB. Methods of Procurement

Cont….


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Chapter Three- Institutional Mechanisms This is an addition to GFR provisions and aims to strengthen the system to achieve objectives of bill and make it more efficient. It is also subdivided into three sub chapters

A. Transparency Mechanisms B. Grievance Redressal C. Professionalisation

Chapter Four – Offences, penalties and Debarment. This also is a new addition, primarily concerned with curbing corrupt practices.

Chapter Five- MiscellaneousIt deals with procedural matters, arising out of introduction of the Bill.


Chapter One- Preliminary

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Definitions

Defines ‘Procurement’ as covering goods, works and services – cl. 2 (r)

‘Procurement Process’ has been defined to end with award of contract, cl.2 (t)

‘ Framework Agreement’ has been introduced, cl.2 (h)

‘Offset’ is introduces at cl.2 (n)

‘ Public Private Partnership’ is introduced at cl.2 (w)

‘Electronic Reverse Auction’ is introduced at cl.2 (g)


Applicability

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• Goes much beyond Govt. ministries and deptts. PSUs are included., cl.3 (2)

• Procurement for externally financed projects are excluded, cl.3(3)

• Not applicable for-• procurement below Rs. 50 lacs or as notified• emergent procurement, ref. Disaster Management Act• procurements concerning national security or strategic

considerations

Chapter One- Preliminary


Chapter Two A : General Principles of Procurement

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• Objectives reiterated, cl.5→ prevention of corrupt practices specifically mentioned cl.5, 1 (e) → different sets of rules for goods, works , services, PPP etc may be

made, as also for different category of procuring entity, cl. 5(3)

• Integrity code introduced, cl.6→ defines what is prohibited, cl.6 2(a)

bribe, misrepresentation, collusion etc.→ disclosure of conflict if interest be made cl. 6.2 (b)→ disclosure of past misconduct or debarment be made cl. 6.2 (c)→ penalties for offences specified, cl. 6.3 .

penalties are ‘without prejudice’ to provisions of Ch. (IV)

Cont..


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Procurement Planning, cl.7 Packaging , cl.8 Specification, cl.9 Time Limit, cl.10

Note: Basically routine procedures in the procurement process

Competition in procurement not to be restricted, cl.11The Govt. may however mandate reservations. Proc. Entity to declare the restrictions if it be so.


Qualification of bidder, cl.12- Procuring entity may determine and call for necessary information,

cl.12 (2) (a), 12 (3) legal requirements cl.12 (c)criteria to apply equally to all bidders, cl. 12 (5)

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Pre- Qualifications, Registration, Bid Docs., Submission, Opening and evaluation, cl.13 to cl.21

Note: These are routine procedures

Cancellation and award, cl.24 to cl.25 Note: Routine procedures The Bill, under several clauses, stipulates that these procedures be laid down and Decisions recorded Price Negotiations only in Single Source procurement (cl.32)

or in circumstances to be prescribed cl.23



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Terms and Conditions of contract as per act and rules, cl. 26 (1) Terms and Conditions of contract may be prescribed by Govt.cl. 26(2) Payment time shall be specified , cl. 26 (3)

Offset policy shall be prescribed by Govt., cl. 27 Procurement entity and bidders, sub –contracts not to disclose

information's that is debarred, cl.28



Chapter Two B: Methods of Procurement

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Methods of procurement are,cl.29(a) Open competitive bidding; or (b) Limited competitive bidding; or(c) Two stage bidding; or(d) Single source procurement ; or(e) Electronic reverse auctions; or(f) Request for quotations; or(g) Spot purchase; or (h) Any other methods of procurement as may be notified by the

Central Govt. in consonance with the principles set forth in Chapter II of this Act


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→ Govt may notify rules for electronic procurement Open tendering shall be the preferred mode, cl. 30

other may be adopted but reasons to be recorded

Limited Tender, Single tender, two stage bidding reverse auction, request for quotation, spot purchase, framework agreement cl. 31 to cl.36Routine procurement methods described, guidelines included

Govt. empowered to notify conditions for use of these methods, cl.37

Chapter Two B: Methods of Procurement


Chapter Three A: Transparency Requirements

The Central Government shall set up and maintain a Central Public Procurement Portal accessible to the public for posting and exhibiting matters relating to public procurement., cl.38

Subject to the provisions of section 28, each procuring entity shall cause the procurement related information to be exhibited as required under this Act or the rules made there under on the Portal referred to in sub- section (I).

Without prejudice to the generality of the provisions contained in sub-section (2), the Central Public procurement Portal shall provide access to the following information in relation to procurement governed by the provisions of this Act, namely:-


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(a) Pre –qualification document, bidder registration document, bidding document and any modification or clarification including those pursuant to pre-bid conference, and corrigenda there to;

(b) List of bidders that presented bids including for prequalification's or bidder registration, and of those bidders which were pre-qualified and registered, as the case may be;

(c) List of bidders excluded under section 22, with reasons thereof;(d) Decisions taken during the process of grievance redressal under the

provisions of Chapter III;(e) Details of successful bids, their prices and bidders;(f) Names and the particulars of bidders who have been debarred by the

Central Government or a procuring entity together with the name of the procuring entity, cause for the debarment action and the period of debarment;

(g) Any other information as may be prescribed.

4 The information exhibited in terms of this section shall be available on the portal for such period as may be prescribed.

Documentary records to be maintained, cl.39Seminar on Public Procurement Bill 2012

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Chapter Three B: Grievance Redressal

A bidder or prospective bidder, aggrieved by any decision, action or omission of procuring entity has recourse to Grievance Redressal Mechanism, cl.40 to cl.42

Cont..


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Time Fixed for different steps:

Application for review within - 10 days

Procuring entity to dispose off - 30 days

Not satisfied, goes to procurement redressal committee - 15 days

Committee makes recommendationto procuring entity - 30 days

+15 days

Procuring entity communications - 15 daysIts decisions +15 days

Note: The process may thus take up to 130 days, The procuring entity may suspend procurement process during this period cl. 40 (3)


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The Central Govt. shall constitute one or more independent procurement redressal committees cl. 41 (3)

Review applications shall not cover need of procurement (cl.7), restricting bidders (cl. 11), decision to negotiate (cl.23) , cancellation of the procurement process (cl.24) or application of confidentiality (cl.28)

Chapter Three B: Grievance Redressal


Chapter Three C- Professionalisation

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Central Govt. may prescribe professional standards to be achieved in procurement, process Specify training and Certificates requirements for it, cl.43


Chapter Four- Offences, Penalties and Debarment

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Punishment for acceptance of gratification by public servant cl.44Note: Code of integrity also prohibits it in cl. 6 (i)

Punishment for , cl. 45→ Interference in procurement process→ Lobbying for restricting fair competition.→ Influencing to restrict fair competetion → Employing a former official of procurement entity within one year of

his association in procurement

Cont.


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→ Collusion or anticompetitive behavior → breaching confidentiality (cl. 28)

Imprisonment up to 5 years + fine up to 10 % of assessed value of procurement

Vexatious, frivolous or malicious complaints with intentions to delay or defeat procurement, or cause loss to procuring entity or other bidder, cl. 46Fine up to 5 % of value of procurement

Liability of offences committed by a company to be borne by its officers, cl. 47

Abetment of offence is also punishable as the offence is, cl. 48



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Debarment from Biding, cl.49 A bidder may be debarred by the Govt.→ If he has been convicted under law, shall be debarred upto three yrs,

cl. 49(2)→ May be debarred for two years, cl.49 (3)

If breaches code of integrity, orWithdraws from procurement process or fails to sign contract, submit performance security (other than for force majeure conditions), If his performance security has been forfeited for breach of contract,

→ Reasonable opportunity for representation cl. 49(4) Previous sanction of competent authority, required for prosecuting an

officer of procuring entity, cl.50



Chapter Five- Miscellaneous

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Every official of procuring entity or member of committee shall be deemed to be a Public Servant, cl.51

No prosecution against any officer/employee, acting under good faith cl.52

Clauses 54, 55, 58Procedural issues relating to the Bill. Central Govt. shall have powers to make, rules under the Act ,

cl.56 A procuring entity may issue guidelines and instructions

under the Act and the rules for proper implementation,cl.57 Govt. may exempt, any or a class of procurement or a class

of procuring entities from provisions of the Act , cl.59


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All existing instructions relating to procurementshall remain valid to the extent they are consistent with the Act., cl.60

Chapter Five- Miscellaneous


Public Procurement Bill-2012Part II: An overview of the Bill

Presented by Keshav Prasad Varma

4th June 2012

The Overview

• What does the Bill do

• What does it overdo

• What does it not do


What does the Bill do

Fills a vital gap in governance

Creates awareness amongst stakeholders

By conforming to the existing GFR, it ensures a smooth change over.



It goes beyond the GFR and broadens its coverage

Firstly and most importantly, it adds to the list of objectives

In preamble, ‘maintaining integrity and public confidence in public procurement process’

In clause 5(1)e, ’evolve mechanisms to prevent corrupt practices’

Concern for prevent corruption is very pronounced, fresh clauses and even a full chapter has been added

Cont…..


What does the bill do

Fixes threshold at Rs. 50 lakh

Cont…..



Establishes Central Procurement Portal to strengthen transparency.

Introduces Electronic tendering.

These steps shall help in meeting other objectives too.



Introduces

Framework Agreement Electronic Reverse Auction

As additional tools methods of procurement



Introduces Integrity Pact

Directives on what conducts are not acceptable

Penalty for unethical acts.

The pact shall lead to better understanding between purchaser and bidder.



Introduces Grievance Redressal Mechanism

Independent panel to hear grievances

This would restore confidence of bidders in the procurementprocess



Introduces Professionalization

Govt. to prescribe/ specify:

Professional standards Suitable training Certification requirements


What does it overdo

Emphasis on anti corruption measures

There is an integrity pact Cl.6

There is a complete chapter (four) on ‘offences, Penalties and Debarment’, (which repeats some provision of Integrity Pact.)

Cont…..


What does it overdoCl. 6(3) clarifies that punishments under integrity pact are’ without prejudice to provisions contained in chapter 4’

The provision in this Act shall, therefore be in addition to, and not in derogation of, the provisions of any other law for the time being in force, Cl. 53

The conduct of the procuring entity as well as he bidder are subject to other laws take, as for example:

Indian Penal Code 1860 Prevention of corruption act 1988

Cont……….


What does it overdo

It may be worth examining if such stringent measures have been applied to other fields of governance also.

The burrucracy at present is already paralyzed by fear on account of prosecutions that followed recent scams. The proposed provisions may therefore adversely affect the procurement process

Cont…….


What does it overdo

Many questions arise out of the provisions:

What shall constitute interference in procurement process? What is lobbing ? If lobbying is non-existent, will it come in the way of the

procurement entity (or his organisation) getting to know or understand new innovations of technology?

How easy or difficult is defining a vexatious complaint? etc.

Cont…….


What does it overdo

Grievance Redressal Mechanism is cumbersome

The presentation shows that the process may take up to 130 days

The redressal committee shall be headed by a retired High Courtjudge. The committee has been directed to make its recommendationwithin 30 days or within a further period of 15 days, if there aresufficient reasons for delay.

In our country a process involving any judicial entity does notappear to work within a time table.

Cont…….


What does it not do

Several issues and procedures today come in the way ofefficiency in procurement process and getting value formoney. The Bill does not address those issues: themost important of which are,

Quality of subject matter of procurement

Dispute Resolution

A Monitoring Cell for public procurement at Government level

Cont……….


Quality of Subject Matter of Procurement

The quality of procured items is perceived to be poor

The Bill does not even emphasise need to improve the perception or suggest ways to improve it.

Without this emphasis, the procurement process would always end justifying L1.

The contentious issue of Vender Development is but an aspect of quality buying.


Dispute Resolution

The Bill defines the procurement process to come to anend with award of contract: so Dispute Resolution is notIn its scope.

Disputes do and shall arise in contracts

The dispute resolution mechanism today is long drawn andtary: it slow down the procurement process; execution ofNational Highway project is a burning example

Cont…….


Dispute Resolution

The Bill ought to cover Dispute Resolutions to improveefficiency of the procurement process.

Stating that other laws already exist (The IndianContract Act, The Arbitration and Conciliation Act etc.)is not an answer. The Bill has gone in overdrive incombating corruption and introduced more stringentmeasures.

Cont……….


Central Monitoring Cell

There is need to establish a Central Monitoringorganisation in the Ministry to oversea implementationof the Act, frame rules under the Act, clarify issues,prepare or approve manuals, Standardise BiddingDocuments (a very contentious issue today) andcoordinate all procurement matters.

Most of the countries have such a cell, including thosewho recently enacted Public Procurement Bill.
