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Interaction | December 2013

E-procurement will reduce corruption

The Public Procurement Bill, 2012, which was introduced in the Parliament on 14 May 2012 by the then Minister of Finance Pranab Mukherjee, was supposed to be tabled in the current winter session. However, as the session is nearing end, the Bill is likely to be re-introduced in the 16th Lok Sabha. Vinod Dhall, former Chairman of Competition Commission of India (CCI), who also headed the Committee on Public Procurement (CoPP), which recommended the features of the Bill, explains to RAHUL KAMAT how India can adopt fair and justifiable processes to minimise corruption.  

The Public Procurement Bill, 2012, which was supposed to be tabled in the current winter session, is still pending, and chances are that it may get re-introduced in 16th Lok Sabha. Despite rules and regulations laid down by the Central Vigilance Commission in terms of procurement, why there is a need to have a new law?
 The Bill will regulate public procurement with an objective of ensuring transparency, accountability and probity in the process. If passed, the Bill will also witness a fair and equitable treatment of bidders, thereby promoting competition, enhancing efficiency and economy, along with maintaining integrity and public confidence in the entire procurement process.


Currently, there is no single law specifically governing procurement by the central government. Instead, public procurement is regulated by the General Financial Rules, 2005 (GFR) and guidelines issued by the Central Vigilance Commission (CVC) and respective ministries, departments and public sector undertakings (PSUs). Any misconduct is prosecuted under the provisions of the Competition Act, 2002 and the Prevention of Corruption Act, 1988 (PCA).


The government undertakes all the procurement process; however, this is an enormous task in terms of volume as the procurement is mainly for materials, contractors for public structures, services, etc.


You need to have a proper set of rules and regulations for procurement. As far as current regulations are concerned, these are formulated under General Financial Rules (GFR); moreover, the GFR does not stand as a law. GFR are quite old and they were also revised in 1996, which has led to a certain level of improvement, so far. But GFRs are not enough because it is just an internal set of instructions from government to its officers about how to go about procurement. There is a need to have a clean law or act so that every PSU would adhere to the law and act accordingly and stop malpractices in the procurement process.


Are PSUs not adhering to the rules currently?
 I would not say that. Let me put it this way-GFR is not a law for public procurement but it contains the rights and obligations of various parties, not only the procurement department but also the vendors.


Every vendor should get the right, and therefore there is a need for a Public Procurement Law, which would be not like an internal document of the government. The law for public procurement means, procurement by any public entity-be it government, its departments, or PSUs should be covered under this law.


Will PPP projects come under the purview of the Act?
 Absolutely. When the entire process of procurement is through PPP, it can be considered an act of public procurement. Under the law, the government has to prescribe a certain code of integrity for the officials of procuring entities and the bidders. The Bill empowers the government and procuring entity to debar a bidder under certain circumstances. To make it clean and clear, the Bill mandates publication of all procurement-related information on a Central Public Procurement Portal, thereby encouraging maximum competition. When tenders get published on the portal, they should be appraised and evaluated based on the terms and conditions that have been disclosed to public. One cannot change the conditions arbitrarily when it becomes an act.


Do you think it will be a difficult act for PSUs to follow?
 One thing is very clear-the government must encourage e-procurement to arrest under-the-table activities or corrupt practices. There should be a public procurement portal of the government, and all procurements and the results of those tenders should be put on that portal. If the government opts for this method, then they will certainly gain the confidence of private players and will curb down the corruption in the system.


In addition, the Bill provides provision for setting up procurement redressal committees, where if a aggrieved bidder is not satisfied with the bidding process, then they can approach the committee and that committee has to solve the issue within 15 days.


The Bill has allowed some ambiguity in exempting from certain procurements from the specified process, and allowing the government to limit competition in certain cases, etc... The exemptions are given but those are for certain emergency situations like national disasters, national threat or security. So at such time there is no time to call bids on open competitive method. But, any such exemptions will then have to be open for public scrutiny.


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