Bill to regulate govt purchases introduced

Live Mint, May 14 2012

A Bill covering all government purchase contracts worth more than Rs 50 lakh was introduced in Parliament on Monday in a push to reduce graft and hold officials involved in the decision-making process accountable.

The Bill, introduced in the Lok Sabha by finance minister Pranab Mukherjee, contains norms that will regulate public procurement and ban bidders found engaged in corruption.

Further, procurement by all government departments as well as public sector units (PSUs) will come under the ambit of the Bill.

Based on the recommendations by a panel on public procurement under former corporate affairs secretary Vinod Dhall, the Bill also stipulates norms under which a public servant can be sent to jail for six months to five years for accepting bribes and wrongfully influencing bidding. Dhall’s recommendations had been accepted by the government in February.

The Bill comes even as the country has seen public agitations over corruption led by activists such as Anna Hazare.

While all Union government procurements are governed by the so-called General Financial Rules, 2005, there is no overarching law. The Bill will govern several aspects of procurement—from the determination of the need for procurement to qualification of bidders, bid evaluation criteria, price negotiations, cancellation and award.

It will also regulate offsets wherever applicable. On 6 April, Mint had first reported that the government was working on a national policy on offsets that will extend to all government imports, including by the departments of defence, space, oil and gas, telecom and atomic energy.

Offsets are counter-trade obligations that have to be fulfilled by vendors from a particular country selling equipment or commodities to another country. Typically, they do this by generating business in the buying country worth a certain percentage of the deal value.

Offset obligations can also be fulfilled by the seller country by committing cheaper long-term supplies of strategically important commodities, including energy resources, up to a certain value in lieu of goods bought. In such a transaction, the payment is made partly with goods and services instead of money.

At present, only equipment procured by the defence ministry is covered by an offset obligation policy. In other cases, the offset agreements are ad hoc and not based on any policy guideline. The Bill stipulates that all procuring entities will be required to publish information on the Central Public Procurement Portal.

“The Bill is fine. The problem is vested interests, which can kill its spirit,” said Pradeep Mehta, secretary general of Jaipur-based consumer advocacy group CUTS International.

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