UPSC MAINS 2019 : Public Procurement Policies

Public Procurement Policies

TOPIC: Public Procurement Policies

Topic in syllabus: General studies Paper 2: Indian Governance

 

Background

Public Procurement Policies

What is public procurement?

Public procurement refers to the purchase by governments and state-owned enterprises of goods, services and works. As public procurement accounts for a substantial portion of the taxpayers’ money, governments are expected to carry it out efficiently and with high standards of conduct in order to ensure high quality of service delivery and safeguard the public interest.

 

Policies of the government

  • Establishment of GeM:

Government e Marketplace (GeM) is an online procurement platform for government ministries and departments, and the most widely used channel for public procurement in India.  MSMEs, DPIIT recognised startups and other private companies can register on GeM as sellers and sell their products and services directly to government entities.

  • Public Procurement Policy for Micro and Small Enterprises (MSME) order 2012:

The Public Procurement Policy for Micro and Small Enterprises (MSME) order 2012 has mandated Every Central Ministry/Department/PSU shall set an annual goal for procurement from the MSE sector at the beginning of the year, with the objective of achieving an overall procurement goal of minimum 25 per cent of the total annual purchases from the products or services produced or rendered by MSEs.

  • Government has issued Public Procurement (Preference to Make in India), Order 2017

Under this purchase preference shall be given to local suppliers in all procurements undertaken by procuring entities in the manner specified. As per the order the minimum local content shall ordinarily be 50%. The Nodal Ministry may prescribe a higher or lower percentage in respect of any particular item and may also prescribe the manner of calculation of local content. The margin of purchase preference shall be 20%.

 

Lacunas in the Present system and steps needed

  • Procurement by the government accounts for 30% of the GDP; yet there is no comprehensive parliamentary legislation till date to regulate such public procurement by the Central government.
  • Charges of corruption are common and instead of legislation, there is a maze of regulations, guidelines and rules.
  • Existing constitutional provisions are themselves no great help in this area. While Article 282 provides for financial autonomy in public spending, there are no further provisions that address any guidance on public procurement principles, policies, procedures or for grievance redress.
  • State public procurement is regulated by a State Act only in five States: Tamil Nadu, Karnataka, Rajasthan, Andhra Pradesh and Assam. The grievance redress mechanisms provided in these Acts are not confidence-inspiring as they are neither independent nor effective.
  • Frequent Litigations: Courts have imposed stringent self-imposed restrictions in the area of judicial review vis-à-vis tenders that the power to interfere is very sparingly exercised, if at all.
  • The procuring officer is empowered by judicial principles such as “Government must be allowed a play in the joints”. Hence the legal framework is feeble.
  • In such a depressing legal scenario, it is no surprise that public procurement tender awards are often challenged in constitutional courts.
  • Hence need of the hour is to provide efficacious remedy to redress grievances.

 

Need of Legislation

Parliamentary legislation to regulate public procurements which provide adequate means for aggrieved parties to challenge inequities and illegalities in public procurement needs to be put in place.

The United Progressive Alliance had introduced the Public Procurement Bill in the Lok Sabha in 2012, “to regulate public procurement with the objective of ensuring transparency accountability and probity in the procurement process”.

The National Democratic Alliance, in 2015, revamped the provisions of the earlier Bill to come up with the Public Procurement Bill, 2015; but it is pending.

 

Conclusion

Public procurement is a crucial pillar of services delivery for governments. Because of the sheer volume of spending it represents, well governed public procurement can and must play a major role in fostering public sector efficiency and establishing citizens’ trust.

Well-designed public procurement systems also contribute to achieving pressing policy goals such as environmental protection, innovation, job creation and the development of small and medium enterprises.

 

Sample question:

Public procurement is a crucial pillar of services delivery for governments. Do you think there is need of a well-designed public procurement policy? Elaborate.

 


 

Public Procurement Policies info graphic