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Friday, June 7, 2013

Govt bodies to give reasons for rejecting procurement tenders

The finance ministry has asked all government bodies to disclose the reasons for rejecting or excluding bidders from contracts awarded by them in order to bring more transparency into public procurement and avoid litigations from losing bidders. 

The government awards public contracts worth lakhs of crores each year, but the process is fraught with delays as losing bidders often seek to stall their execution by filing vigilance complaints and mounting multiple legal challenges. Congress president Sonia Gandhi has identified public procurement as the biggest source of corruption along with the allocation of natural resources. 

Finance Minister P Chidambaram had told Parliament in 2011 that even buying a pencil is a painstaking process in government. "Every time you go for procurement, on the day you are going to place the order, you will have a complaint on your table," he had said in his earlier avatar as home minister. 

"It has been observed that there are many instances of a tender being rejected or tender documents not being issued and when the party enquires reasons, the same are not communicated," the procurement division in the expenditure department has said in a memo sent to government departments last month. "In such cases, the first round of litigation is to find out the reasons and the second round is to challenge the reasons," it noted. 

Procurements made by the central government are currently regulated by the General Financial Rules of 2005, which only have the status of a subordinate legislation and are generic guidelines on government expenditure. Violations of these rules seldom attract penalties, noted a recent report on probity in India's public procurement by the United Nations Office on Drugs and Crime. The finance ministry has, however, pointed out that the rules clearly require that "every authority delegated with the financial powers of procuring goods in public interest" shall be responsible for bringing transparency in such procurements and ensuring "fair and equitable treatment of suppliers and promotion of competition." The rules also stipulate that suitable provisions be made in the bidding document "to enable a bidder to question the bidding conditions, process and/or rejection" of its bid. "The reasons for rejecting a tender or non-issuing a tender document to a prospective bidder must be disclosed where enquiries are made by the bidder," the finance ministry has said. 

The ministry has pointed departments to a recent order on the issue by the Delhi High Court and said that importance of complying with it 'in letter and spirit cannot be over-emphasised.' Adjudging a case filed by a contractor who was not being issued tender documents by a government department, the court had said: "We have repeatedly emphasised in various orders that whenever a tender is rejected or tender documents are not issued and a party enquires reasons, it is necessary that the reasons be communicated to avoid unnecessary litigation...Despite this, the authorities persist in keeping silent over such representations, which we strongly deprecate."

Source:-The Economic Times

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