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New Delhi: Just before the Diwali week, the Narendra Modi government announced significant reforms in its public procurement policy, which went unnoticed.
With a view to ensure quality work and keep time and cost escalation under control, the Finance Ministry on 29 October issued General Instructions on Procurement and Project Management, which expanded the scope of selection of bidders for executing government projects. and procure goods and services in ministries. Government Office.
As per the revised guidelines, L1 or Minimum Cost Selection methodology will no longer be the only tender format for selection of bidders to execute the projects. L1 was hitherto the preferred method used by Ministries, Public Agencies and Public Sector Undertakings (PSUs) to select the lowest bidders. standard or routine work/ Non-consultancy services like auditing of non-complex works and engineering design.
The guidelines issued by the Public Procurement Department of the Department of Expenditure have now allowed selection of bidders for works and non-consultancy services through alternative procurement methods such as Quality-cum-Cost Based Selection (QCBS).
under so far General Financial Rules, 2017While dealing with matters relating to public finance had to be followed by government agencies and ministries, QCBS was used for procurement only in cases where the quality of consultancy services is of prime concern. GFR 2017 also recommended two additional modes of procurement – L1 and single source selection.
The revised guidelines have suggested a fourth method – fixed budget based selection – for selection/evaluation of consultancy proposals. Under this method, the cost of consulting services will be specified as a fixed budget in the tender document itself.
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How is QCBS different from L1?
In L1 system, the bidder is selected on the basis of minimum cost committed to complete the work. There is no weightage to the technical score in the final evaluation and the responsive technically qualified proposal with the lowest assessed cost is selected.
Unlike L1, QCBS evaluates the bidder based on a combination of technical and quality scores. However, maximum weightage for non-financial norms should not exceed 30 percent.
The revised guidelines allow procurement agencies to use QCBS where procurement has been “declared to be a quality oriented process by the competent authority” and where the estimated value of procurement does not exceed Rs 10 crore.
QCBS is the preferred method for international competitive bidding. As per the Finance Ministry’s toolkit designed to improve the public-private partnership decision-making process, QCBS is used for selection of bidders for transport infrastructure projects, roads, etc., where the bidder does not have the technical Has both skill and competence.
Why was the Public Procurement Policy revised?
The need to revise the public procurement strategy was felt by various agencies including the Central Vigilance Commission (CVC), the Comptroller and Auditor General (CAG), and NITI Aayog such that the L1 system is most effective when it comes to the selection of bidders. Doesn’t happen. For products or services, especially for executing infrastructure projects that require a high level of technical expertise.
The agencies felt that L1 system could compromise with quality of work, delay and increase in cost, as the bidder is selected on the basis of lowest quoted cost.
Economic Survey 2020-21 gives a quote CVC Concept Note Titled ‘Alternative Procurement Strategy for the Award of Works and Goods Contracts’, which states that “L1 may still be good for routine works, procurement of goods and non-consultancy services, but high impact and technically Not for complicated purchases”.
The Economic Survey, in the chapter ‘Process Improvement: Enabling Decision Making Under Uncertainty’ states that the L1 system persists because of the regulatory default problem.
“No decision maker wants to exercise discretion for fear of future inquiries. This criterion may seem simple and quantitative, however, in a complex world where it may not be possible to define everything in the pre-purchase process, While maintaining adequate transparency and active supervision, it is pertinent to leave some discretion in the hands of the administrators,” the Economic Survey said.
While agencies have condemned how L1 is not the most effective method, there are some who recommend caution in using QCBS, on the grounds that it only results in Stranded Suppliers to Bid or Cartelize Among themselves.
(Edited by Neha Mahajan)
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