Recent Developments in Public Procurement: Ministry of Finance Department of Expenditure, January 2019

The Ministry of Finance Department of Expenditure in India has made significant advancements in public procurement, focusing on methodologies for assessing procurement systems, sustainable procurement practices, and recent amendments. Assessments like the Country Procurement Assessment Report and Benchmarking Public Report have highlighted the improvements needed in various areas. India's scores compared with global benchmarks show progress in procurement parameters.

• Public Procurement
• Ministry of Finance
• Sustainable Procurement
• Assessment
• Methodology

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1. Recent Developments In Public Procurement Ministry of Finance Department of Expenditure January, 2019 1

2. Agenda Methodology for Assessing Procurement Systems (MAPS); Sustainable Public Procurement (SPP); MSE 2018; Procurement Amendment Order, Public Procurement (Preference to Make in India) Order, 2017 2

3. METHODOLOGY FOR ASSESSING PROCUREMENT SYSTEMS (MAPS) 3

4. Earlier Public Procurement Systems Assessments in India In 2003, World Bank had published a Country Procurement Assessment Report (CPAR) covering: Central Government; State Governments (Three); Public Sector Enterprises under Central Government (250+) The report recommended improvement in 13 areas pertaining to Public Procurement 4

5. Previous Assessments World Procurement Report (BPP) focusing on legal and regulatory environments that affect the ability of private sector to do business with Government Bank, in 2017 published Benchmarking Public BPP 2017 report covered 180 economies (including India for first time) A high score (approaching 100) for the parameters by the economy is considered to have regulatory framework close to internationally recognized good practices 5

6. Indias score on the Six parameters of BPP 2017 India Score S.No Parameters Parameter Details Parameter-1Needs Assessment, Call for Tender and Bid Preparation Parameter-2 Bid Submission Parameter-3Bid Opening, Evaluation & Award Parameter-4Content & Management of Procurement Contract 1 63 2 75 3 50 4 68 5 Parameter-5 Performance Guarantee 54 6 Parameter-6 Payment of Supplier Average of All Parameters 59 62 6

7. Comparing India with the World World Avg OECD Avg BRICS Avg Neighbour Avg India's Rank Globall y India Paramet ers Parameter Details Score Score Score Score Score Needs Assessment, Call for Tender and Bid Preparation 1 63 59 73 70 53 80 2 Bid Submission Bid Opening, Evaluation & Award 75 64 65 76 67 47 3 50 58 60 63 59 124 Content & Management of Procurement Contract 4 68 65 66 76 66 67 5 Performance Guarantee 54 50 40 61 44 82 6 Payment of Supplier 59 47 76 53 46 53 62 57 63 67 56 76 Average of All Parameters 7

8. Methodology for Assessing Procurement Systems (MAPS) MAPS is universally accepted method to assess and improve public procurement systems by providing a common tool for analyzing information on key aspects of any system; Already 90+ countries have been assessed through MAPS; Based on the strengths and weaknesses identified, to develop strategies and implement reforms; Report expected in early 2020 8

9. MAPS framework 9

10. Assessment of Indias Public Procurement through modified MAPS Implementing Agency- PPD The assessment will be conducted by the World Bank; 5 states Assam; Bihar; Himachal Pradesh; Odisha; and Rajasthan Central government entities CPWD; NHAI; Ministry of Road Transport and Highways; Ministry of Railways; Power Grid; and Central Medical Services Society (CMSS), MoH&FW 10

11. SUSTAINABLE PUBLIC PROCUREMENT (SPP) 11

12. Definition- SPP Process meet their needs for goods, services, works and utilities achieves value for money on a whole life-cycle basis in terms of generating benefits not only to the organization, but also to society and the economy, whilst significantly impacts on the environment. whereby public organizations in a way that reducing negative 12

13. GFRs, 2017 Provision Rule 173 (xi) (b) of GFR, 2017 stipulates that while checking the responsiveness of bids for performance and efficiency criteria, characteristics shall also be taken in to account; environmental Rule 136 (1) (iii) of GFR, 2017 states that while designing the projects etc., principles of Life Cycle Cost may also be considered; Rule Ministries/ Departments shall procure BEE Star Rating certified electrical appliances. threshold is notified by DoE. Ministries/ Departments may also procure higher appliances 173 (xvii) of GFR, 2017 highlights that The star rating star rating electrical 13

14. Sustainable Procurement Task Force (SPTF) In March, 2018, Department of Expenditure set up a SPTF whose main objectives are to: Review International Best Practices in the area of SPP; Inventorise the current status of SPP in India across Government organizations; Prepare a draft Sustainable Procurement Action Plan; Recommend an initial set of product/ service categories (along with where SPP can be implemented their specifications) 14

15. MSE Procurement Amendment Order 2018 15

16. Amendment in MSE Procurement Order issued in Nov, 2018 Minimum annual purchase requirement from MSEs increased 25%; from 20% to A minimum women owned mentioned 25% reservation of 3% MSEs within the above reservation for 16

17. Public Procurement (Preference to Make in India), Order 2017 17

18. MII Order, 2017 Issued by DIPP pursuant to Rule 153 (iii) of GFR 2017 on 15.06.2017 To promote manufacturing and production of Goods, Works and Services in India thereby encouraging Make in India; Nodal Ministry has to identify items where sufficient local capacity competition exists and local 18

19. Salient points of MII Order Procurements < Rs. 5 lakh are exempted Procurements less than Rs. 50 lakhs Only Local Suppliers are eligible Minimum Local Content (LC) shall be 50%. Nodal Ministry may prescribe higher or lower %; Margin of Purchase Preference 20% Ministries/ Departments purchase preference below 20%; The minimum LC, Margin of Purchase Preference and procedure for PPI-MII policy shall be declared in NIT; can reduce the margin of 19

20. Conditions for Purchase Preference Procurements more than Rs. 50 lakhs and that are divisible in nature If L1 is a local supplier, entire quantity is placed on L1; If L1 not a local supplier, 50% quantity awarded to L1; For award of balance quantity, lowest bidder among the local supplier, with quotation purchase preference, is invited to match the price of L1; If lowest local supplier fails to match L1 price or accepts less than the offered quantity, the next higher local supplier is invited with purchase preference; The same exercise is carried out till the invited local supplier matches the L1 price and accepts the balance quantity; falling in margin of price falling in margin of 20

21. Conditions for Purchase Preference Procurements more than Rs. 50 lakhs and not divisible in nature Lowest evaluated Responsive Bid is considered L1; If L1 is a local supplier, entire quantity is placed on L1; If L1 not a local supplier, lowest bidder among the local supplier, with quotation falling in margin of purchase preference, is invited to match the price of L1 for award of entire quantity; If lowest local supplier fails to match L1 price, the next higher local supplier with purchase preference, is invited to match the price of L1 and so on; Where none of the local supplier matches the price of L1, the contract may be awarded to L1 price falling in margin of 21

22. Verification of Local Content For procurement < Rs. 10 crore, local supplier shall submit self certification requirement of minimum LC The supplier to provide the location details where value addition is done regarding meeting the For procurement > Rs. 10 crore, certificate regarding meeting the requirement submitted by local supplier from Statutory auditor or cost auditor of the company (for companies); Practicing cost accountant accountant (other than companies) of minimum LC shall be or practicing chartered 22

23. Verification & Debarment Nodal Ministries may constitute committees with internal and external verification; experts for independent For false declarations of minimum LC, bidder shall be debarred for upto two years The preference of MII by any other purchaser for period of debarment. debarred bidder shall not be eligible for Debarment shall be prospectively in a manner that ongoing procurements are not disrupted 23

24. Specifications in Tenders Eligibility condition shall not require proof of supply in other countries/exports; Eligibility capability and financial strength do not result in unreasonable exclusion of local suppliers; however ensuring quality supplier; conditions like turnover, production or creditworthiness of the Can restrict foreign suppliers in the tenders, in case such foreign country do not allow the participation of Indian suppliers in their tenders; 24

25. Thank you !! 25