Lowest bidder only to get tender for govt procurements

NEW DELHI: The discretion of officials in awarding tenders in government procurements, a key driver of the economy, to the second lowest bidder if the winning bidder failed to sign the contract has been ended by the Centre, two persons aware of the development said.

A fresh tender will have to be issued in such circumstances, according to the modified public procurement policy. This could lead to delays and cost escalations, experts said.

To make public procurement more transparent and scrupulous, the finance ministry last month amended the manuals for procurement of goods and work pertaining to cases where the lowest bidder fails to sign the procurement contract. The usual practice in such instances allowed the procurement entity to offer the contract to the next successful bidder on matching the terms of the first bidder.

“Now the procurement entity has no such discretion in such cases other then re-tendering,” one of people said, requesting anonymity.

As many as 12.88 lakh tenders worth Rs 47.96 lakh crore have been issued by over 30,000 government organisations since 2011, according to the official e-procurement portal. In the current financial year that started in April, the portal has already published 13,104 tenders worth Rs 40,818 crore.

Earlier, the policy was that the procuring entity, on being satisfied that there was no cartelisation and the integrity of the procurement norms were maintained, could offer the next successful bidder an opportunity to match the financial bid of the first successful bidder. If the offer was accepted, the entity could award the contract to the next successful bidder at the price bid of the first successful bidder, said the person, citing the discretionary powers.

To be sure, the discretionary power was not absolute, as the procurement entity had to give in writing the reasons for allowing second lowest bidder, he added. The finance ministry of finance did not respond to an email query in this matter.

The new rule may lead to delays in implementing projects and consequently lead to cost escalation, experts said.

The change in procurement policy may lead to “delays and higher costs in procuring essential and urgent goods and services as the procuring entity is now left with no option but to re-tender in the event of failure or withdrawal of bid” by the first successful bidder, said Pradeep Multani, president of the PHD Chamber of Commerce and Industry, a lobby group.

“The earlier provision of awarding a contract to the next successful bidder at the price of the first successful bidder was quite expedient and had adequate safeguards, which was in the interest of efficiency and economy in the procurement process,” Multani said. “Re-tendering of contract might lead to higher prices as the earlier quoted prices would be known now to all bidders, besides the delays in re-tendering.”

“The logic behind public tender is to get the best service timely and at economical rates,” said AP Singh, partner at law firm MV Kini.