Public Procurement – Government, Public Sector

1. Please summarise briefly any relationship between the public
procurement / government contracting laws in your jurisdiction and
those of any supra-national body (such as WTO GPA, EU,
UNCITRAL)

There is no comprehensive or any specific legislation that
governs public procurement contracts in India. The legislative
framework on public procurement (which mostly takes place through a
tender process for large procurements) is presently based on
guidelines contained in rules, procedures and manuals formulated by
the Government, which apply to government departments and public
sector undertakings (PSUs). These are, namely:

• General Financial Rules, 2017 (GFR) and the
  Delegation of Financial Power Rules, 1978
  (DFPR):

The general rules regarding public procurement are provided
under the GFR, which are applicable to all ministries and
departments of the Government. GFR are supplemented by the DFPR,
which are based on the principles of the GFR and empower the
Central Government to sanction expenditure for public procurement
contracts.

In line with the GFR, a few state governments like Tamil Nadu,
Karnataka, Rajasthan, Andhra Pradesh, Assam and certain PSUs have
developed their own financial rules which govern public
procurement. Additionally, certain states such as Tamil Nadu and
Karnataka have enacted specific rules and regulations governing
public procurement called the Tamil Nadu Transparency in Tenders
Act, 1988 and the Karnataka Transparency in Public Procurement Act,
1999, respectively.

• Manual for Procurement of Goods, 2017 (MPG);
  Manual for Procurement of Works, 2019 (MPW); and
  Manual for Procurement of Consultancy and Other Services, 2017
  (MPCS):

These manuals contain the guidelines on procurement of goods,
works, consultancy and other services. The Ministry of Finance,
Department of Expenditure issues the revised version of these
manuals from time to time. These administrative guidelines are
supplemented by manuals and policies governing procurement by
individual ministries/departments, such as defence, telecom and
railways.

In addition to the above, the Directorate General of Supplies
and Disposals under the Ministry of Commerce and Industry
(DGS&D), which is the central purchasing and
quality assurance organization, also issue guidelines to strengthen
transparency and integrity in public procurement. Further, the
Central Vigilance Commission (CVC) which is
created to address governmental corruption, has framed tender
guidelines.

At present, there is no relationship between government
contracting/public procurement laws in India with any international
or foreign bodies such as WTO, EU and UNCITRAL.

• Defence Procurement Manual, 2009 (DPM) and
  Defence Acquisition Procedure, 2020 (DAP):

New defence procurement management structures and systems were
set up in the Ministry of Defence (MoD) which came into effect from
30 December 2002 and that are applicable to procurements resulting
from the ‘buy’ decision of the Defence Acquisition Council.
DPM 2009 and DAP 2020 provide comprehensive guidelines for
acquisition for the defence sector. In September 2020, MoD released
the DAP to streamline the procurement process and provide a boost
to indigenous arms manufacturing. Given the specific requirements
of procurement in the defence sector, the DPM and DAP lay down the
procedures relating to public procurement in the defence sector and
provide for measures to ensure expedited decision-making along with
simplified contractual procedures. Broadly, these guidelines
contain procedures for the following:

• Buy and make through transfer of technology; and




• Buy, innovate and make (Indian)




• The Prevention of Corruption Act, 1988 and the Indian Penal
  Code, 1860:

These legislations impose criminal liability and penalties on
bidders who may indulge in fraudulent, corrupt or malicious
practices.

2. What types of public procurement / government contracts are
regulated in your jurisdiction and what procurement regimes apply
to these types of procurements?

The GFR provides guidelines for all contracts, except those
having a very low value of approximately less than INR 25,000
(approx. USD 400). Examples of such contracts vary from those for
procurement of goods, PPP contracts, engineering procurement and
construction (EPC) contracts, concession
agreements and operation and management (O&M)
contracts.

Further, a government entity may, after consultation with the
appropriate authority, outsource a contract to a specifically
preferred contractor. In such a situation, the proposal must
contain a detailed justification, explaining the circumstances
leading to the said outsource.

While GFR is an umbrella regulation which governs the process
for public procurement, various departments and utility sectors
have introduced rules/guidelines which supplement the GFR in public
procurements in their departments and sectors. For instance, the
Electricity Act, 2003 provides for a bidding process for
determination of tariffs. Additionally, the New Exploration
Licensing Policy framed under the Petroleum and Natural Gas
Regulatory Act, 2006 provides for the evaluation of bids according
to the transparent quantitative bid evaluation criteria that
evaluates the financial and the technical capability of the
bidders, the proposed work schedule as well as the monetary
package.

While the defence sector is governed by the DPM and DAP, the
railways are governed by a number of specific laws and use the
Indian railways e-procurement systems (IREPS) for
procurement.

There are other sectors which have issued rules and regulations
to guide the public procurement process, such as the telecom sector
which is guided by the National Telecom Policy and the energy
sector wherein the Ministry of New and Renewable Energy released a
National Policy on Biofuels and a Strategic Plan for New and
Renewable Energy Sector. In fact, in 2017, the Government issued
guidelines for wind power procurement to enable the distribution
licensees to procure wind power at competitive rates in a
cost-effective manner. Even the pharmaceuticals sector has
introduced the Pharmaceutical Purchase Policy 2013 which aims to
reserve the procurement of certain medicines from the Central
PSUs.

Regulations have also been introduced to encourage micro, small
and medium size enterprises to participate in the public
procurement process. The Public Procurement Policy for Micro and
Small Enterprises Order, 2012 provided that a minimum of 25% of
annual value of goods/services of the Central Government and PSUs
must be procured from micro and small enterprises. Further, a
special provision has been added to encourage women owned micro and
small enterprises. Out of the total annual procurement from micro
and small enterprises, 3% from within the 25% target was to be
earmarked for procurement from micro and small enterprises owned by
women.

To encourage the ‘Make in India’ policy of the
Government and to enhance income and employment by promoting
manufacturing and production of goods and services in India, the
Ministry of Commerce and Industry has issued a Public Procurement
(Preference to Make in India) Order, 2017. This order was
subsequently revised in 2018, 2019, 2020 and 2021. The applicable
rules of GFR allow the Central Government to provide (by way of
notification) mandatory procurement of any goods or services from
any category of bidders, or provide for preference to bidders on
the grounds of promotion of locally manufactured goods or locally
provided services.

In addition to all the above-mentioned sector specific
guidelines, DGS&D has been authorised to undertake procurement
on behalf of those ministries/departments which lack the expertise
to undertake such processes on their own.

3. Are there specified financial thresholds at which public
procurement regulation applies in your jurisdiction?

The GFR provides guidelines for procurement of goods starting at
a value of INR 25,000. The GFR does not provide for one threshold
of value of contracts which are required to be governed by the
guidelines issued in the GFR. It prescribes specific rules for
various thresholds of contracts. For instance, it provides for
constitution of a local purchase committee for purchase of goods in
the range of INR 25,000 to INR 2,50,000. In order to promote local
manufacturers and suppliers, the Government has increased the
limit of tenders for procurement of goods, services and works from
outside India to INR 2 billion.

4. Are procurement procedures below the value of the financial
thresholds specified above subject to any regulation in your
jurisdiction? If so, please summarise the position.

To summarise, there are no specific legislations in India that
govern public procurement. The legislative framework on public
procurement is based primarily on guidelines contained in rules,
procedures and manuals. These guidelines generally apply to
contracts having value of either equal to or above the limit of INR
5 million. However, the basic principles underlying such guidelines
would be applicable to all contracts, including those valued below
INR 5 million and the parties to such contracts are bound to act in
a just, fair, equitable and transparent manner.

5. For the procurement of complex contracts*, how are contracts
publicised? What publication, journal or other method of publicity
is used for these purposes?

Public procurement is generally conducted through a tendering
process. The Supreme Court of India has held that the notifications
for inviting tenders are required to be advertised in well-known
daily newspapers with all the relevant details of the tender.

As per GFR, it is mandatory for all ministries and departments
of the Central Government to publish their tender enquiries,
corrigenda thereon and details of bid awards on the Central Public
Procurement Portal (CPPP). CPPP enables the
tenderer to download the tender schedule and submit the bids
online.

Further, as per guidelines of the CVC, notifications for public
tenders are required to not only be published in trade journals and
newspapers, but also on the website of the concerned public
authority along with all the relevant bid documents forming part of
the tender.

In this regard, certain states in India have formulated specific
requirements for the publication of notices inviting tenders. For
instance, the State of Rajasthan requires the notices inviting
tenders for procurement contracts which are above INR 10 million to
be published on the notice board of the procurement authority, in
one regional newspaper, one state-level newspaper as well as in one
all-India-level daily newspaper having wide circulation. While, in
the State of Tamil Nadu, tender notices for contracts that
have an estimated value above INR 750 million, are to be
mandatorily published in all editions of Tamil Nadu’s English
and regional language newspapers, as well as the Indian Trade
Journal.

The time period within which the bidders have to respond to the
notice inviting tenders is at the discretion of the relevant
authority publishing these notices and varies depending upon the
nature of the procurement. The Bill states that in fixing the last
date for submission of bids, the procurement entity must take into
account the need of the bidders and accordingly the bidders must be
provided with reasonable time to prepare and submit their bids.

6. For the procurement of complex contracts, where there is an
initial selection stage before invitation to tender documents are
issued, what are typical grounds for the selection of bidders?

In cases wherein the procurement of contracts involves an
initial selection stage, before invitation to tender documents are
issued, the bidders are usually selected on the basis of the
eligibility criteria determined by the procurer/ authority. Such
eligibility criteria are not fixed or tailor made and are usually
formulated to promote competition and transparency.

In the case of defence procurement contracts, at the first
instance, a request for information (RFI) is issued to all original
equipment manufacturers (OEMs) and upon receipt of information from
these players, the criteria and specification of procurements are
set out and finalised, after which the tenders are issued. Since
most of the utilities are owned by government entities or PPP
entities, they are required to follow the applicable procedure for
procurement for selection of the bidders.

7. Does your jurisdiction mandate that certain bidders are
excluded from tendering procedures (e.g. those with convictions for
bribery)? If so what are those grounds of mandatory exclusion?

The GFR provides that a bidder may be debarred/ blacklisted (i)
for up to three years, in case they have been convicted of
corruption or of a criminal offence as part of execution of a
public procurement contract; and (ii) for up to two years for
breach of the code of integrity.

The CVC recommends that government procurement entities should
adopt an Integrity Pact (Pact) with the bidders/
contractors. The Pact is adopted by almost all parties in the
public procurement process and would cover instances of bribery and
corruption.

The model Pact provides, that in case the bidder or the
contractor before being awarded the contract or during its
execution has engaged in or committed a transgression which is in
violation of its commitments (as mentioned below) or has put its
reliability or credibility in question, the procuring entity is
entitled to disqualify such bidder/ contractor from the tender
process and/or impose a ban on business dealings with such bidder/
contractor.

The commitments of the bidders/ contractors include:

• The bidder/ contractor shall not give any of the employees of
  the procuring entities involved in the tender process, any material
  or other benefit in order to obtain any advantage during the tender
  process or during the execution of the contract.




• The bidder/ contractor shall not enter into an undisclosed
  agreement or understanding (formal or informal) with the other
  bidders. In other words, the bidder/contractor must not take any
  action which will restrict competition or introduce cartelization
  in the bidding process.




• The bidder/ contractor shall not commit any offence under the
  provisions of the Prevention of Corruption Act, 1988 or the Indian
  Penal Code, 1860.

The general principle is that the government or any government
authority must exercise any discretionary power vested in it in a
fair and non- arbitrary manner in the selection process. Any
exclusion of a bidder can otherwise be challenged in the Indian
courts.

8. Please describe a typical procurement procedure for a
complex contract. Please summarise the rules that are applicable in
such procedures.

Procurement procedures in India, are based on the bidding
process. The different kinds of bidding procedures typically
followed in India are briefly discussed below-

• Open competitive bidding: In this type of bidding, the
  bids submitted by the parties are opened to the public. This type
  of bidding creates a transparent bidding process, wherein the
  interested parties are made aware of the selection of the
  bidder.




• Restrictive bidding: In this procedure, the invitation
  to bid is only sent to a limited number of bidders that have been
  prequalified through a screening process.




• Two-stage bidding: Two-stage bidding process is
  usually taken up where a heightened sense of professional
  proficiency is required. In such cases, two separate bids
  (technical and financial) are invited from the procurers.




• Single source procurement/ Spot purchase: As opposed
  to the other procedures covered above, this method is
  non-competitive and is used in exceptional circumstances after
  obtaining the approval of a competent authority. The
  special/exceptional circumstances could be an emergency, limitation
  of cost or continuance of previous work.

In addition to the above procurement methods/procedures, other
methods may also be notified by the Government.

The timelines for procurement in all the above processes varies
depending upon the nature of the procurement and the terms of the
tender, and may range anywhere between 6 to 15 weeks.

It may also be noted, that the decision of the procurer to
subscribe to one of the above procedures depends upon the subject
matter and the nature of procurement. The procuring entity is
required to ensure that the method chosen must be consistent with
the criteria of prequalification and any restrictions that are
imposed before execution.

9. If different from the approach for a complex contract,
please describe how a relatively low value contract would be
procured?

Approach for procurement for a relatively low value contract is
usually the same as complex contracts and procuring entities are
bound to act in a just, fair, equitable and transparent manner.

10. What is seen as current best practice in terms of the
processes to be adopted over and above ensuring compliance with the
relevant regime, taking into account the nature of the procurement
concerned?

The current best practice that is adopted over and above
ensuring compliance with the relevant procurement regime is
the electronic procurement regime or ‘eProcurement’
involving the submission of bids through the online portal created
for this purpose. For encouraging electronic submission of bids,
the Government has created CPPP within which all the prerequisites
and authentications are carried out and the documents are also
published. As a process, prior to submission of bids on the portal,
the bidders are required to enroll themselves on the CPPP.

11. Please explain any rules which are specifically applicable
to the evaluation of bids.

There are no specific rules which have been prescribed to
evaluate the bids. The evaluation and selection process and
mechanism are subject to the requirements prescribed in the bid
documents, which may vary. However, the Supreme Court of India has
laid down principles in various judicial precedents which are used
as guidelines for evaluation of bids. These principles broadly
provide for fairness, transparency, equality, non-arbitrariness and
non- discriminatory treatment of bids.

Based on these principles laid down by the Supreme Court of
India, the procuring entity usually evaluates the bids on the basis
of:

1. Price or economic efficiency;




2. Quality of goods/ raw material;




3. Costs of operation;




4. Terms of payment;




5. Guarantee;




6. Technical competence; and




7. Professional competence

In addition to the abovementioned principles, a commonly adopted
method for the selection of bids is the selection of the lowest bid
(referred to as the L1 method). This method is usually
adopted in case of rate contracts or lump sum contracts.

Another commonly used method for evaluation, is the selection of
the highest bidder method (referred to as the H1). This method is
usually adopted in cases of revenue sharing contracts or a contract
where an upfront premium is payable to the procurer. Yet another
method of evaluation is wherein the bidder requires the shortest
concession period is selected. This method is usually adopted in
concession projects involving a fixed revenue stream.

The procurer may also select a bidder based on their combined
scores from the evaluation of their technical bid and financial bid
calculated on the basis of a predetermined weightage basis.

However, procurers are not bound to evaluate and select bids
based on these methods and select the bid quoting the highest price
or the highest evaluated bidders and have the discretion to select
another bidder if they are convinced that the selection process was
fair, just and reasonable.

The Procurement Policy Division of the Ministry of Finance,
Government of India on 29 October 2021 issued guidelines which
would act as “general instructions” within the meaning of
Rule 6(1) of the GFR, 2017. The guidelines are aimed at ushering in
reforms in public procurement and public project management. The
formulation and release of the guidelines came as a measure of
periodic review of the existing procurement procedures.

The guidelines were prepared under the aegis of the Central
Vigilance Commission (CVC) after a thorough review and consultation
process involving experts from various fields of public
procurement. Similarly, the Comptroller and Auditor General (CAG)
and the National Institution for Transforming India (NITI) Aayog
carried out a detailed analysis of the existing procedures and
rules for public procurement to suggest changes in strategies to
meet present and future challenges in public procurement. The
guidelines attempt to incorporate in the realm of public
procurement, innovative rules for efficient and quick execution of
public projects. A few of the improvements carried out in the
existing regime include prescribing strict timelines for payments
when due. Further, timely release of ad-hoc payments of 70% or more
of the bills raised by vendors is expected to improve the financial
position and liquidity amongst the contractors more particularly
the Micro, Small and Medium Enterprises (MSMEs).

The guidelines also prescribe alternative methods for selection
of contractors apart from the prevailing ones. In cases where it is
deemed appropriate, quality parameters can be given weightage over
cost during evaluation of proposals in a transparent and fair
manner, through what is termed as Quality cum Cost Based Selection
(“QCBS“). QCBS can be employed in cases
where the procurement has been declared to be a Quality Oriented
Procurement (QOP) or for procurement of non-consulting services
where the value of the procurement does not exceed INR 10 crores
(INR 100 million).

12. Please describe any rights that unsuccessful bidders have
that enable them to receive the reasons for their score and (where
applicable in your jurisdiction) the reasons for the score of
the winning bidder.

At the outset, there is no obligation on the procuring
authority/bodies to provide reasons for their award or selection of
a bidder to the other unsuccessful bidders. However, since
Government entities fall within the purview of ‘state’
under Article 12 of the Constitution of India, they are bound by
the provisions of the Right to Information Act, 2005 and may be
required to disclose their reasons in case an unsuccessful bidder
makes a formal request under the Right to Information Act,
2005.

The exceptions to the disclosure inter alia, includes
such information the disclosure of which:

• would prejudicially affect the sovereignty and integrity of
  India, the security, strategic, scientific or economic interest of
  the ‘state’, its relation with any foreign state, or lead
  to incitement of any offence;




• has been expressly forbidden to be published by any court or
  disclosure of which may constitute contempt of court;




• would cause a breach of privilege of the parliament of India or
  a state legislature; and




• includes the information such as commercial confidence, trade
  secrets or intellectual property rights and cabinet papers
  including records of deliberations of the council of ministers,
  secretaries and other officers which are not required to be
  disclosed.

13. What remedies are available to unsuccessful bidders in your
jurisdiction?

The unsuccessful bidders may challenge the bidding process by
invoking the writ jurisdiction of the concerned High Courts or the
Supreme Court of India, as the case may be. In the event, the
unsuccessful bidder manifestly establishes before the writ court
that the procuring entity while evaluating the bids violated the
principle of fairness, transparency and equal treatment and the
procurement process has been carried out in an arbitrary and
discriminatory manner, the writ court may cancel the contract
awarded to the bidder. The writ court may also direct the procuring
entity to initiate the procurement process afresh so that
irregularities occurred during the evaluation stands corrected in
compliance with the afore-stated settled principles. The courts are
however careful before interfering in the bidding process. In
various decisions, courts have held that the terms of invitation of
tender are not open to judicial scrutiny. The courts can interfere
only if the policy decision is arbitrary, discriminatory or mala
fide.

14. Are public procurement law challenges common in your
jurisdiction?

It is not uncommon for bidders to challenge the public
procurement process in India. The challenge itself may not cause
reputational harm, though a bidder may possibly suffer such harm
due to its blacklisting by the procurer for a specified time
period. The challenge also does not usually affect the prospects of
future procurement contracts, as the evaluation criteria for each
procurement is separate and independent unless a bidder has been
blacklisted for a certain period of time. The above concerns
however often weigh on the minds of the bidders.

The cost involved in such procurement challenge claims depends
upon a number of factors including process of challenge, the number
of hearings involved and the legal fees charged by counsels.

15. Typically, assuming a dispute concerns a complex contract,
how long would it take for a procurement dispute to be resolved in
your jurisdiction (assuming neither party is willing to settle its
case).

The adjudication of disputes in Indian courts can be time
consuming and cumbersome. A dispute raised against the procurement
process by way of a writ jurisdiction may be resolved within 2-3
months but could take up to a few years based on various factors
such as the complexity of the case, nature of dispute and the forum
where the dispute is raised.

The key stages in the resolution of a dispute involving a
challenge to the procurement process, would include (i) filing a
writ petition before the concerned state high court; (ii) admission
of writ petition by the concerned court; (iii) reply/counter
affidavit to the writ petition by the procurer; (iv) rejoinder to
the reply by the petitioner; and followed by (v) submission of oral
arguments before the court.

16. What rights/remedies are given to bidders that are based
outside your jurisdiction?

The rights/ remedies available to foreign bidders/ bidders based
outside India are the same as those afforded to bidders in India.
Further, since, the Constitution of India mandates equality before
law and prohibits discrimination, the foreign bidders would not be
treated differently but as per rule of law. There is also no
preferential treatment given to any bidders from
any particular jurisdiction or country including members of
GPA or EU.

17. Where an overseas-based bidder has a subsidiary in your
territory, what are the applicable rules which determine whether a
bid from that bidder would be given guaranteed access to bid for
the contract?

There is no discrimination in the bidding process for subsidiary
entities of an overseas bidder and Indian bidders. The subsidiary
of an overseas-based bidder, will be afforded the same rights and
remedies as a nationally owned company bidding in India. The Indian
subsidiary would be treated as a domestic entity in seeking
remedies before Indian courts.

However, certain procurement criteria may provide for additional
requirements for foreign bidders (upon being declared as successful
bidder) such as, incorporation of an SPV/ subsidiary in India,
wherein the foreign bidder is required to maintain certain level of
ownership or control during the period of the contract. Certain
bids may also have conditions regarding supply of certain quantity
of goods which are manufactured locally.

18. In your jurisdiction is there a specialist court or
tribunal with responsibility for dealing with public procurement
issues?

There is no specialist court/ tribunal which has been authorised
to deal with matters specifically relating to public procurement
issues. The unsuccessful bidders, who may want to challenge the
bidding process can invoke the writ jurisdiction of the concerned
High Courts or the Supreme Court of India, as the case maybe.

The adjudication of disputes arising out of or in relation to
the public procurement contracts, will either fall with the
arbitral tribunal or the civil courts having jurisdiction to
entertain such disputes, depending upon the terms of the contract
and the value of the claim sought.

19. Are post-award contract amendments/variations to publically
procured, regulation contracts subject to regulation in your
jurisdiction?

At the outset, contracts in India are governed by the provisions
of the Indian Contract Act, 1872, pursuant to which the parties to
a contract are free to mutually amend the contract. However,
amendments or variations to the terms and specifications of the
contract after the bid has been procured is usually not
acceptable by the procurer and may be permitted only on a
case-to-case basis under extraordinary circumstances. The intent
behind dealing with the amendments or modifications, is always to
prevent losses to the public exchequer and therefore, only where
the modifications and amendments are considered to be necessary and
inevitable, such amendments to the contract may be allowed after
considering its financial consequences.

In relation to the changes to the identity of the supplier as a
result of sale or insolvency may be permitted, subject to the terms
and conditions of the contract as well as the prior permission of
the procuring authority. Depending upon the terms of the contract,
such changes may also result in a right to termination by the
procuring authority.

20. How common are direct awards for complex contracts
(contract awards without any prior publication or
competition)?

Direct awards are not common in India. Having said that, there
may be certain situations where such direct awards or procurement
from a single source are permitted. The Supreme Court of India, in
this regard has held that though the normal course of action while
undertaking public procurement is an auction or calling for
tenders, there may be certain exceptional circumstances wherein the
usual course of auction and bidding may not be pursued.

The GFR 2017, provides that contracts may be awarded on a
nomination basis or procurement from a single source may be
resorted to, in the following limited circumstances:

(i) In case the procurer or the awarding authority has knowledge
that only a particular firm manufactures the required goods; or
(ii) In case of any emergency; or (iii) For the purpose of
standardization of machinery or spare parts to be compatible to the
existing sets of equipment.

An award resulting from single source procurement may be
challenged on grounds such as (i) the process being in violation of
the Constitution of India and/or violation of any applicable laws
in force; (ii) the lack of transparency in conducting the
procurement process; or (iii) unreasonableness or arbitrary conduct
resorted to for procurement.

21. Have your public procurement rules been sufficiently
flexible to allow contracting authorities to respond to the ongoing
COVID-19 pandemic? What measures have been most used and in what
areas have any difficulties arisen? How have these evolved over the
past year and is it likely that lessons learned from procurement
during this period will give rise to longer term changes?

The Government took immediate steps to relax the procurement as
COVID-19 spread across India and the lockdown was initiated. These
steps were primarily taken to ease the procurement and
transportation of medical and other essential supplies.

It went a step further to even ease the challenges faced by the
parties supplying and in the process of completing their
contractual obligations towards the Government. While some
relaxations were introduced early-on during the lockdown in March,
2020, with the continuation of the challenging circumstances,
certain other steps were taken to troubleshoot the difficulties
faced by suppliers.

These measures have been briefly discussed below-

1. The Department of Expenditure, Ministry of Finance vide an
   office memorandum issued in March, 2020 provided for special
   instructions for procurement by certain ministries/departments.
   These included, the Department of Pharmaceuticals, Ministry of
   Health and Family Welfare, Ministry of Textiles, Department of
   Consumer Affairs and Ministry of Civil Aviation.

2. In addition to the specific special instructions issued, the
   Ministry of Home Affairs declared COVID-19 as a ‘notified
   disaster’. This allowed the rules governing public procurement
   during disasters to be triggered and become applicable. For
   instance, as per the GFR 2017, selection of supplier by direct
   negotiation/nomination on the lines of single tender mode of
   procurement of goods is considered appropriate in case of emergency
   arising from natural disasters wherein timely completion of
   assignment is of utmost importance.

Also, in view of the challenges faced by parties having ongoing
contractual obligations towards the Government, certain reliefs
were introduced over a period of time. These have also been
discussed below-

1. As a primary step in February, 2020, it was clarified that
   COVID-19 should be considered as a case of natural calamity and
   force majeure clause as provided in the Manual of Procurement of
   Goods, 2017 issued Department of Expenditure, maybe invoked.

2. Another key relaxation was issued in relation to return of the
   performance security deposited by the contractor. This was
   introduced due to the liquidity challenges caused by the
   restriction on the movement of materials and individuals.
   Discretion was also provided to the concerned departments/agencies
   to return the performance security deposited initially, in case the
   contractor has not defaulted in his obligations or has invoked the
   force majeure clause.




3. In November 2020, due to the ongoing financial crunch affecting
   the execution of the contracts in a timely manner, the performance
   security was reduced to 3% of the value of the contracts from the
   existing 5-10%.




4. Recently, in May 2021, for efficient sourcing of covid-related
   goods and services, the Government relaxed the local content norm
   of public procurement till September 30, 2021. An order was issued
   by the Department for Promotion of Industry and Internal Trade
   (DPIIT), putting on hold the applicability of the
   Public Procurement (Preference to Make in India) Order, 2017 and
   all related amendments with respect to procurement of supplies
   required for containment of COVID-19.

As can be assessed from the measures introduced, the majority of
difficulties were faced by Government in immediate procurement of
essentials on a large scale, which led to issuance of special
instructions. While, contractors with ongoing obligations, tackled
issues relating to smooth supply, liquidity and other financial
crisis and the Government provided relief as and when such issues
cropped up.

Although the economy has been in and out of recovery and
movement has opened up over the past 2 years since the pandemic has
been ongoing, it is difficult to determine in case the relaxations
offered will continue after normalcy is achieved. It is possible,
that procurement, wherever required on an immediate basis, may be
permitted from more than one source to fulfil the requirement of
the Government. This may however require outlining the scope of
’emergency/exceptional situation’ as mentioned in the
relevant GFR 2017 rules.

Originally published by
The Legal 500.

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