Public procurement, wealth distribution and educational bid

In a welfare state all the Government  Ministries, Departments, Agencies, Statutory Corporations and Public Sector Undertakings in the Centre and the States, Municipal Corporations and other local bodies  and even by private Public Sector Undertakings (hereinafter called government  agencies)  providing public services in very wide scale . While providing   service   by government agencies, they incur huge expenditure through public procurements which can be defined as the procurement of goods, works and services by government agencies in very wide scale. The estimate of public procurement as per preface of Public Procurement Bill  2011  is simply enormous and  estimates vary between 15 to 20 per cent of GDP or about Rs. 12 to 15 lakh  crore per annum in case of India.

The  process used by government’s agencies for   Public Procurement can be categorized in three distinct Stages-

a. Pre-tender Stage

(Project formulation, Appointment of Consultants, Preparation of Detailed Project report/ Detailed Estimate)

b. Tender Stage

(Preparation of tender documents, inviting & opening of tenders, prequalification, tender evaluation & award of work)

c. Execution Stage

(Compliance of agreement conditions, making payments, ensuring quality & timely completion)

The   pre-qualification criterion is a yardstick to allow or disallow firms to participate in the bids. The pre-qualification criteria acts like a filter and by varying the criteria selection of contractor (company/individual/firms) can be varied accordingly. In this regards the question that come to my mind is when government is incurring expenditure of about Rs. 12 to 15 lakh  crore per annum  through public procurement  then why the wealth distribution and consequently public participation  is skewed i.e. limited to very few individuals .

 The  skewed public participation is due to fact that  government agencies not incorporating educational bid in their tender. Almost in all the tender made by government  agencies specifying  the criteria in which only experienced firm/company/individual having sufficient financial capability or experience can able to bid . By this method once a company/firm/individual being selected, they are continuously getting selected which is prejudicially affecting the new company/firm/individual. The individual/association/companies which are already  doing government   work  getting the work of government agencies continuously and  getting their wealth increased day by day. A non experienced individual or new company, firm or association whether incorporated or not   are finding it is impossible to getting selected for carrying out government  agencies work.

As observed by CVC the prequalification clause in the tender documents of  government  agencies skewed for  experienced and big companies ,association and  influencing individual only and also it has been observed  during intensive examination of various contracts by CVC  that the prequalification criteria is either not clearly specified or made very stringent / very lax to restrict/facilitate the entry of competent/incompetent bidders .

Because of this lacuna in public procurement system  the public procurement work  of India is concentrated  within a few individuals/company/firms  only which is prejudicially affecting the equitable distribution of wealth  as envisaged in Article -39 (b) and 39(d) of  the constitution mentioned  below.

39. The State shall, in particular, direct its policy towards securing—

b) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good;

(c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment;

Therefore public procurement which is important source of   distribution of wealth and generation of indirect employment is concentrated between few companies, associations and individuals only. Presently  the government is  in the process of  bringing a bill namely Public Procurement Bill  in the parliament which also silent about   uniform distribution  of work and how to allow new entrants in the field.

CONCLUSION

It is therefore required that government should make it mandatory that  while government agencies going for procurement they should invariably  incorporate educational bid except cases which required high skill or new technology so that new entrants get chance  and  there shall be uniform distribution of wealth as envisage in Aritcle-39 (b) and 39(d) of  the constitution.