Prime Minister Manmohan Singh today stressed the need for a public procurement law to end corruption.
While three of the 11 members refused to sign the report to protest against the ‘doctoring’ of a chapter on railway procurement, five members, representing the Cabinet Secretariat and spending departments of the Railways, Defence, DGS&D and CPWD, said the Indian systems of procurement were among the best in the world and needed no change.
Former additional secretary in the finance ministry and procurement expert M P Gupta told Business Standard the functioning of the committee reminded him of how vested interests continue to stymie transparency in public procurement. India is one of the few countries in the world that does not have a law for procurement. Even Bangladesh, Nepal and Afghanistan have such a law, apart from the US. He said the report — most of which was compiled by Planning Commission member and panel member Gajendra Haldea, former DG road development SC Sharma and Gupta — strongly argued the government should come out with a resolution on public procurement so that India would not have to wait for Parliament to pass a law. According to him, the law should specify to both public sector undertakings and government offices.
The report recommended that the bidder must have the right to complain if he feels discriminated against. A quasi-judicial body must hear his complaint and redress it. And, the current system of ‘fine tuning’ — tweaking the conditions of the bid document to eliminate bidders — must be done away with. The government’s General Financial Rules govern the financial conduct of the government. The chapter on ‘works’ has no rules on procurement. Calling this the ‘granddaddy of all corruption’ Gupta said the report suggests there must be separate rules for procurement of ‘works’.
The report also said there must be an institutionalised system of arbitration in case of a dispute between the government and a contractor. “Rs 8,000 crore are locked up as a result of arbitration between contractors and the National Highways Authority of India” Gupta said.
The report notes that Railways and Defence, for instance, pay 98 per cent of the cost of an item against delivery. “No contractor comes to collect the remaining two per cent – because he has to pay bribes,” said Gupta.
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Representatives of departments present at the meeting when the report was being drafted took offence and demanded evidence of corruption. They asserted the Indian system of procurement needed no change and appended dissent notes.
The report suggests codification, open advertising, unambiguous eligibility criteria, and mandatory de-briefing of bidders. An Engineering Procurement and Construction (EPC) arrangement, which turns contracting into turn-key projects and reduces contact between contractors and officials should be adopted, the report said, especially in public-private-partnership projects.
The report, however diverse the opinions, is to be placed before the Group of Ministers on Corruption by the Cebinet secretary. But given the turf it is going to encroach upon, how it rolls out remains to be seen.