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Recent Developments in Public Procurement: MAPS, SPP, MSE Procurement Amendment Order, Make in India Order

Learn about the latest developments in public procurement, including the Methodology for Assessing Procurement Systems (MAPS), Sustainable Public Procurement (SPP), MSE Procurement Amendment Order, and Public Procurement (Preference to Make in India) Order.

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Recent Developments in Public Procurement: MAPS, SPP, MSE Procurement Amendment Order, Make in India Order

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

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

  3. METHODOLOGY FOR ASSESSING PROCUREMENT SYSTEMS (MAPS)

  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

  5. Previous Assessments … • World Bank, in 2017 published Benchmarking Public Procurement Report (BPP) focusing on legal and regulatory environments that affect the ability of private sector to do business with Government • 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

  6. India’s score on the Six parameters of BPP 2017

  7. Comparing India with the World…

  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

  9. MAPS framework

  10. Assessment of India’s Public Procurement through modified MAPS

  11. SUSTAINABLE PUBLIC PROCUREMENT (SPP)

  12. Definition- SPP • Process whereby public organizations meet their needs for goods, services, works and utilities in a way that 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 reducing negative impacts on the environment.

  13. GFRs, 2017 Provision

  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 their specifications) where SPP can be implemented

  15. MSE Procurement Amendment Order 2018

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

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

  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 and local competition exists

  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 can reduce the margin of purchase preference below 20%; • The minimum LC, Margin of Purchase Preference and procedure for PPI-MII policy shall be declared in NIT;

  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 falling in margin of 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 price falling in margin of purchase preference; • The same exercise is carried out till the invited local supplier matches the L1 price and accepts the balance quantity;

  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 price falling in margin of 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

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

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

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

  25. Thank you !!

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