Government proposes a regulator for public procurement

Legislation codifies rules for all government procurement and purchases

By Richard Mahapatra
Published: Tuesday 22 November 2011

Faced by a series of scandals and public outrage against corruption, the government of India has drafted a bill to regulate public procurement and purchases. The proposed legislation, the Public Procurement Bill of 2011, is meant to regulate public purchases totalling Rs 12-15 lakh crore annually. A draft bill is being circulated by the Planning Commission for wider public discussion.

Prime Minister Manmohan Singh in his Independence Day speech had hinted about such a legislation. His proposal for regulating public procurement, considered a major source of corruption, came in the midst of the popular campaign for a strong Jan Lokpal Bill by a group of social activists led by Anna Hazare.


Many countries, including India's neighbours like Nepal, Bangladesh and Afghanistan have such a legislation in place. The United Nations Commission on International Trade had circulated a model law for regulating public procurement for adoption by member countries in 1994. The proposed legislation seems to have drawn most provisions from this model legislation.

According to the draft bill, there will be a central department of procurement policy. The department will  regulate all procurement and purchases of government departments and agencies, including trusts and organisations that get substantial government funds. Once the legislation is enacted, the government will have the power to notify any institution or deal, which involves the government, to be brought under the supervision of the department. Even agencies involved in implementing international agreements of the government will be under the purview of the legislation. Given the increase in the public-private partnership in many projects, these will also be covered by the new legislation.

To ensure compliance of the regulations, there will be a procurement regulatory authority.  The authority members' selection will be approved by an appointment committee, consisting of the Prime Minister, leader of Opposition (Lok Sabha) and the Union Minister of Finance. The selection committee, headed by the cabinet secretary, will prepare a panel of names for the appointment committee.

The draft bill has given detailed procedures on procurement and grievance redressal. There will be a tribunal of public procurement to settle disputes. Any contested decision of this tribunal will go straight to the Supreme Court. The authority will have suo moto power to take cognisance of complaints.


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