Public Procurement - India
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This Chapter was first published in Getting the Deal ThroughPublic Procurement 2009 (Global Competition Review) Legislative framework 1 What is the relevant legislation and who enforces it? India has a federal constitution, with the responsibility forgovernance divided between the central and state governments. TheUnion List, the State List, and the Concurrent List in the IndianConstitution govern the legislative functions of the central, unionand state governments. State procurement does not figure in any ofthe lists as a distinct subject. Under such circumstances the UnionParliament has the exclusive power to make any laws on the subjectof procurement. Parliament has not enacted any specific legislationon the subject. Hence Public Procurement is performed throughGovernment policies. The subject is primarily covered by: theGeneral Financial Rules 1963, framed by the Ministry of Finance byexecutive order, and the Delegation of Financial Powers Rules 1978(again framed by the said Ministry). Further, the DirectorateGeneral of Supplies & Disposals (DGS&D) Manual onProcurement and the Central Vigilance Commission (CVC) Guidelinesprescribe the procurement procedure to be followed by all centralministries. In furtherance to these Rules, in August 2006 theCentral Government, through the Ministry of Finance carried out adetailed exercise and issued three Manuals providing forprocurement of Goods, Works and Services. These Manuals are meantto be guidelines to the Government Ministries / Department / PublicSector Undertakings. They are very detailed in nature. The state governments generally follow the sameprocedure as the central government. The procurement rules are enforced by the respectiveministries and departments (ie, the procuring authority in thefirst instance). Judicial review of administrative action is vestedin the high courts. Each state of the union has a highcourt. 2 In which respect does the relevant legislation supplement theEU procurement directives or the GPA? India has not acceded to the GPA. 3 Are there proposals to change the legislation? No. At present there is no bill pending in parliament tobring about any change to the legislation. 4 What is the relevant legislation for the procurement ofmilitary equipment? As part of the implementation of the report of the Groupof Ministers on reforming the National Security System, new DefenceProcurement Management Structures and Systems were set up in theMinistry of Defence (MoD) order No. SA/01/104/2001, dated 10September 2001 and No. 17179/2001-Def Secy/IC/2001, dated 11October 2001. To implement the provisions laid out in the saidDefence Procurement Management Structures and Systems, theprocedure for defence procurement laid down in MoD ID No.1(1)/91/PO (Def), dated 28 February 1992 was revised. The DefenceProcurement Procedure – 2002 (DPP- 2002) came into effectfrom 30 December 2002 and was applicable to procurements flowingout of 'Buy' decisions of Defence Acquisition Council(DAC). The scope of the same was enlarged in June 2003 to includeprocurements flowing out of 'Buy and Make through ImportedTransfer of Technology (TOT)' decisions. This procedure wasreviewed and DPP – 2005 came into effect from 1 July 2005and later 2006. The Defence Procurement Procedure – 2006,has been reviewed and revised based on experience gained inimplementation and DPP 2008 came into existence with effect fromAugust 2008. The Defence Procurement Procedure – 2008provides comprehensive policy guidelines for all capitalacquisitions undertaken by the Ministry of Defence, DefenceServices, the Indian Coast Guard both from indigenous sources andexports and imports, the Defence Research and DevelopmentOrganisation (DRDO), and the Ordinance Factory Board(OFB). Applicability of procurement law 5 Which, or what kinds of, entities have been ruled not toconstitute contracting authorities? The rules governing public procurement are binding only on theState as defined in Article 12 of the Constitution of India. Thisexpression ("State") is widely defined and interpreted toinclude not only the Government but also agencies and otherautonomous bodies directly or indirectly controlled by it. Henceprivate bodies not under the control of the Government are notbound by the procurement procedures described in Question 1.Further the Constitution of India vide article 299 stipulates thatall contracts made by the Union or State shall be expressed to bemade in the name of the President of India or the Governor of theState (as the case may be). Accordingly any person who has not beenso authorized shall not be competent to be a contractingauthority. 6 For which, or what kinds of, entities is the status...
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