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Public procurement: A policy worth waiting for
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Bikky Khosla | 24 Jan, 2012
It is widely expected that the Public Procurement Policy that has already been approved by the Union Cabinet would be introduced in the next session of Parliament. And beyond doubt, for the small business community, this first-of-its-kind policy is something worth eagerly waiting for.
The bill mandates government departments and public sector units to procure minimum 20 percent of their total annual purchases from Micro and Small Enterprises (MSEs) – a move that is expected to facilitate the sector exclusive access to public procurement worth Rs.35,000 crore annually. This figure is just big enough to get our hopes up, despite the fact that the minimum 20 percent quota will be made mandatory only after the first three years of implementation.
This has been a long-standing demand of the small units, and if the government could just get the ball rolling in the next Budget session, then the MSE sector would get a much-needed boost. But to ensure this, I think the government must be cautious enough to get their priorities right -- right from the beginning -- and make sure that unlike most of the past policy interventions for the sector, this one does not fail to produce the desired results.
First and foremost, transparency is essential to success. There must be no loophole for public officials to engage in corruption. The government, besides promoting transparency through availing information on tenders and giving feedback on awarded tenders, should make every effort to prevent corruption in any possible way.
Secondly, majority of MSEs will find it difficult to tender for big lot of supplies. The present bill tries to address this issue to some extent, but I think that measures, such as setting up consortium across all sectors and encouraging small firm participation through sub-contracting and joint ventures are most required.
Thirdly, equally important is to help MSEs access necessary information on market opportunities, train them to bid for tenders, provide adequate trade financing to help them meet orders, ensure that public institutions do provide complete information on tenders, and encourage supplier innovation and set up clear mechanisms through which innovative ideas, services or products can be communicated.
A good procurement policy is vitally important to the micro and small enterprise sector. At the same time, it is of equal importance to the public sector, which should make the best use of public money. The government can serve both these needs by making the procurement policy, processes and practices efficient, transparent and above suspicion in all respects.
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Public procurement
Hitesh Joshi | Tue Feb 14 09:12:48 2012
SMEs lack marketing efforts in public procurement. Like MNCs who hire retired officers as their marketing specialists who have deep knowledge of the requirements. Compare to them, SMEs depends upon own efforts. This is the time for freelance marketing in Govt sector and I am volunteer for that.
Pre Qualification
Ashwin | Sun Feb 5 05:22:46 2012
1. Govt should do away with EMD, Security Deposti, Performance Guarantee System. The Private Buyers are doing a good procurement job even without these deposits from suppliers. This will reduce a suppliers cost of funds imagine an expense of 2% EMD, 10% Security Deposit or Performance Guarantee even before he receives a single rupee! So NSIC Registration requirement for such exemptions is eliminated. Also problem of people not accepting NSIC registration will be eliminated.
2. Strictly implement the MSMED Act 2006 for delayed payments to MSMEs by Large Govt and Private companies. The MSME must be assured payment within 30 days of INVOICE. Payment terms like after receipt and acceptance etc should not be allowed to form a part of the contract. This is a major cause of corruption at stores and payment levels.
3.Once technically qualified, qualification should be valid for 3 years and only Price Bids to be invited from such parties. Only new parties must need to submit technical bids.
Repeat of cheating
Prafulla Chikerur | Sat Jan 28 16:50:31 2012
The new bill is nothing but a repeat of cheating to the people of India. Once again, the rich businessmen will bring their children forward as SMEs, and will bite the major share of public procurement, same as happened in all previous policies for SSI and Tiny industries. Just take a review who took advantage of all the schemes launched before for prosperity of small businesses. This is a new idea to make rich and influential people richer and more influential. Don't get cheated my friends, shout against the earlier cheating and stop praising the new methods of cheating.
If the Govt adopts transparency
ESWARAN.M | Wed Jan 25 10:29:47 2012
As rightly said in the editorial, if the Govt adopts transparency in the formulation and implementation without loopholes, naturally this will be a boost to the MSEs. But our Govt. is well known for backtracking in every implementation. There is no second opinion that present Govt has let industry sectors particularly textiles to bite the dust since several years. First they sidelined Agri and then Textiles which are the back bones to the nation since time immemorial.
Pre-qualification process faulty
Tushar | Wed Jan 25 05:42:16 2012
It is all very rosy. But the system will kill this scheme also. Currently National Small Industries Corporation is the body responsible to certify the MSME status of an enterprise. It takes more than 6 months and under the table transactions to get a certificate from NSIC. On top of that there is EMD waiver for NSIC registered enterprises. But 90% of govt./semi govt procurement organisations are either ignorant by default or by choice hence the purpose of support to MSME gets defeated there also. Then comes the registration with CPWD, MES and Railways. Try and get registration in these 3 organisations which is a pre-qualification for participation in public procurement tenders. You will spend one year each plus the shady transactions- hence 3 years to qualify. My question is why to have multiple systems. We already have existing systems. What is required is to establish accountability in the existing systems and plug the loopholes. Instead we are looking at creating another way to facilitate corruption.
All big tenders are somehow or the other bagged by big fishes. Then they sublet the contract back to back to a smaller fish and further. Then the payment to SMEs is made as and when they recover their payments from the principle buyer. This way they play on SMEs' money which is delayed beyond acceptable limits. This is the root cause of the problem which was the subject of your last editorial article.
A few proposals for consideration
A.K.BOSE | Wed Jan 25 05:36:01 2012
It is good news indeed.The period of 3 years appears to be quite long since in every sphere, world is moving fast.To become more competitive ,it should be cut down to 2 years .
I submit herein below few proposals for to consideration, which if implemented can plug loop holes out of many:
1. Accreditation or certification of overseas Bodies for the Products manufactured by MSMEs, should not be inserted as one of the qualifying criteria for the Bidder.
2.There should not be any condition that only MSMEs unit of the states which goes for procurement should only get the benefit out of this policy and exemption from EARNEST MONEY DEPOSIT,TENDER FEE AND PRICE PREFERENCE.
3.The policy should be uniform and should be applicable for all states and central government procurements.
4.The procurement should not be restrict6ed to clusters of product ,it should apply to all the products,equipments MSME units produces.
A basic problem
Raja Debashis | Wed Jan 25 05:20:54 2012
The new procurement policy is very much welcome step. But a basic flaw in the policy is that its difficult to ensure the set 20% procurement from MSEs as the procuring PSU may have a valid ground stating that no MSE provides major supplies to be procured by the corporation.
Besides, the onus should be broadened to cover even PRIVATE sector companies as well.
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