Para 2.5.1 — GOODS_MANUAL

b) Reassessment of the quantity and Packaging/ Slicing of Requirement: i) The procuring authority shall normally neither package nor divide its procurement or take any other action to limit competition among bidders or to avoid the necessity of obtaining the sanction of higher authority required with reference to the estimated value of the total demand (Rule 157 of GFR 2017). ii)

Provided that in the interest of efficiency, economy, timely completion or supply, wider competition, or access to MSEs, a procuring authority may, for reasons to be

2. After receipt of the Indent, the procuring entity should make the following decisions to initiate procurement to ensure conformity to the Procurement Guidelines:

a) Within 10 (Ten) working days of receipt of the indent from the user Department, the procuring authorities should critically review the description and TS enclosed with the indent for completeness/approvals/funding, VfM and possibility of the widest competition and seek clarifications from the indenting officer, if needed, before initiating such procurement;

2.5.1 Planning the Procurement 1. Publish the Annual Procurement Plans: The procuring entity shall publish information regarding the planned procurement activities for the forthcoming year or years on the Government e-Marketplace (GeM), GeM-Central Public Procurement portal and website/e-procurement portal used by the procuring entity with a caveat that such publication shall not be construed as an initiation of a procurement process and cast any obligation on the procuring entity to issue the tender document or confer any right on prospective bidders. (Rule 144 (x), GFR 2017).

Chapter 2: Need assessment, Formulation of Specifications and Procurement Planning recorded in writing, divide its procurement into appropriate packages or club requirements of other users for procurement. iii) Packaging of the contract and procurement planning should be done while keeping in view the market conditions and availability and the possibility of eliciting the interest of the qualified firms, effective competition for the type and size of the contract, and access to MSEs. An exceptionally large value package contract may restrict competition to big firms. iv) Some requirements, e.g., IT Systems, may have elements of Goods, Works, and Services. It could be either sliced into separate Goods, Works and Services elements or combined into a single package. v) In all such situations, the dominant aspect of the requirement and value for money aspects of a composite all-inclusive contract versus dividing the contract into respective categories should be carefully examined at the time of Need assessment/ Procurement Planning. This is a crucial stage of decision-making in procurement planning for a better outcome and VfM considerations;

c) Determine and declare in documents any limitation on the participation of bidders as per the government’s procurement policy regarding preference for certain sections of industry, if any. The procuring entity shall not establish any requirement aimed at limiting the participation of bidders in the procurement process that discriminates against or amongst bidders or against any category thereof except to lay down a reasonable and justifiable eligibility or pre-qualification criteria for the bidders; d) Selection of a Tendering System (single/two stages; single/two bids; suitability for eprocurement or reverse auction); e) Select the mode of procurement (open tenders, limited tenders, single tenders, and so on); f) Decisions on the timeframe for completing various stages of procurement from the date of issuing the tender to the date of issuing the contract, which should be declared in the pre-qualification/ bidder registration or tender documents. (Rule 144(ix), GFR 2017). g) The procuring entity should endeavour to adhere to the time limit, so decided and recorded reasons for any modification of such limits. h) An integrated annual procurement plan should be prepared for goods, works and services for the ensuing financial year based on the latest cost estimates and realistic time schedule for procurement activities and contract implementation and thus schedule and stagger the procurements over the year with a view to ensure an even load on the procuring entity and the market and to co-ordinate matching procurements of Goods, Works, and Services for a project; i) Mitigating Cartel Formation. Need Assessment and Procurement Planning is the main stage where this menace can be addressed effectively: i) Inadequate competition, due to an inadequate number of suppliers in the list/ panel of registered suppliers: 1) New firms may be encouraged to register themselves for the subject goods. 2) A review of technical specifications (especially tailor-made specifications) may be done to examine why a commercially available alternative cannot be used instead, or at least review its features so that more suppliers become eligible. Consider using substitute items or new developments in the Market.

ii) Processes, e.g., pre-bid conferences (where a considerable number of competing bidders come together on a platform), may facilitate such cartel formation. This may be avoided as far as feasible or be held only virtually. However, a pre-bid conference may be advantageous in case of turnkey contract

(s) and sophisticated and costly equipment, large works, and complex consultancy assignments, as detailed in para 5.2.3 below and pre-bid conferences must be done wherever necessary. iii) Tendering similar quantities with similar conditions, year on year, provides a stable conspiring environment for the bidders to come to an agreement for quoting prices and quantities. Therefore, the following action can be considered to vary quantity and conditions to make it difficult for cartels: 1) Change the mode of procurement - OTE instead of LTE, or GTE instead of OTE; or bypass the pre-qualification stage and vice versa. 2) Change the quantity to be procured by packaging/slicing the tendered quantity or by clubbing more than one similar item in a tender (or vice versa). 3) Change the pre-qualification criteria, especially in the case of slicing/ packaging, to broaden the target bidders.

3. Strategizing Large Procurement: Large procurements warrant strategies to achieve competition and VfM. Large procurements require the application of mind during need assessment, cost estimation and procurement planning, where the blind application of rules may not bring VfM. Formal market research can reveal important parameters of the market that can be used for designing optimal procurement strategies (alternative methods of procurement, slicing/ packaging, mitigating cartels, optimising various features/ specifications of the item) to maximise VfM and competition. Some of the market parameters to look for are:

a) Total Production Capacities and total demand for the item in the country and abroad. Is there an unbalanced demand/ supply? b) Volumes of procurement: How significant is our requirement vis-à-vis the market? Would clubbing demands increase bargaining power? Can we collaborate with another large public-sector buyer? Has there been a recent major procurement that may constrict available capacity? c) Level of competition – location-wise number of suppliers, co-ordination/ cartelization among them, major suppliers/ buyers controlling the market d) Supply chain constraints, Raw materials bottlenecks, logistics, geopolitical issues. e) Specifications and variations: patents, manufacturing processes, pollution, and other legal restrictions, etc. Should we tinker with specifications to get VfM? f) Pricing Trends: Seasonality of prices, is it the appropriate time to enter the market?