Para 2.3.3 - Risk Mitigation | KartavyaDesk
Original Rule Text
Risk Mitigation 1. Need is either artificially created or exaggerated, with the intention to channel benefits to an individual or an organisation. For example, demand is created for a good that is not needed simply to benefit the company’s owner. Keep records and involve stakeholders: Records of decision making, and data used should be kept. Involve procurement and finance functions at this stage also. End user and stakeholder consultations should be part of the process. 2. Delays in the Assessment of Need and generation of Indent for Procurement may lead to shortcut procurement procedures that dilute transparency and prevent the achievement of value for money. It may also lead to delays in the delivery of services. Need assessment should be done sufficiently in advance of the time when services are required. In the case of urgent requirements, the urgency certificate should be approved by the authority empowered to grant administrative approval for the indent, recording justification – why the need could not be formulated earlier. 3. The estimate of the costs may be inadequate. This may lead to inadequate response from the bidders and may delay finalisation of procurement. It may also adversely affect the quality of supplies. Estimates of procurement should be prepared with due diligence, keeping in view inflation, technology changes, profit margins etc.
What This Means
Para 2.3.3 of the Manual for Procurement of Non-Consultancy Services focuses on mitigating risks during the initial stages of procurement. It highlights three key areas: artificially created or exaggerated needs, delays in need assessment, and inadequate cost estimation. The goal is to ensure fairness, transparency, and value for money in government procurement processes. This rule applies to all government departments and agencies involved in procuring non-consultancy services, affecting everyone from the end-users who identify the need to the finance and procurement officers responsible for managing the process.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- •Avoid artificially inflating or creating needs to benefit specific individuals or organizations. Maintain detailed records of decision-making and data used.
- •Conduct need assessments well in advance to prevent rushed procurement processes that compromise transparency and value for money. Document justifications for urgent procurements.
- •Prepare cost estimates diligently, considering factors like inflation, technological advancements, and reasonable profit margins, to ensure adequate bidder response and quality.
- •Involve relevant stakeholders, including procurement and finance functions, throughout the process to ensure a collaborative and transparent approach.
Practical Example
The Department of Agriculture needs to procure pest control services. Mr. Sharma, a junior officer, suggests procuring an expensive, specialized pesticide from a specific company owned by his relative, claiming it's the only effective solution, even though cheaper, equally effective alternatives exist. This violates the rule against artificially creating needs. Furthermore, the department delayed the need assessment, leading to a rushed tender process with an underestimated budget of ₹50,000. Only one bidder responded, offering a substandard service. Had the need been assessed earlier with a realistic budget of ₹75,000, multiple bidders would have participated, ensuring better value for money and quality pest control.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What constitutes an 'artificially created' need?▼
What should be included in the 'records of decision making'?▼
What is considered a 'sufficiently advanced' need assessment?▼
Who is responsible for approving the urgency certificate?▼
What factors should be considered when estimating costs?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Test Your Knowledge
Question 1 of 3
According to Para 2.3.3 of the Manual for Procurement of Non-Consultancy Services, what is a key risk associated with artificially creating or exaggerating the need for a service?
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