Para 2.4 — NONCONSULT_MANUAL

2. Packaging, Bundling and Slicing: 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.

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 recorded in writing, divide its procurement into appropriate packages or club requirements of other users for procurement. Packaging of the contract and procurement planning should be done keeping in view the availability and possibility of eliciting the interest of the qualified firms, effective competition for the type and size of the contract, and access to MSEs. For example, for a particular contract, material to be procured may constitute more than 50 (fifty) per cent of the total cost of works, or there are services that are a mix of consultancy services with substantial elements of goods, such as procurement of an IT system. Such procurement could be

2.4. Developing a Procurement Plan 2.4.1. Planning the Procurement 1. The NC Services may be part of a larger project/ works in which there be other components of work, Goods or Consultancy/ NC services. Once a project or a program is identified, the Procuring Entity needs to develop a synchronised procurement plan for all the various components of the project/programme. This will also require planning of the sequence and contents of the different components, including NC services, adoption of the most appropriate method of selection and type of contract and ensuring that selection of service provider is initiated and completed to meet the overall requirements of the project implementation. For example, if a service provider is required for housekeeping services for a hostel still under construction, the entire sequence of preparation of feasibility report, detailed design and bidding document, the time required for inviting bids for construction work, and award of contract has to be considered so that the housekeeping service provider is mobilised at the right time when the hostel is ready for occupation. Procurement planning is a crucial stage of decision-making in procurement planning for a better outcome and for VfM considerations.

Chapter 2: Need assessment and Procurement Planning done as a single composite contract comprising all components or divided into separate contracts for each category of procurement. 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 for VfM considerations;

3. Eligibility for Participation in Tender: Determine and declare in documents any limitation on participation of bidders as per the Government’s procurement policy regarding preference to 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;

4. System of Tendering and Mode of Procurement: a) Selection of a system of tendering (single/two stage; single/two bids; suitability for eprocurement or reverse auction); b) Select the mode of procurement (open tenders, limited tenders, single tenders, and so on);

5. Time Frame: Decisions on the timeframe for completing various stages of procurement, which should be declared in the pre-qualification/bidder registration or tender documents. The procuring entity should endeavour to adhere to the time limit so decided and record reasons for any modification of such limits. (Rule 144(ix), GFR 2017)

6. Annual Procurement plans: GFR 2017 (Rule 144 (x)) mandates that All Ministries/Departments shall prepare Annual Procurement Plan within 30 (thirty) days of Budget approval, before the commencement of the year and the same should also be placed on their website. 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. The procuring entity may publish information regarding the planned procurement activities for the forthcoming year or years on CPPP and website/ e-procurement portal used by the procuring entity with a caveat that such publication shall not be construed as the 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.

7. Mitigating Cartel Formation: Need Assessment and Procurement Planning is the main stage where this menace can be addressed effectively:

2.4.2. Procurement Planning - Risks and Mitigations

Risk Mitigation 1. Packaging, bundling, and slicing of requirements are done to avoid open competition or reduce competition. Or it is too large to make it difficult for MSEs to participate. Possible clubbing/collaboration among different units having the same needs has not been explored. Lay down a clear policy for packaging and bundling of requirements. In large packages, the affordability of EMD and resultant restriction on competition may be kept in view, and bidders may be allowed to bid for slices of the package by depositing proportional EMD.

a) Inadequate competition, due to an inadequate number of service providers in the list/ panel of registered service providers, may empower bidders to conspire against the Procuring Entity: i) New firms may be encouraged to register themselves for the subject services. ii) Various services and activities in the Services and Activities Schedule may be reviewed so that more service providers become eligible. Insisting on costly machinery to be used may reduce competition and encourage cartel formation. b) 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 the case of turnkey contract

(s) and sophisticated and costly equipment, large works, and complex service assignments, as detailed in para 5.2.3 below.

c) Tendering similar Services and Activity Schedule 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:

i) Change the mode of procurement - OTE instead of LTE, or GTE instead of OTE; or bypass the pre-qualification stage and vice versa. ii) Change the packaging/slicing by clubbing/ slicing services/ activities in a tender. iii) Change the pre-qualification criteria, especially in the case of slicing/ packaging, to broaden the target bidders.

8. 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 NC Services in the region or the State. 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 service providers, co-ordination/ cartelisation among them, major service providers/ buyers controlling the market d) Manpower constraints, Skills/Manpower bottlenecks, logistics, geopolitical issues. e) Statutory Constraints: patents, manufacturing processes, pollution, and other legal restrictions, etc. Should we tinker with specifications to get VfM?

Chapter 3: Participation of Bidders and Governance Issues 3.1. Eligibility Criteria for Participation in Tender Process 1. Normally, participation in the Tender Process should be open to all bidders. However, the procuring entity should lay down ‘Eligibility’ criteria based on the requirements of the procurement and Government Policies. ‘Eligibility’ and ‘Qualification’ criteria (Experience, Performance, and Financial Capabilities) are entirely different criteria and should not be mixed up. ‘Eligibility’ criteria regulate the participation of bidders in the Tender process, while ‘Qualification’ criteria are for the evaluation of bidders for the award of the contract. The bidder should meet the eligibility criteria as of the date of his bid submission (and should continue to meet these till the award of the contract); otherwise, his bid would be rejected as non-responsive and would not be evaluated for the award of the contract. The bidder shall be required to declare fulfilment of Eligibility Criteria in his bid document. Some of the eligibility criteria are related to the following issues (for details, refer to relevant Model Tender Documents): a) Legal status of the bidder: Individual bidder - a natural person or a private entity or a public entity (State-owned enterprise or institution), or a Joint Venture/ Consortium (an association of several persons, firms, or companies - hereinafter referred to as JV/C). JV/C may be permitted to participate in the procurement of Non-consultancy services only in specific situations where the credentials required are not likely to be available with an individual bidder. Participation of JV/C is specifically discouraged in the case of Quality Oriented Procurement (QOP) with QCBS evaluation (Please refer to para 4.3.2 below). b) Participation of demerged entities20 (by virtue of a corporate restructuring exercise etc.): Tender documents must clearly mention if (and under what conditions) the demerged entity will be permitted to use credentials of original/parent entity (for initial five years from the incorporation of the demerged entities) to satisfy the eligibility criteria or not in the specific tender. c) Requirement of various registrations/ licences from various statutory authorities required for the subject matter of procurement: GSTIN, PAN, EPF, ESI, Labour, Private Security Agencies (PASARA), etc. d) Submission of requisite Bid Security (or Bid Security Declaration, if allowed) or proof of exemption therefrom e) free from Financial insolvency, Debarment, or Convictions; f) A consistent history of litigation or arbitration by the bidder may result in disqualification; g) free from ‘Conflict of Interest’ with other bidders, which may affect fair competition. h) Restriction on participation as per Government Policies: i) For Class-II Local Suppliers and Non-Local bidders as per the Make-in-India policy. ii) Any bidder from a country sharing a land border with India (but not in development partnership with India), or any bidder (including Indian) with a

Chapter 3: Participation of Bidders and Governance Issues Specified Transfer of Technology (ToT) arrangement with such a country, shall be eligible subject to certain conditions.