A landmark Supreme Court judgment of 2006 made issuing of open tenders mandatory for awarding of PSU and government contracts. However, at a time when the Government is focused on transparency and efficiency, this judgment is being routinely flouted. Even the Central Vigilance Commission (CVC) norms are being overlooked by some PSUs and contracts are being awarded on nomination basis.
The CVC order of 2007 clearly stated: “It is needless to state that tendering process or public auction is a basic requirement for award of contract by any Government agency as any other method, especially award of contract on nomination basis, would amount to a breach of Article 14 of the Constitution guaranteeing right to equality, which implies right to equity to all interested parties.”
Vinaya Varma, mjunction MD & CEO said, “By awarding contracts on nomination basisthe government as well as the PSUs are losing out on the best possible service provider both technically as well as financially, thereby hindering optimum economic growth. Competent and experienced organisations, on the other hand, are losing out on a level-playing field in the absence of open tenders. In this context, I seek open tenders on the basis of fair competition and equity. I would like to point out here that while mjunction has won several government contracts for conduct of e-auction of national interest whenever there has been an open tender, it has lost out on that opportunity whenever the stipulation of calling for open tenders has been overlooked.”
Among others, mjunction has won the contracts for e-auction of telecom spectrum for the Department of Telecommunications, e-bidding of oil and gas blocks under HELP Policy of the Government of India and more recently, contracts to deploy its e-procurement system at Ordnance Factory Board under the Ministry of Defence and also for all departments of the Government of Bihar – all through open bidding.
The GFR (General Financial Rules) 2017 provides for procurement of non-consulting services by nomination only in exceptional situations. The same CVC circular of 2007 also provides for nomination basis in exceptional circumstances. “However, it is being routinely exercised by ministries in the Government of India to award contracts on a nomination basis. This is going against all principles of equal opportunity, competition and fairness,” he said, adding, “In this regard, I call for greater clarity in the GFR provisions. I also seek greater CVC surveillance and an urgent advisory from them to follow all guidelines.”
Mr Varma added that this practice of awarding contracts through nomination also violates The Competition Act, 2002, as it directly or indirectly results in eliminating or reducing competition.