Public Procurement within the Oversight of Competition Commission of India Varun Chopra* The process of Public Procurement is an agreement between a department of Government of India on one side and suppliers on the other. All commercial agreements ofany enterprise including Government Departments (GD) are within the ambit and scrutiny of the Competition Commission of India (CCI). GD in the scenario of public procurement is a buyer of goods and/or services and the bidders are the suppliers and/or sellers for the same. However, the scenario is not pro-competitive always as a result of which several checks have.been created to curtail restrictive and unfair practices.amongst and \ between bidders and the officials of GD involved in the bidding processes. The relationship between the GDs and bidders are vertical, But amongst bidders the relationship is horizontal, Each one is trying to win the bid and depending on the stake of bid, a few amongst them may indulge in conducts which are not permitted under the CA but may be customary practices of business. The few amongst the large group of bidders could act in a clandestine manner L with concerted effort indulge in collusion and quote the bid price after consultations amongst them thereby, foreclosing the opportunities for the rest to bid successfully in fair manner. Thus, besides oversight of the CVC, CAG all public procurement will have the CCI oversight now onwards. ‘The bidders as well as the Government departments will have to take extra care : and ensure free, fair competition while concluding public procurement processes. | Introduction of goods and/or services and the bidders The process of Public Procurement is an agreement between a department of Government of India on one side and suppliers on the other. All commercial agreements of any enterprise including Government Departments (GD) are within the ambit and scrutiny of the Competition Commission of India (CCI). GD in the scenario of public procurement is a buyer are the suppliers and/or sellers for the sanie, Further, it is reiterated that Parties ie: GDs and suppliers and/or sellers to this agreement are within the ambit of the Competition Act, 2002 (as amended in 2007) (CA) unlike the Monopolies Restrictive Trade Practices Act (MRTP Act), 1969 the erstwhile legislation in India. Though the agreement between * Advocates, Solicitors, Notaries, Patent & Trade mark Attorneys, Khaitan & Co. e-mail: varun.chopra@khaitanco.com 180 B-362 Oct, 2010 - Dee. 20102010} patties is a vertical agreement but the bidders ie, the suppliers and/or sellers are in horizontal relationship attempting to succeed among each other. So long as the aforesaid compete freely and fairly between themselves, there may not be a concern under the CA for competition. However, the scenario is not pro competitive always as a result of which several checks have been created to curtail restrictive and unfair practices amongst and between bidders and the officials of GD involved in the bidding processes. Checks The Central Vigilance Commission (CVC) and the Comptroller & Auditor General (CAG) are the two independent autonomous Constitutional authorities entrusted to ensure integrity and fairness in tendering processes and financial deals arising out of the Public Procurement (PP). With the notification Of Sections 3 and 4 of the CA with effect from 20" May, 2009, an additional check has been created to make the PP, transparent and competitive. Thus, oversight of “3Cs-CCI, CVC and CAG” is a comprehensive check against restrictive, unfair and discriminatory practices which may arise in PP. Further, the General Financial Rules (GFR), 1963 (as amended from time to time), the Delegation of Financial Powers Rules (DFPR), 1978 are the two basic Rules issued by the Government of India, to ensure financial integrity in Government's financial dealings. CVC Guidelines are the other, which guide the GDs to prevent unfair and discriminatory methods of awarding contracts to bidders. The statutory legislations in this behalf are the Prevention of Corraption Act (PCA), 1988 and the CA. PCA is a relief to bidders against corrupt Government officials while CA is a telief to the government departments against anti competitive practices of bidders. Public Procurement within the Oversight of Competition Commission of India 8-363 Moreover, huge penalties including jail terms from six months up to a period of 5 years have been prescribed under the CA and the PCA against anti competitive practices and corruption. Although abiding by the principles of natural justice is the cornerstone of almost all legislations in India, as such right to appeal before appellate authorities as well as before the Supreme Court of India for logical conclusion of any dispute is available to all parties. However, decisions of the Supreme Court of India are end of the road as the same are binding upon all Courts and tribunals, Procedure Notice Inviting Tenders (NIT), is the first interface between the GD and the prospective bidders. NIT gives the bidders an overall idea as to what is the nattire of job that the department intends to achieve and within a stipulated period of time. It also spells out in unambiguous terms the DOS and DON'TS to the bidders. Although, the pre qualification standards, depending on nature of works intended tobe undertaken, may vary from tender to tender, but shall remain within the confines of the GFR, DFPR, CVC Guidelines, CAG Orders, and statutory laws including the CA. Further, the Public Private Participation (PPP) projects follow additional criteria viz, Request for Qualifications (RFQ), Expression of Interests (EOI) and Request for Proposals (RFP) before contracts are awarded by the Government. Technical bids are normally opened first and from amongst the successful short listed bidders, the financial bids of only such successful bidders are opened later. The bidder who bids the lowest (L1) on financial parameters is awarded the contract. No negotiation is permitted post awarding of the contract. However, in exceptional circumstances negotiations may take place but with L1 bidder only and reasons for such negotiations shall ‘Oct, 2010 - Dee, 2010 181B-364 Competition Law Reports {Vol. 1 have to be recorded in writing by the competent authority, in this behalf. Furthermore, the bidding processes in projects arising out of World Bank or ‘Asian Development Bank or other International Funding Agencies vary from the normal bidding process. In most cases Department of Economic Affairs (DEA), Ministry of Finance, Government of India pre examines the international funding proposals and consequent upon approval of the DEA, the tendering processes start. In international funding projects the technical bids at times take precedence over financial bids. Competition Issues The relationship between the GDs and bidders are vertical. But amongst bidders the relationship is horizontal. Each one is trying to win the bid and depending ‘on the stake of bid, a few amongst them may indulge in conducts which are not permitted under the CA but may be customary practices of business. The few amongst the large group of bidders could act in a clandestine manner with concerted effort indulge in collusion and quote the bid price after consultations amongst them thereby, foreclosing the opportunities for the rest to bid successfully in fair manner. Conclusion Besides oversight of the CVC, CAG all public procurement will have the CCI oversight now onwards. The bidders as well as the Government departments will have to take extra care and ensute free, fair competition while concluding public procurement processes. Copyright © Varun Chopra 182 Oct, 2010 - Dec. 2010