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Framework of Public Procurement

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in India
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Table of Contents
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3.1 Introduction
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3.2 Public Procurement Procedures

3.2.1 Open Competitive Bidding
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3.2.2 Restrictive Bidding

3.2.3 Two-Stage Bidding
3.2.4 Single Source Procurement
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3.2.5 Electronic Procurement

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3.2.6 Spot Purchase

3.2.7 Other Methods
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Self Assessment Questions

3.3 Procurement at National and Subnational Levels
O

Self Assessment Questions

C

3.4 Public Procurement Legislative Framework

Self Assessment Questions
3.5 Revised GFR Rules 2024
3.5.1 Introduction to Revised GFR Rules 2024
3.5.2 Applicability of GFR 2024 in Public Procurement
3.5.3 Key Changes in the Revised GFR 2024
3.5.4 Impact of Revised GFR on Public Procurement Practices
 Table of Contents
3.6 Summary
3.7 Key Words
3.8 Case Study
3.9 Exercise

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3.10 Answers for Self Assessment Questions
3.11 Suggested Books and e-References

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 Framework of Public Procurement in India

Learning Objectives Notes

After studying this chapter, you will be able to:

€€ Explain the public procurement procedures
€€ Describe the procurement at national and subnational levels
€€ Outline the procurement legislative framework
€€ Discuss the revised GFR rules 2024

D
3.1 INTRODUCTION

E
In the previous chapter, you studied the various methods of public procurement. You

V
also studied the functions of public procurement management along with the basis
of public procurement. The last section of the chapter discussed procurement and

R
public finance. Let us now study the public procurement framework implemented
in India.

E
The selection of appropriate suppliers, consultants, and service providers for

S
the provision of goods, works, and services is a challenging task. Just because a
supplier sounds a good choice and is offering a lucrative price, it is not a green
E
signal for signing it up. A supplier or a service provider must be selected through a
recognised public procurement procedure. Although the open competitive bidding
R
method is used as the default procedure of procurement in India, there are several
other procedures that public entities can use depending on the nature of items to be
T

procured, availability of suppliers, the urgency of the situation, complexity of the

deal, etc.
H

In this chapter, you will learn about these different procedures of public procurement.
IG

The chapter also discusses the procurement system in India at national and
subnational levels. Finally, you will identify the public procurement legislative
framework in India and revised GFR rules 2024.
R

3.2 PUBLIC PROCUREMENT PROCEDURES

Y

The key objective of public procurement is social benefit at large. Therefore, a

P

supplier cannot make a profit at the expense of public money. To ensure transparent
and accountable public procurement procedures, most governments and public
O

agencies are always in a dilemma over which procurement procedure to apply a

procedure that provides the best value for money, is transparent and accountable,
C

and also provides good quality. The jury is still large on that point. However, the list
of public procurement procedures that can be considered is as follows:
€€ Open competitive bidding €€ Electronic procurement
€€ Restrictive bidding €€ Spot purchase
€€ Two-stage bidding €€ Other methods
€€ Single source bidding
39
Public Procurement

Notes 3.2.1 OPEN COMPETITIVE BIDDING

Competitive bidding is used for procuring goods and services. Under the open
competitive bidding, companies or suppliers submit their best proposal in response
to a Request for Proposal (RFP) and they openly compete for a specific project. Any
company, irrespective of its size, revenue or any other similar factor, can respond
to the advertised contract notice, request or download the procurement documents
and submit a bid. All bids are evaluated using the award selection criteria specified
in the procurement documents.

D
The open competitive bidding procedure is a one-stage procurement process, which
includes exclusion criteria, selection criteria, and award criteria. The process is as

E
follows:

V
1. A public agency posts an advertisement on a government portal, website, official
newspapers (at least two daily newspapers), and notice boards inviting bids for

R
public works, goods, or services.

E
2. The concerned authority prepares a bid document with a detailed objective and
coherent technical specifications.

S
3. The authority also prepares the objective evaluation criteria.
E
4. The bid document is provided to bidders, for which a fee may be charged.
R
5. All the qualified bidders are invited to participate in the bid process in an open,
transparent and fair process.
T

6. The contract is granted to the least cost supplier. Since the cost is the sole criterion,
there will be no contract negotiations.
H

This procedure not only ensures a fair and transparent bidding environment to the
suppliers but also enables public agencies to keep costs low and attract the most
IG

qualified suppliers or service providers to do the work. However, this procedure has
also been criticised for encouraging competition based on the value of money. Thus,
it is often not recommended for large and complex deals where stringent standards
R

need to be followed.
Y

The open competitive bidding procedure is best used in the following cases:
P

€€ The bidding requirements are open and straightforward and the selection and
award processes are relatively simple.
O

€€ Only a small number of suppliers or service providers are expected to respond to

C

the advertised control notice.

Table 1 lists the pros and cons of this procedure:

Table 1: Pros and Cons of Open Competitive Bidding Procedure

Pros Cons
More competition among suppliers/service Potentially lengthy process for bid
providers to respond. This in turn leads to a evaluation due to a higher volume of
40 higher volume of responses proposals
 Framework of Public Procurement in India

Pros Cons Notes

Opportunity to all suppliers/service providers Challenge of selecting the best bid due to
to participate in the bidding process, which a higher volume of responses
in turn, increases the opportunity for more
innovative proposals
Beneficial for simple and straightforward Increased chances of poor quality bids
requirements due to a limited timescale
Full bid documentation provided at the outset, No opportunity to negotiate or refine bids
which enables suppliers/service providers to

D
make an informed decision on bids
The absence of the pre-qualification stage

E
reduces the overall timescale of the bid process

V
N ote

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The open competitive bidding procedure can also be implemented as a reverse
auction process. In this process, the roles of the buyer and the seller are reversed.

E
Bidding will start at a specific figure provided by the public agency. The cost will
be lowered based on the submissions received from the bidders. This process of

S
lowering the figure will continue until the closing date for the bid. The bidder
with the best price and/or offer wins the contract to perform the work and/or
E
supply the products.
R
The closing date for a bid is a specific date and time when the bid is closed to the
public for submissions of the proposals. From this point, no new submissions
T

will be accepted. Thus, the closing date establishes a level playing ground for
contractors to submit their best proposals for the project. Most contracts will
H

also have a specific start date and a time frame to complete the project. This will
ensure that the project is completed on time.
IG

3.2.2 RESTRICTIVE BIDDING

R

Restrictive bidding refers to a procurement or tendering process that limits

competition by setting narrow criteria or conditions that only a few suppliers can
Y

meet. This approach may be used deliberately to favour specific vendors, or it might
result unintentionally from overly specific requirements. While restrictive bidding
P

can sometimes help ensure quality or compliance with precise standards, it often
raises concerns about fairness, transparency, and value for money in public or
O

private sector contracts.

C

In contrast to the open competitive bidding procedure, only a few companies are
invited to submit bids for a project in the restrictive bidding procedure. It is a two-
stage procedure, as follows:
1. Selection: The potential suppliers/service providers are alerted to express an
interest in a public contract opportunity by procuring and submitting a Selection
Questionnaire (SQ). This SQ will be used to specify their capability, experience
and suitability for the project. Based on the SQ, five or more suppliers/service
providers are shortlisted, which are likely to meet bidding requirements. 41
Public Procurement

Notes 2. Award: The shortlisted suppliers/service providers that meet the selection criteria
are invited to submit a bid by the specified closing date. All submitted bids are
evaluated according to the process and award criteria specified in the bid process.
The restrictive bidding procedure is used in the following cases:
€€ In case of a large number of suppliers/service providers expected to respond to an
advertised contract notice.
€€ In case of complex requirements along with a lengthy selection and award criteria.

D
€€ When the nature of goods, works or services is specialised and thus favours pre-
qualified suppliers/service providers only.

E
€€ When the time and costs for inspection and evaluation of a large number of tenders
are unequal to the value of goods, works or services to be procured

V
€€ When there are only a few known suppliers/service providers of goods, works or

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services, which need to be procured

E
€€ When the bidding committee gives approvals and reasons in favour of restrictive
biding

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Table 2 lists the pros and cons of the restrictive bidding process:
E
Table 2: Pros and Cons of Restrictive Bidding Procedure
R
Pros Cons
More manageable bidding process due to Submission of speculative Selection
the restricted number of suppliers/service Questionnaire due to unavailability of the
T

providers in the bid process full bid documentation at stage one of the
procedure
H

Detailed selection assessment (stage one of Increased timescales

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the restrictive bidding procedure)

Improved quality of bids due to two reasons: Enhanced resource cost and potentially
unnecessary burden for suppliers/service
1. Increased chance of a bidder being
R

providers, making the bid potentially

successful unattractive to them
Y

2. Shortlisting of pre-qualified suppliers/

service providers
P

No opportunity to negotiate or refine bids

O

3.2.3 TWO-STAGE BIDDING

C

The two-stage bidding method is used for complex projects where information is
inadequate or impossible to provide in the initial stage. Therefore, bids are first
evaluated on the basis of technical specifications. Those bidders that clear the
technical stage will be asked to provide detailed bids with the price and financial
information in the second stage. Thus, two procedures are used in this method. This
may be a disadvantage for those procurement deals where time is of the essence
on securing a contract. However, this method provides more flexibility to both the
42 public agency and the supplier/service provider, allowing more rooms for discussion
of their mutual needs. The two stages of the two-stage bidding are as follows:
 Framework of Public Procurement in India

1. First procedure: The steps in this procedure are as follows: Notes

i. A public agency receives a proposal from a supplier with two envelopes. One
envelope has the technical proposal that highlights the solution to fulfil the
requirements specified in the bid document, while the other has the associated
financial information.
ii. The concerned authority scores each proposal from all bidders according to the
relevance of the solution offered to the specified requirements.
iii. The bidder with the highest scored proposal is invited for further discussion.

D
iv. After the final agreement for the technical proposal is reached, the bidder is
invited to submit its financial proposal.

E
v. Further discussions are held to negotiate a contract.

V
2. Second procedure: This procedure is similar to the first procedure, except that the

R
bidder submits a partial proposal rather than a fully complete technical proposal.
The partial proposal will include the methodology and technical specifications to a

E
limited extent. This enables both the parties to discuss and customise the proposal
freely until a final agreement is reached. The highest qualified bidder, once

S
selected, is invited to submit a complete technical proposal along with a financial
proposal. The financial proposal will be opened only after a complete evaluation
E
of the technical proposal. The combined scores of both proposals will determine
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whether the contract is awarded to the bidder.

3.2.4 SINGLE SOURCE PROCUREMENT

T

Single source procurement refers to the process of awarding a contract to a

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specific supplier without conducting a competitive tendering procedure. This

approach is typically used when only one vendor is deemed capable of fulfilling
IG

the requirements due to unique expertise, proprietary technology, urgency, or

exceptional circumstances. While it can streamline procurement in time-sensitive or
specialised situations, it must be justified transparently to avoid concerns related to
R

fairness, accountability, and value for money.

Y

The single source procurement is also known as the direct procurement. It is a non-
competitive bidding procedure where goods, works or services are acquired from a
P

single supplier or service provider. Therefore, there must be a strict approval process
from the management before using this method.
O

This procedure can be used in the following situations:

C

€€ There is an emergency or an urgent need for the goods, works or services to be

procured.
€€ There is only one supplier or service provider that is qualified to meet the
requirements.
€€ There are clear and obvious advantages of using a certain supplier or service
provider.
€€ There is no reasonable alternative or substitute for the goods, works or services. 43
Public Procurement

Notes €€ The other available methods of procurement are not reasonable.

€€ There needs to be continuity in work that cannot be reproduced by another
supplier or service provider.
€€ The situations that gave rise to the urgency could not be predicted and were not
the result of the negligent or slow conduct on part of the public agency.

3.2.5 ELECTRONIC PROCUREMENT

Electronic procurement, often referred to as e-procurement, is the process of

D
purchasing goods and services using digital platforms and internet-based systems. It
streamlines traditional procurement methods by enabling organisations to manage

E
supplier interactions, place orders, and handle transactions electronically. This

V
modern approach not only enhances efficiency and transparency but also reduces
paperwork, minimises errors, and fosters better compliance and cost control in both

R
public and private sector procurement activities.

E
The electronic procurement procedure aims to provide transparency in the bidding
process of all the public agencies of a government. It provides equal opportunity

S
for all suppliers to submit their bids and encourages maximum participation and
competition. The steps in the e-procurement procedure are as follows:
E
1. A supplier/service provider enrolls in the online e-procurement portal, using the
R
digital signature and applies for an e-token.
2. The supplier/service provider is provided with an e-token containing a user ID
T

and password.
H

3. The supplier/service provider can then update in advance the documents, such as
certificates and purchase order details on the portal and then attach them with the
IG

relevant bid document during bid submission.

4. To participate in a bid, the supplier/service provider can download the bid
R

schedule and then submit a proposal after reading the selection criteria. The fee
for the bid is also paid online.
Y

5. Any clarifications from the supplier, if required, will be asked through the
e-procurement portal only, or through the contact details provided in the bid
P

document.
O

6. The bidder needs to submit the bid document (which can be more than one) online
before the prescribed closing date.
C

7. After completing the bid submission process, the bidder must freeze the bid online.
Unfrozen bids are considered as incomplete or invalid and are not considered for
evaluation.
8. Once the bidder freezes the bid, the e-procurement portal will give a successful bid
update message after all the submitted bid documents are uploaded. After the bid
is submitted, the portal will display a bid summary with the bid number, date and
44 time of the bid submission, as well as other relevant details.
 Framework of Public Procurement in India

9. The bidder must print the bid summary and keep it as an acknowledgement of the Notes
bid submission process. It will also act as an entry point to participate in the bid
opening event.

3.2.6 SPOT PURCHASE

When there is an immediate need for a good or a service, then the public agency can
do a spot purchase. For example, there is an immediate need of paper for printing,
then any end-user can give an order for more paper. Similarly, the air conditioner has
stopped working in hot weather, then the repairman can be immediately contacted

D
via the spot purchase route. Spot purchases are used in the following situations:

E
€€ The purchase is for an emergency.
The purchase is inexpensive.

V
€€

€€ The transaction is relatively simple.

R
€€ The purchase is one-time or unique.

E
€€ The purchase belongs to an unmanaged spend category.

S
The spot purchase is an unplanned bidding procedure where an end-user (not
necessarily a procurement professional) can buy a small order for one-time
E
requirement. The spot purchases are mostly performed on an immediate payment
and delivery basis. It enables buyers to quickly purchase what they need without
R
any paperwork. It also enables suppliers to win big deals with quick turnaround
times and services.
T

To ensure transparency in the spot purchase process, it should be integrated with

H

the e-procurement portal, which directly connects the purchases to the sellers and
suppliers for purchase. This provides a streamlined response system where users
IG

can easily get a bid and ensure compliance in the purchase process.

3.2.7 OTHER METHODS

R

In addition to the traditional open tendering process, various alternative bidding

methods are employed to suit different procurement needs, project complexities,
Y

and time constraints. These methods aim to enhance efficiency, transparency, and
P

fairness while ensuring value for money. Depending on the nature of the goods or
services required, organisations may opt for approaches such as selective tendering,
O

negotiated bidding, two-stage tendering, or reverse auctions. Each method offers

distinct advantages and is chosen based on specific project goals, market conditions,
C

and regulatory frameworks.

Some other bidding methods are as follows:

€€ Request for Quotations (RFQ): This procurement method is used for small-
valued goods, works or services, which are readily available in the market or for
which there is already an established market. It is a simple and fast procurement
method involving the least amount of paperwork. There is no formal proposal
drafted from either party. The public agency simply selects a minimum of three
45
Public Procurement

Notes suppliers or service providers and asks them to provide a quote. The evaluation
committee analyses the quotes and selects the supplier or service provider that
shows maximum compliance with the requirements specified.
€€ Request for proposals for consultant contracts: This is a widely used method in
private procurement. Sometimes, it is used in public procurement also. A Request
for Proposal (RFP) is a compelling and unique document from a consultant that
explains why its services are the best fit for a particular project or programme.
Consultants may submit RFPs in a two-envelope proposal to the public agency.
The two-envelope process allows the selection team of the public agency to

D
thoroughly review the technical proposal first. The financial proposal is sealed
in the second envelope and is only opened after the first-envelope proposal is

E
approved or rejected. This enables the procuring agency to objectively analyse the
submitted RFPs and select the best fit for the project in terms of qualification and

V
price. If a supplier offers a less qualified proposal but at a less price, then it will

R
not be selected. Only the most qualified and appropriate proposal, irrespective of
price, is usually selected in this method.

E
S elf A ssessment Q uestions

S
1. ___________ is a one-stage procurement process, which includes exclusion
criteria, selection criteria and award criteria.
E
2. _________ requires the registration of bids through e-tokens.
R
3. Restrictive bidding is a more manageable bidding procedure than open
competitive bidding. (True/False)
T
H

3.3 PROCUREMENT AT NATIONAL AND SUBNATIONAL LEVELS

In most countries, public procurement used to be a centralised process and was
IG

conducted mostly by the central government. To increase efficiency and transparency,

more and more countries around the world are increasingly decentralising the
procurement of public goods, works, and services to provincial, state, or local
R

authorities. Consequently, most of the public procurement today occurs at national,

Y

sub-national (province/state), and local levels.

In a centralised public procurement system, a single government entity under the

P

central government is responsible for procuring goods, works and services for all
O

government entities.

In a decentralised public procurement system, government agencies procure goods,

C

works, and services for public entities as per the legislative and/or regulatory
requirements of the country. For a decentralised system to be effective, it must be
supplemented by the following:

€€ Necessary institutional framework

€€ Management capacity for public procurement
€€ Accountability
46
 Framework of Public Procurement in India

It has been observed in some countries that changes implemented in public Notes
procurement laws and regulations take a long time in reaching to the sub-national
levels. As a result, outdated public procurement policies continue to be followed by
public officials. This not only makes the procurement system ineffective, but casts
a doubt on the government’s resolve, intent, and image. Therefore, there needs to
be an effective interface between national and subnational procurement agencies,
which allows more effective interaction and communication between them.

A hybrid procurement model, which combines centralised and decentralised

D
procurement systems, has been found to provide better solutions particularly for
procurement of common and frequently used items. In this model, a government

E
agency is responsible for compiling the list of commonly used, relatively simple items
and handling their internal procurement. Some examples of hybrid procurement

V
systems with different degrees of centralised procurement are as follows:

R
€€ General Services Administration (GSA) – The US
Hansel – Finland

E
€€

€€ BBG – Austria

S
€€ Consip – Italy
€€
E
The Office of Government Commerce (OGC) – The UK
R
There is no typical system for the implementation of a centralised procurement
system in institutions and organisations. The degree to which centralisation should
T

be allowed depends on the benefits provided to each commodity and organisational

structure. Often, the benefits in terms of the improved value for money play a central
H

role in the choice of the degree of centralisation in a procurement system.

IG

S elf A ssessment Q uestions

4. A disadvantage of decentralised public procurement system is the delay in
the implementation of the changed laws and regulations in the procurement
R

made at the national level. (True/False)

Y

5. Consip in Italy is an example of a __________ procurement model.

P

3.4 PUBLIC PROCUREMENT LEGISLATIVE FRAMEWORK

O

Public procurement plays a vital role in the effective delivery of public services and
C

the responsible use of public funds. A robust legislative framework is essential to

ensure transparency, accountability, fairness, and value for money in the procurement
process. This framework comprises the laws, regulations, and guidelines that
govern how public sector organisations acquire goods, services, and works. It not
only promotes open and competitive bidding but also helps prevent corruption and
inefficiency. Understanding this legal structure is key to ensuring compliance and
fostering trust in public administration.

The public procurement legislative and regulatory framework comprises four main 47
elements as shown in Figure 1:
Public Procurement

Notes

Constitutional Legislative Administrative

Provisions Provisions Guidelines Overseers

Contract Act,
Article 246 Procurement
1872 DFPR, 1978
Policy Division
Sales of Goods
Article 288
Act, 1930 GFRs, 2024
CVC

D
Article 298 Prevention of MSEs Order,
Corruption Act, 2012 CAG
1988

E
Article 299
Arbitration and MoF Manuals CCI

V
Conciliation Act,
Article 300 1996
Defence,

R
Railways, PWD CBI
Competition Act,
Article 300A Manuals
2002

E
CVC 2003, Merit Y RoP
Article 355

S
RTI, 2005 and PMA

E
Procurement Act
at state level
DGS&D
Manual, 1999
R
T

Figure 1: Public Procurement Framework in India

These elements have been explained as follows:

H

€€ Constitutional provisions: Empowered by the Constitution of India, the central

IG

and state governments have the authority to procure goods and services in the
name of the President of India and the Governor of the state, respectively. They
have complete autonomy in public spending. However, there are no procurement
R

policies or procedures in the constitutional provisions.

Y

€€ Legislative provisions: There is no central legislation in India that exclusively

governs public procurement. However, there are various procurement rules and
P

policies which are developed after considering the central legislations, such as the
Contract Act, 1872, Sale of Goods Act, 1930, Prevention of Corruption Act, 1988,
O

etc.
C

Moreover, some states such as Tamil Nadu, Karnataka, Andhra Pradesh, Assam,
and Rajasthan have passed state-specific legislation to govern procurement policies
and procedures in their respective states. Some examples are as follows:
zz Tamil Nadu Transparency in Tenders Act, 1998
zz Karnataka Transparency in Public Procurement Act, 1999
zz Rajasthan Transparency in Public Procurement Act, 2012

48 €€ Administrative guidelines: General Financial Rules (GFR) are detailed

administrative rules and guidelines on the procurement of goods and services,
 Framework of Public Procurement in India

contract management, and financial management. These administrative guidelines Notes

were first implemented in 1947 and have been modified from time to time. These
guidelines must be strictly adhered to by all government agencies in India.
The Manual for Procurement of Goods (MPG), 2024, provides guidelines for the
purchase of goods.
The Delegation of Financial Powers Rules (DFPR), 1978, decentralises the financial
powers of the government to different ministries and subordinate bodies.
Manuals and policies governing procurement by individual ministries or

D
departments, such as defence and railways are also in place. In addition, the
Directorate General of Supplies and Disposals (DGS&D), the central purchase

E
organisation, has issued guidelines on procurement. The government, in 2024,
issued the Public Procurement (Preference to Make in India) Order in order to

V
grant purchase preference to local suppliers and promote local manufacturing and
production of goods and services in India.

R
€€ Overseers: The public procurement legislative framework in India is strengthened

E
by the following agencies:

S
zz Central Vigilance Commission (CVC): This is responsible for boosting
transparency and objectivity in public procurement.
zz
E
Competition Commission of India (CCI): This checks anti-competitive
R
elements.
zz Central Bureau of Investigation (CBI): This conducts investigation and
T

prosecution of criminal activities in the procurement process, such as probity

issues.
H

In a nutshell, any public procurement process in India must follow:

IG

€€ GFR
€€ MPG
R

€€ Sector-specific procurement rules

State-specific legislation related to procurement
Y

€€

S elf A ssessment Q uestions

P

6. This no central legislation in India that exclusively defines public procurement

O

policies and procedures. (True/False)

7. The _______________ is responsible for bolstering transparency and objectivity
C

in public procurement.

3.5 Revised GFR Rules 2024

The Revised GFR 2024 were introduced by the Government of India to modernise and
enhance the efficiency, transparency, and accountability of financial management
and public procurement processes. These rules replaced the earlier GFR 2017 and 49
incorporated key reforms aligned with advancements in digital governance, such as
Public Procurement

Notes e-procurement, electronic payment systems, and online bid evaluation. The revision
aimed to standardise procedures across ministries, reduce delays, and promote
competition by simplifying and streamlining procurement practices. Additionally,
the GFR 2024 placed greater emphasis on outcome-based budgeting, efficient
contract management, and improved monitoring mechanisms. By adopting global
best practices and addressing loopholes in earlier frameworks, the revised rules
have significantly impacted the way public funds are utilised and monitored across
government entities.

D
3.5.1 Introduction to Revised GFR Rules 2024

E
The introduction of the Revised GFR Rules 2024 was crucial for modernising public
financial management in India. It emphasised transparency, accountability, and

V
efficiency in government procurement and expenditure. By promoting digital
platforms and streamlined procedures, the revised rules aimed to curb corruption,

R
ensure value for money, and support good governance practices. Some of the benefits
of revised GFR rules 2024 are as follows:

E
Enhanced transparency: The revised rules establish new procurement processes

S
€€
in e-procurement and online tendering. This instills transparency in procurement
E
through reducing human discretion. This will, thereby minimise instances of
corruption, ensuring all bidders have equal access to government procurement
R
opportunities, and strengthen the public finance systems.
€€ Improved efficiency: The revised rules will minimise delays and redundancies
T

by streamlining procurement and establishing a new uniform process. They will

also ensure timely government decisions can be made and better decisions as a
H

result of quicker contract awards, which will ultimately enhance efficiencies of all
government operations, reducing time.
IG

€€ Promotion of digital governance: Revised GFR 2024 encourage the use of digital
mechanisms such as e-Government Procurement (e-GP) platform and represent
R

the future of advanced digital government! This increase in digital procurement

nationally enhances opportunities to minimise administrative paperwork,
Y

improves access, monitoring and audit-ability of public financial transactions and

demonstrates commitment to the government’s Digital India initiative.
P

€€ Accountability and audit readiness: The rules reinforce financial discipline by

O

defining clear responsibilities for various stakeholders. Regular recordkeeping

and mandatory documentation improve accountability and make government
C

departments more prepared for audits, reducing the chances of mismanagement

or fund misuse.

3.5.2 Applicability of GFR 2024 in Public Procurement

GFR governs public procurement procedures across all ministries, departments,
and autonomous bodies of the Government of India. GFR applies to all public
procurement where funds belong to the Indian public and are used to provide
50 accountability, transparency, fairness, competition, and economy in the acquisition
of goods, services, or works. GFR 2024 provides a uniform set of policies and
 Framework of Public Procurement in India

procedures for public procurement processes to ensure that procurement practices Notes
are consistent, minimise discretion, and shall uniformly grant responsibility and
accountability to all procurement processes regardless of size or dimension.

The rules are applicable not only to central government entities but also to grant-in-aid
institutions and organisations receiving substantial funding from the government.
They lay down clear procedures for various stages of procurement including planning,
bidding, evaluation, award of contract, and contract management. GFR 2024 also
encourages the use of e-procurement and GeM (Government e-Marketplace), making
procurement more accessible and tamper-proof.

D
Moreover, GFR also provides for an open public procurement environment where

E
there is, less manual intervention, standard bidding documents, bidding time frames,
and opportunities for monitoring. Thus, by applying GFR across Government of India

V
authorities, the new rules will ensure the best use of public funds consistent with
financial propriety and good governance, GFR 2024 thus becomes the foundation of

R
sound public financial management.

E
3.5.3 Key Changes in the Revised GFR 2024

S
Revised GFR 2024 introduced significant reforms to enhance transparency,
E
efficiency, and accountability in public procurement and financial management. The
key changes reflect a shift towards greater digitisation, streamlined processes, and
R
improved oversight mechanisms. Some of the key changes in revised GFR are as
follows:
T

€€ Introduction of e-procurement and GeM portal: The GFR 2024 emphasises

e-procurement through platforms like Government e-Marketplace (GeM), to give
H

public procurement more transparency, efficiency, and competitiveness. This

change intends to reduce corruption and render the purchase process simple for
IG

departments across all governments.

€€ Revised procurement thresholds: The different monetary thresholds define
R

various modes of procurement, which were revised. These updated thresholds

remove ambiguity from the question of whether limited tendering, open bidding,
Y

or purchases through GeM should be followed so that procurements can be aligned

to the value and character of goods or services.
P

€€ Focus on outcome-based procurement: GFR 2024 promotes outcome-based

O

procurement over mere input-based contracts. This change encourages

performance-linked contracts where payments and evaluations are tied to
C

measurable results, improving service delivery and accountability in government

projects and purchases.
€€ Compulsory Use of standard bidding documents: The reformed rules require
standardised bidding documents for vendors, to ensure consistency, reduce
ambiguity and facilitate understanding by vendors. It promotes fair competition
and makes the bidding process transparent and accessible for new and small
vendors.
€€ Preference for make in India products: The amended rules promote the 51
preference of locally manufactured goods for the purpose of supporting domestic
manufacturing. The preference aligns public procurement with the ‘Make in India’
Public Procurement

Notes initiative to support local industries and jobs and reduce the need for dependency
on foreign suppliers to meet the government needs.

3.5.4 Impact of Revised GFR on Public Procurement Practices

The 2024 update to GFR rules impacted public procurement by enforcing stricter
guidelines on tendering, contract management, and vendor performance. It
prioritised fairness, speed, and cost-effectiveness, enhancing both the credibility
and operational outcomes of government procurement systems. The following are
some impact of revised GFR on public procurement practices:

D
€€ Emphasis on transparency and accountability: The GFR 2024 made improvements
in transparency through e-procurement and publication of tender information and

E
award announcements meant to reduce discretion, lessen corruption, and improve

V
access to procurement stakeholders, thereby increasing the confidence level of the
public in government procurement processes.

R
€€ Introduction of Government e-Marketplace (GeM) platform: The updated rules
institutionalised the use of the GeM for common-use goods and services. This

E
reduced paperwork and enabled procurement through GeM to engage in more

S
stream lined processes than traditional procurement. These processes contributed
to cost competitiveness; greater efficiency, consistency, & dynamic monitoring in
public procurement. E
R
€€ Encouragement to startups and MSMEs: The GFR 2024 provisions to support
procurement from startups and Micro, Small & Medium Enterprises (MSMEs).
This initiative supports local innovation, helps to develop local entrepreneurs, and
T

encourages inclusive growth by creating reserved procurement opportunities and

more limited eligibility requirements for smaller enterprises.
H

€€ Strengthened contract management: The GFR 2024 established explicit timelines

IG

with performance guarantees and penalties in the event of non-performance to

complete and implement contract documents. Setting objective timelines and a
performance guarantee improves contract delivery, reduces material or service
R

delays, and maximises value-for-money by ensuring suppliers meet performance

targets and deadlines.
Y

S elf A ssessment Q uestions

P

8. The GFR 2024 emphasises e-procurement through platforms like Government

e-Marketplace (GeM), to give public procurement more transparency,
O

efficiency, and competitiveness. (True/ False )

C

9. The reformed rules do not require standardised bidding documents for

vendors, to ensure consistency, reduce ambiguity and facilitate understanding
by vendors. (True/ False)

3.6 Summary
€€ Competitive bidding is used for procuring goods and services. Under the open
competitive bidding, companies or suppliers submit their best proposal in response
52 to RFP and they openly compete for a specific project.
 Framework of Public Procurement in India

€€ Restrictive bidding is a two-sage bidding procedure where only a few suppliers/ Notes
service providers are invited to submit bids for a project.
€€ The two-stage bidding method is used for complex projects where information is
inadequate or impossible to provide in the initial stage. Therefore, bids are first
evaluated on the basis of technical specifications. Those bidders that clear the
technical stage will be asked to provide detailed bids with bid price in the second
stage.
€€ The single-source procurement is a non-competitive bidding procedure where
goods, works, or services are acquired from a single supplier or service provider.

D
€€ The electronic procurement (e-procurement) procedure aims to bring transparency

E
in the bidding process of all the public agencies of a government. It provides
equal opportunity to all suppliers to submit their bids and encourages maximum

V
participation and competition.

R
€€ The spot purchase is an unplanned bidding procedure where an end-user can buy
small order for one-time requirement.

E
€€ In most countries, public procurement used to be a centralised process, which

S
was conducted mostly by the central government. However, to increase efficiency
and transparency, more and more countries around the world are increasingly
E
decentralising the procurement of public goods, works, and services to provincial,
state, or local authorities.
R
€€ The public procurement legislative framework comprises constitutional provisions,
legislative provisions, administrative guidelines and overseers.
T

€€ The GFR 2024 provisions to support procurement from startups and Micro, Small
H

& Medium Enterprises (MSMEs).

IG

3.7 Key words

€€ Aggregation: The summing-up of the value of separate contracts for the same
R

supply or service
€€ Amendment: A modification to a contract or other agreements
Y

€€ Approved list: A list of potential contractors, suppliers, or service providers, who

P

have met the pre-set criteria, approved by the public agency

Competitive tendering: The procedure of awarding contracts by the process of
O

€€
seeking rival bids from various companies
C

€€ Contract: A binding and legally-enforceable agreement between two or more

parties
€€ E-Procurement: The online purchasing process from requirement identification to
payment, and potentially to contract management
€€ Reverse auction: The opposite of an auction process with a single buyer and
various sellers. The buyer specifies what they want to purchase and offers it to
several suppliers
53
Public Procurement

Notes 3.8 CASE STUDY: Public Procurement Framework – Case

of “BHEL’s Adoption of e-Procurement in Power Plant
Projects”

Introduction
In India, public procurement is a critical process for government organizations and
public sector enterprises, and it involves ensuring transparency, efficiency, and

D
fairness in awarding contracts. Bharat Heavy Electricals Limited (BHEL), a prominent
state-owned enterprise in power plant equipment manufacturing, implemented a

E
public procurement framework aligned with the revised General Financial Rules
(GFR) 2024 to improve efficiency and optimize procurement processes for large-

V
scale power plant initiatives.

R
Procurement Procedures and Open Competitive Bidding

E
BHEL’s procurement framework primarily follows the open competitive bidding

S
method, ensuring that the process is transparent and encourages competition. Under
this system, the company invites tenders for various projects, such as the construction
E
of thermal power plants, ensuring that eligible companies can participate. This
process adheres to the guidelines set forth by the GFR 2024, which mandates
R
competitive bidding for procurement contracts above a specified threshold value.

BHEL’s open competitive bidding involves several stages, including pre-

T

qualification criteria, technical and financial evaluations, and final award of contract.
The transparent nature of this process ensures that no single supplier or vendor is
H

favoured, promoting fairness.

IG

Two-Stage Bidding
R

For more complex procurements, especially those requiring technical specifications,

BHEL utilises the two-stage bidding process. In this model, the first stage involves
Y

submission of technical bids where suppliers submit their proposed solutions,

technical qualifications, and design specifications. Only the technically qualified
P

bids are then evaluated in the second stage, which assesses the financial proposals.
This approach ensures that technical expertise is prioritised before considering the
O

cost, thereby ensuring better quality outcomes in large projects.

C

Electronic Procurement
BHEL embraced electronic procurement (e-Procurement) to streamline its processes,
improve efficiency, and reduce the risk of corruption. The company implemented
an e-Procurement system that allows suppliers to submit bids electronically, view
tender documents, and track procurement progress in real time. This digital system
is in line with the government’s push for a paperless environment and provides a
54 platform for vendors to engage in transparent bidding without the need for physical
paperwork.
 Framework of Public Procurement in India

Procurement at National and Subnational Levels Notes

BHEL operates at both national and subnational levels, handling procurement for
large government projects across various states. For instance, the company engages
in procurement activities for State Electricity Boards (SEBs) to set up power plants,
ensuring that procurement procedures are followed as per the guidelines laid down
by state governments and the central procurement laws. While national procurement
adheres to central government rules, subnational procurement may have additional
requirements tailored to local needs.

D
Public Procurement Legislative Framework and GFR 2024

E
BHEL’s procurement practices align with the Public Procurement Legislative
Framework, which includes the latest Revised General Financial Rules (GFR) of

V
2024. These rules emphasize the need for transparency, accountability, and fairness
in public procurement. The GFR 2024 introduced several key reforms, such as

R
ensuring that public procurement contracts must be awarded based on the best
value for money and mandating the use of e-Procurement for all contracts above a

E
certain financial threshold.

S
The revised GFR also emphasises the need for promoting domestic industries by
mandating preferences for indigenous suppliers and using the “Make in India”
E
initiative to support local manufacturing. BHEL integrates these rules into its
procurement operations by giving priority to domestic suppliers and encouraging
R
the use of advanced technology in power generation equipment.
T

Conclusion
H

BHEL’s adoption of the public procurement framework, including open competitive

bidding, two-stage bidding, and electronic procurement, has significantly improved
the transparency, efficiency, and accountability of its procurement operations. By
IG

adhering to the Revised GFR 2024 and focusing on both national and subnational
levels, BHEL ensures compliance with government policies while enhancing the
overall effectiveness of its large-scale procurement processes. These efforts have
R

allowed BHEL to successfully manage its complex projects and deliver high-quality
power generation solutions across India.
Y
P

Questions:
O

1. What is the importance of open competitive bidding in public procurement?

(Ans: Open competitive bidding ensures transparency and fairness in the
C

procurement process by allowing multiple suppliers to compete for contracts,

reducing the risk of corruption and ensuring that the government gets the best
value for money.)
2. How has the adoption of electronic procurement by BHEL improved procurement
processes?
(Ans: BHEL’s adoption of electronic procurement has streamlined the bidding
process, increased efficiency, reduced paperwork, enhanced transparency, and
minimised human errors, all while complying with the government’s digital 55
transformation initiatives.)
Public Procurement

Notes 3.9 EXERCISE

1. Explain different public procurement methods. Distinguish between:
a. Open competitive bidding and Restrictive bidding
b. Single source procurement and Two-stage bidding
c. Open competitive bidding and Two-stage bidding
2. Write a brief note on the following:

D
a. Spot purchase
b. Electronic procurement

E
3. What is the difference between RFP and RFQ methods?

V
4. Write a note on centralised, decentralised and hybrid procurement systems.

R
Explain their advantages and disadvantages.
5. How is the Office of Government Commerce a hybrid procurement model in the

E
UK?

S
6. Explain the public procurement framework in India.
E
3.10 ANSWERS FOR SELF ASSESSMENT QUESTIONS
R
Topic Q. No. Answer
Public Procurement Procedures 1. Open competitive bidding
T

2. Electronic procurement
H

3. True
IG

Procurement at National and Sub- 4. True

national Levels
5. hybrid
R

Public Procurement Legislative 6. True

Framework
Y

7. Central Vigilance Commission (CVC)

P

Revised GFR Rules 2024 8. True

O

9. False
C

3.11 SUGGESTED BOOKS AND E-REFERENCES

SUGGESTED BOOKS
€€ Khan, N. (2018). Public Procurement Fundamentals: Lessons From and for the Field.
Emerald Publishing Limited.
€€ La Chimia, A., & Trepte, P. Public procurement and aid effectiveness.
56
 Framework of Public Procurement in India

E-REFERENCES Notes

€€ Public Procurement 2019 - Government, Public Sector - India. (2020). Retrieved

21 September 2020, from https://www.mondaq.com/india/government-contracts-
procurement-ppp/930884/public-procurement-2019
€€ (2020). Retrieved 21 September 2020, from https://www.nipfp.org.in/media/
medialibrary/2017/07/WP_2017_204.pdf
€€ eProcurement System Government of India. (2020). Retrieved 21 September 2020, from
https://eprocure.gov.in/eprocure/app?page=HelpForContractors&service=page

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