Procurement reforms: How manual reforms can take the story further?

Many rulebooks and manuals are complex and voluminous and do not adequately facilitate the public procurement business. (Source: pexels/anete lusina/Representative image)

Public procurements are a major function for Union and State Governments in India. While many procurement manuals have been published in recent times, the centrality of the General Financial Rules (GFR), since its first edition in 1947, remains in situ. In a commendable public policy initiative, the Ministry of Finance (MoF) recently revised procurement limits mentioned in the GFR (2017) by 100 percent in most cases. However, while the GFR remains simple, lucid and easy to understand, many other rules and manuals are complex and voluminous and do not adequately facilitate the public procurement business in the country.

The latest GFR revision is based on the presumption that financial limits for different kind of procurements, works, repair proposals and even tendering may have become unrealistic after factoring in the inflation since the promulgation of the GFR (2017 edition). For example, under Rule 154, purchase of goods without quotation from market was allowed only up to Rs 25,000. Over the years, this limit had become unrealistic. It was not sufficient to cater to daily expenses of offices, particularly on maintenance heads. Doubling the limit without any extra conditions to Rs 50,000 would ease the public procurement business for small and petty items since they are generally difficult to insource on Government e-Marketplace (GeM) platform.

The GFR is, however, only a core reference manual to facilitate public procurements. MoF has itself issued other generic manuals within the GFR framework. Further, it is up to ministries and departments to come up with supplementary rulebooks within the GFR framework. Consequently, there are too many supplementary rulebooks and manuals on public procurement. We also have procurement guidelines from the Central Vigilance Commission (CVC). Additionally, some ministries have also come out with product preferences for certain sectors that guide public procurements. With progressive revisions, the basket of these rulebooks and manuals is getting heavier. The language in these rulebooks is often not as simple and lucid as found in academic textbooks. Bureaucratic jargons and the tendency to include everything make these documents confusing, repetitive and ultimately a tome – too heavy to handle!

Why Simpler Manuals are Needed? 

These exhaustive manuals and rulebooks, therefore, do affect public procurements in some, if not all cases, in several ways. First, too much time is being consumed in the processing of procurement cases, leading to cost escalation as well! The voluminous manuals and rulebooks often lead to interpretational differences, high hesitational index and play safe approach amongst different stakeholders. Paucity of time at senior management level increases their dependency on lower level staff who themselves may not have a conceptual understanding about procurement. Very few ministries and departments make attempt to bridge the knowledge gap of senior procurement managers through orientation or refresher courses and boost their confidence in decision-making.

Second, even if the procurement managers were to be serious in their business, most often, they do not have adequate academic backgrounding. Further, they may have come to this procurement business desk after having handled a completely different assignment within the Government. Therefore, they need time to settle down. Unfortunately, their postings are for short period of two to three years. It is difficult to conceptualise all the provisions of the bulky manuals and apply their provisions logically in procurement contracts. By the time they are familiarised with the manuals, they are often transferred to a different functional profile!

Third, while many ministries have attempted procurement simplification by providing all kinds of format in the manuals, these manuals may still lead to imperfect contract designs. All procurement contracts may have some or the other inherent deficiencies. These are exposed as the contract progresses. Consequently, there are many cases of flawed procurements, litigations, enhancement of payment costs and most regrettably, dilution of noble public policy intents. A collegiate approach to procurements can reduce these deficiencies. However, different stakeholders in a procurement environment live in their own cocoons without interacting with others on regular basis. Procurement manuals are aloof to this problem, with the exception of few ministries.

What is the ideational approach for manual reforms?

Perhaps a cue could be taken from the GFR itself! The GFR chapters are small and concise. Every chapter provide the broad contour or framework of some or the other exclusive theme of public finance, including the chapters on procurement and contract management. Within these chapters, the paragraphs are very precise and crisp and do not leave the readers with pangs of doubt. Perhaps this speaks for its large-scale popularity. The GFR is indeed considered as the ‘bible on Indian public finance’. All ministries, departments and Government offices under the Union and States scrupulously follow it.

If other procurement manuals are not able to redesign and simplify themselves on the GFR pattern, it is because their procurement philosophy is vaguely premised – at least in some manuals. The primary assumption, though with a righteous intent, is that nothing should be left for doubt and debate for any stakeholder involved in the procurement business and all sundry details must be recorded in black and white. However, such an approach often leads to engendering ‘doubts after doubts’ amongst different stakeholders. Some stakeholders simply obstruct the procurement process by raising ‘observation-based economy’ under the garb of adhering to the manuals. In the complicated environment, some genuine procurement proposals get abandoned after few years and the procurement managers are exhausted and frustrated!

Procurement rulebooks and manuals have a big role in efficient procurement, more so, when there is no public procurement law at the moment. They are supposed to provide a right choice architecture and a public policy communication tool. Therefore, it would be prudent to keep them simple and easy to understand. The GFR is already there as the lead model. Perhaps, it is time for other manuals to ‘shed their weight’ and adopt a simple, trimmer and leaner outlook.