Cabinet likely to take up Procurement Bill tomorrow

Two weeks ahead of the resumption of the Budget session that is expected to see dominating of the issue of corruption, the Cabinet is likely to take up the Public Procurement Bill at a meeting on Thursday. The ministers are also likely to discuss a proposal to raise the royalty on coal and lignite, those in the know told Business Standard. Companies pay royalty to state governments for these blocks.

Earlier, a group of ministers had cleared a draft Public Procurement Bill that seeks to ensure transparency in the government and central public sector undertakings purchases, besides providing for penalties for wrongdoers. The proposed legislation aims at regulating public procurement by all ministries and departments of the Union government, central public sector enterprises (CPSEs), autonomous and statutory bodies controlled by the Centre and other procuring entities.

The Bill also aims at ensuring transparency, fair and equitable treatment of bidders, promoting competition and enhance efficiency and economy in the procurement process. It contains broad principles, and is expected to be supplemented by rules. The proposed legislation also provides for a grievance redressal mechanism and penalties for offences, including debarment of bidders who are engaged in corrupt practices.

The draft bill suggests an absence of price negotiations except in circumstances that are prescribed, and for which reasons are to be recorded. Also there should not be any restriction on the number of bidders other than on specified conditions.

The criteria for evaluating bids have to be published in the bidding documents, and no changes will be permitted thereafter, says the draft bill. Currently, there is no overarching legislation governing public procurement by the union government and CPSEs.

The draft bill was mooted following recommendations of the Committee on Public Procurement headed by former bureaucrat Vinod Dhall.

The rate of royalty on coal was last revised with effect from August 1, 2007. The revised royalty rate is applicable to all states. Between 2008-09 and to 2010-11, the coal companies have paid royalty of Rs 15,745.70 crore to the government.