SAMS BLOG

Every Procuring Entity uses one or the other form of Bidding Documents, whether guided by precedence or drawn from sound international best practices like World Bank. The concept of Standard Bidding Documents (SBD) for repeated procurement of similar type of Goods, Works and Services were developed by World Bank to facilitate Procuring Entities (funded by World Bank) to quickly prepare Specific Bidding Documents with focused customization, using standard instructions, templates, terms and conditions contained in SBD. It is expected from Procuring Entities to prepare specific Bidding Documents using SBD every time afresh. However, Procuring Entities tend to use already customized Bidding Documents,prepared by them (or by other Procuring Entities) as an easy route. This practice(short-cut) carries its own risk of being carried away by previous customization.

The similar practice is being followed by majority of Procuring Entities in India, whether under World Bank or Government funded procurement. The classic example is Procurement of Drugs by most of the State Public Health Procurement Corporations. The Tamil Nadu Medical Services Corporation Ltd. (TNMSC) was the pioneer in carrying out procurement reforms in health sector public procurement in India, way back in the year 1994.

The Bidding Documents prepared by TNMSC (including organizational structure and system of procurement) have been adapted by majority of states,who established Corporations in line with TNMSC after 1994. To date, as many as 19 States have established Procurement Corporations. If you look at the Bidding Documents they use for procurement of drugs, they look similar and guided by that of TNMSC. It was policy of TNMSC to institutionalize system of Rate Contract(RC) for procurement of drugs and they implemented this policy quite well, given the network of Drug Warehouses in each district, robust IT enabled inventory management system, distribution and fund allocation system.

There seems no harm in adopting best practice, but over the time, Procurement System itself has evolved and market, demand etc. have grown. States are not able to leverage benefit of economies of scale, market growth and changing needs. In my view, the Bidding Documents and system of procurement being used by majority of State Procurement Corporations for procurement of drugs need sincere reform to gain full advantage of sound public procurement.

My former colleagues and friends used to call me when they come up with need to hire Procurement Professional in their organizations in Junior, Middle and Senior level. Every time I tend to look around and call a few known fellow procurement professionals to check their availability. Many times I used to end up with frustration of not being able to identify best-fit person who could be recommended. Same thing happened yesterday again when one of my ex-colleague and friend requested me to urgently recommend some senior person in procurement advisory role with State Government. This time again I failed, but this failure puzzled my mind, so decided to pen down the thought process, analyse the scenario and come up with possible solutions.

Based on my experience of interacting with potential candidates, while being a member of selection committee for various roles in Public Procurement in India, what I realized is, in spite of growing demand, there is acute shortage of procurement professionals at all levels. In India, there is no University level Degree course which generates Procurement Professionals, except for short-term training courses run by handful of Training Institutes.

To date, the Certificate Program in Public Procurement (CPPP) and Professional Diploma in Public Procurement (PDPP) and other allied courses developed by The World Bank (https://www.procurementinet.org/) and being run by ten Partner Institutes in Massive Open Online Course (MOOC) format is the only such course which could provide domain knowledge to aspiring Procurement Professionals.

But, the question remains, does these courses guarantee a person of becoming a ‘seasoned’ Procurement Professional? In my view, the seasoning comes from handling procurement of Goods, Works and Services. Unless a person gets exposure to handle transaction-level procurement or gets opportunities to pass through complete Procurement cycle, under guidance of an experienced procurement professional, the knowledge acquired by undertaking courses and attending training programmes have virtually no meaning.

One of the possible solution to the issue could be developing system of “Procurement Articleship Training” run by “Procuring Entities”. The duration of Procurement Articleship Training could be of 3-6 months and the candidate be paid a lumpsum stipend (say Rs.30,000/- per month). During the Articleship training, the candidate shall be given exposure to live-wire procurement and at the end of it, the candidate shall be assessed of knowledge and skills acquired and be given a Certificate of Completion of Procurement Articleship Training. After acquiring Procurement Articleship Training, the candidate could get better chance to gain employment in various Procuring Entities.

It’s my Appeal to all Procuring Entities and Development Partners like The World Bank, UNDP, BMGF, UNICEF, European Commission to consider supporting the cause.

As per international best practices we normally append a Standard form of Contract with the Bid Documents used for inviting bids. Once the preferred bidder is selected, the contract is signed using the Standard Form of Contract. Most of the procuring entities diligently review the Standard form of Contract before signing and prepare Appendixes taking in to account the bid submitted by the selected bidder. Once the contract is signed, it takes precedence over to all previous documents exchanged between two parties, such as Bid Document, Clarifications and Amendments issued and even the bid submitted by the selected bidder. The Contract so drafted should be a comprehensive document to be referred during currency of the contract and is treated as a legally enforceable document.

Most of the problems in enforcing contract arises when discrepancy remains in capturing all necessary details from the documents transacted between the two parties prior to signing of contract. In Public Sector, drafting contract is not taken as seriously as the private sector. We often rely on Standard Form of Contract without much changes. No doubt, the Standard Form of Contract can be a guiding document, but it can’t be taken as good for signing without much deliberation.

At the time of bidding we can’t foresee all circumstances concerning successful implementation of contract. At the time of publishing bid invitation notice we don’t know nationality of bidder, source of supplies and other allied details. However, once the preferred bidder is selected, the Standard Form of Contract need thorough review to make it a workable and enforceable document. For example, the inspection and testing requirements as given in the Standard form of Contract of the Bid Document may contain various options to choose from, viz. inspection and tests may be conducted on the premises of the Supplier or its Subcontractor, at point of delivery, and/or at the Goods’ final destination, or in another place in the Purchaser’s Country. At the time of finalising contract, the required and feasible option for inspection and testing need to be selected to serve the purpose of ensuring that the equipment supplied is as per technical specifications. This provision, if left open ended may result in to problems in enforcing the inspection and testing requirements.

Likewise, in case of civil works contract, the selected contractor might have proposed key personnel and other staff to be deployed for execution of contract and in case we slip to incorporate names, qualification and experience of such key personnel and other staff in the final contract we might not be in a position or even fail to demand for same personnel while executing the contract and in turn contractor may take liberty in deploying fewer and / or lesser qualified staff while executing contract which may affect timely execution of contract and quality of work.

In case of consultancy contract if we fail to incorporate methodology and work plan, list of key personnel proposed by the selected consultant, we might fail to achieve intended quality of services rendered by the consultant. Even the terms of Reference might need lots of rework considering the technical proposal submitted by the selected consultant.

The well drafted, self-contained and comprehensive contract document is prerequisite for procurement of goods, works and services. Slippages in diligently capturing all necessary details from documents transacted prior to award of contract between the two parties might result in poor enforcement of contract and affect successful delivery of goods, works and services and may even lead to litigation.

Refer the news item in the recent past on non-availability of drugs in Govt. Hospitals. Neglect and Poor Management have been highlighted as the major cause, along with the perennial funds crunch. What drives an uninterrupted supply of drugs and other consumables in a public health programme? Unfortunately, it is the lack of understanding of poor demand forecasting which results in frequent stock-outs of essential medicines. Forecasting is the first step in the supply chain management of drugs. A good forecasting technique should be able to provide optimal estimates to ensure a critical balance between over and under-stocking. To expect zero expiries in a public health programme may not be possible and should not be expected, as it can be a mammoth challenge to ensure the same in such a large country like India. However, it can defiantly be well-managed and does not involve huge expenses, contrary to common belief.