Topic particularly important for UPSC Mains examination- Public Administration Paper I ->5th Topic : Accountability and control.

  1. What is Public Procurement?
  2. What is the problem in Public Procurement system?
  3. Where does the bill apply?
  4. Where does the bill not apply?
  5. Salient Features / Provisions of the bill?
  6. Punishment

What is Public Procurement?

  • public procurement means how the public authorities– the Central and State governments, ministries/departments, public sector undertakings or state-owned enterprises—spend public money buying goods and services.
  • For example, a department purchasing vehicles, office equipment, computers, stationary, air-conditioners, refrigerators, buildings, etc.

Public Procurement: Problem areas?

  • India’s public procurement systems account for more than Rs. 10 lakh crore of business. This is ~30% of India’s GDP
  • Lot of Corruption during the tender/bidding process.
  • There are imperceptible pressures from trading partners such as the EU that foreign companies should be allowed to easily participate in India’s public procurement process.
  • At present there is no single legislation providing guidelines for public procurement and for giving punishments to bribe givers and bribe takers.
  • So Finance ministry introduced Public Procurement Bill, 2012 in Lok Sabha.
  • It is based on the recommendations of Committee on Public Procurement, headed by former bureaucrat Vinod Dhall.
  • This Bill seeks to make public procurement transparent and corruption-free.

Mohan Public Procurement

Where does the bill apply?

  • Any central department, ministry, PSU or Company where Government has more than 50% stakes.
  • For purchases about 50 lakh rupees.

Where does the bill not apply?

  • For emergency purchases done during disaster Management, national security.

Salient Features / Provisions of the bill?

  • Procuring entity (Ministry/department etc) shall first determine the need for the procurement and estimate the cost of the procurement based on certain specified matters.  It may publish information regarding planned procurements.
  • Bill provides for setting up a Central Public Procurement Portal.
  • This website will ensure transparency in the procurement process.  Information such as pre-qualification document and details of bidders shall be displayed on the Portal.
  • Ministry/Department shall not limit discriminate against bidder, except for the protection of public order and morality, animal or plant life, intellectual, national security. (means foreign companies can also fill up tenders without trouble- that’s what EU and USA wanted.)
  • central government may make procurement mandatory from certain bidders for promotion of domestic industry, socio economic policy, or other considerations in public interest. (means Government can prevent foreign companies from bidding, in special cases)
  • Government shall constitute one or more independent procurement redressal committees [under the chairmanship of a retired High Court Judge]. 
  • if any prospective bidder (seller) feels that a particular ministry/department etc. did not consider his product/services for any foul reasons (e.g. if he feels that since he did not give bribe so his tender was rejected) -so in that case he may file an application with such a committee.


  • Bill providse different penalties for offences such as taking bribes in respect of procurement, interference with the process, making vexation, frivolous or malicious complaints, and abetment of offences.
  • Jail time from 6 months to 5 years, for bureaucrats caught taking bribes or creating obstacles in fair bidding.
  • Government shall debar a bidder (seller) if he has been convicted of an offence under Prevention of Corruption Act, 1998 or or IPC or if he tries to bribe an officer / otherwise play mischief in the bidding.