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Procurement reform: Jugaad legislation in India

Copycat Bills, Anti Bribery Act, Foreign Corrupt Practices Act, Planning Commission of India, Public Procurement bill

By Sandeep Verma

While researching over 10,000 Bills that had been introduced in legislatures nationwide in the US over eight years, a recent investigation by the USA Today, The Arizona Republic and the Center for Public Integrity found that they had been almost entirely copied from versions written by special interest groups. Indeed, copycat Bills originating from self-styled 'model' 'international' legislation can pose serious dangers, as was quickly discovered by the government of India while reviewing the (draft) Prevention of Bribery of Foreign Public Officials and Officials of Public International Organisations Bill, 2011. Thankfully, the 2011 Bill lapsed, perhaps once it was realised by the government that the Bill would severely disadvantage Indian entities vis-à-vis foreign companies-since the latter could easily reinforce their business interests by exploiting a number of loopholes with foreign legislations such as the US's Foreign Corrupt Practices Act and the UK's Anti Bribery Act.

The Indian government was equally nifty when dealing with mounting international pressure for the 'quick' passage of the (draft) Public Procurement (PP) Bill, which was also later allowed to lapse. Multiple versions of the draft PP Bills in 2011-12 had been drafted by the (then) Planning Commission of India, virtually copy-pasting the UNCITRAL Model Public Procurement Law of 1996, not even the already released 2011 version; and the first draft required foreign bidders to be treated at par with domestic bidders, staring in the face of many legal and non-tariff barriers to participation by Indian bidders in external public procurement markets such as those in the US, Europe and China.

Of course, it is easier for the government of India to overcome external agency pressure, given its size and high standing in international politics, but state governments in the country have not been as lucky, especially when faced with strong market-opening measures pursued by international loaning agencies as 'public finance management' reforms-indebted as the states are because of running negative fiscal and budgetary deficits for years altogether.

Procurement reform experiences

Almost 10 years ago, Rajasthan was the first state to enact UNCITRAL-styled public procurement legislation in India-the Rajasthan Transparency in Public Procurement (RTPP) Act 2012-resulting in perhaps the fattest but a rather unnecessary 'reform' measure of this variety. Copy-pasting in Rajasthan went on to the extent of permitting 'competitive negotiations' under state law, when there is virtually no one in the state who understands either its meaning or its complexity, and therefore, unsurprisingly, not one single contract has been processed in Rajasthan during the last eight years under this method after enactment of the RTPP Act. Assam followed next in Rajasthan's footsteps in 2017, copy-pasting all the confusion and inefficiencies with the Rajasthan Act in the Assam version as well; although they managed to remove some of these defects while finalising their draft rules. And now, Punjab, as recently as in September 2019, seems to have fallen prey to using the legislative route to procurement reform, as if efficient project execution can be achieved without proper allocation of risk, and without first ensuring simplified procurement procedures and standardised bidding documents.

In some ways, however, the Punjab Act makes for comparatively more interesting reading, given its rather unique provisions on debarment (sections 7 and 56) and blacklisting (section 26), without defining either of these phrases, and even though these two concepts, as a matter of legal practice, are virtually the same! Punjab's debarment provisions have been copy-pasted from the Rajasthan/Assam texts, while its blacklisting provisions seem to have been copied from some of its earlier executive instructions. The net result of this 'jugaad' legislation in Punjab is that while a contractor debarred under section 56 of the Punjab Act by an executive engineer posted in PWD Patiala can participate in contracts awarded by his counterpart officer in PWD Amritsar, but, on the other hand, a bidder debarred by an executive engineer in PWD Jaipur (in Rajasthan) or by his/her counterpart in PWD Timbuktu (in Mali, if under a loan agreement by an international organisation) would have to be necessarily excluded from participation under section 26 of the Punjab Act. In addition, contractor ineligibility arising out of a debarment decision in Timbuktu by an 'international organisation' such as the Bill & Melinda Gates Foundation or Oxfam may have to be necessarily respected forthwith by the Patiala chap by excluding such a bidder in his/her own PWD contracts, while allowing a contractor debarred by neighbouring PWD Amritsar to participate. All this confusion seems to have happened in Punjab only because of copycat legislation without attempting to appreciate procurement complexities in a bottoms-up manner, particularly when contractor ineligibility as a matter of international best practice, and even under the government of India's 1971 framework for banning and suspension of business dealings, has always been narrowly interpreted and applied to contracts awarded only by the debarring agency/department.

Conclusion

It would, of course, be premature and naïve to state that the only defects with the Punjab, Assam, Rajasthan texts are in relation to their provisions on debarment, blacklisting, competitive negotiations. There appear to be many other instances of similar confusion and impracticality in each of these states-confusion that is unlikely to die down soon enough. For instance, in Rajasthan, it has been difficult to amend many of the RTPP Act provisions, given the political optics of a state government tinkering with any piece of legislation that claims to infuse transparency in the award of public contracts, however silly or impractical any of its provisions may be.

But Punjab seems to have some major advantages vis-à-vis Rajasthan and Assam. First, the two-year period ending September 2021 allowed by its section 62 (the removal of difficulties-ROD-provision) allows the state to amend large parts of the text so long as its ROD orders are consistent with the principal Act. Second, Punjab is yet to formulate and publish its draft rules and can thus potentially avoid copy-pasting problems that will necessarily arise when it is expected by external lending agencies to simply reproduce Rajasthan/Assam's rules. And last but not the least, Punjab's bureaucracy has always had a much more sensible approach to auto-correcting government policies and rules-one that is generally acknowledged to be bolder and more pragmatic than many other states in India-and it would therefore perhaps be safe for its procuring officers to expect that the last word on public procurement legislation may not be out in Punjab as yet, hopefully speaking.

The author, an LLM, specialised in Government Procurement Law from The George Washington University Law School, Washington, DC. Views are personal