The government recently announced its clear intent to operationalise a public procurement law, with a view to fostering transparency, competition, efficiency and economy in government contracts. If the 2011 UNCITRAL (United Nations Commission on International Trade Law) Model Law forms the basis of new legal formulations, the changes will be significant indeed, since the UNCITRAL Model Law essentially mirrors the procurement practices of the EU and the US.
This will mean a new paradigm for procurement stakeholders in India, given that the existing position under government rules, CVC guidelines and the nuances of our legal system are very different from the position in both the US and EU jurisdictions. It may, therefore, be worthwhile to examine the US and EU practices and draw out useful lessons for the smooth operationalisation of the proposed law for stakeholder communities in India.
Contrary to popular perceptions, the US does not have just one single law dealing with federal procurement: legal provisions are found in at least a dozen laws, the more notable ones being the Competition in Contracting Act, the Federal Acquisition Streamlining Act, the Contract Disputes Act, and the Truth in Negotiations Act. Under the US system, new legal requirements can also get incorporated on seemingly unconnected occasions, such as the National Defence Authorisation Act for fiscal year 2009, which provided for increased oversight of task and delivery orders, and the James Zardoga 9/11 Health and Compensation Act of 2010, which imposed differential taxation of foreign suppliers in respect of foreign-originated goods and services.
However, the US does have one single comprehensive set of regulations delineating specific actions of federal contracting officers (COs), vis-?-vis the Federal Acquisition Regulation (FAR), with some enhancements in the shape of departmental extensions such as the Department of Defence FAR Supplement, the NASA FAR Supplement and so on. The FAR is the prime operating manual for COs, contractors and practising attorneys, informing them of the specific actions to be taken and the mandatory contractual clauses to be inserted in proposed solicitations.
The US Congress usually expresses its legislative intent under various Acts with a prescribed delay in the legislation?s effective date, and a direction to the Executive to formulate regulations consistent with congressional intent. Thereafter, the regulation-making process kicks in, with the publication of an interim or a proposed rule under the authority of the FAR council consisting of senior procurement officers from the Office of Federal Procurement Policy, General Services Administration, NASA, and the Department of Defence. The FAR council invites public comments on the interim or proposed rules, and fine-tunes them as ?final rules? published in the ?federal register?.
Prescribing an intervening period between the expression of congressional intent in an Act and the subsequent promulgation of new amendments to the FAR thus ensures that a procedural void, in terms of lack of clarity as to which regulations or procedures are to be followed in ongoing solicitations or contracts, is completely avoided.
One of the most significant events in US procurement reform history?the setting up of the Acquisition Advisory Panel (AAP) in 2005?followed similar standards of transparency and openness as in the case of FAR amendments: the US Congress mandated that AAP proceedings be held in public; and questionnaires for AAP?s stakeholder consultations, including its draft report, were made available on the Internet for public comments.
The EU process is also a consultative one, with proposed directives being put through intense public consultations, including national governments of member-states. Once final directives are promulgated, national governments are prescribed an interim period within which to bring their domestic legislations and procedures in line with the corresponding EC directives. Here again, any temporary differences between existing national procedures and the intent of the EC directives do not hinder COs from following national practices for the time-being.
Indian legal formulations typically contain provisions for ?repeal, savings and transitional measures? in Acts, allowing existing rules to continue to be in force until the adoption of new ones consistent with new legal provisions. But they typically also limit the application of existing rules only to the extent that they are not contrary to the new law.
In the context of a public procurement law for India, where the new law is expected to make radical, rather than incremental, changes to procurement practices, this typical formulation may, therefore, not be adequate. The procurement regulations may need to be ready by, or even before, the time the new Act is in place, so that contracting entities are not placed in a situation where they would either prefer to dither on progressing procurement cases until new regulations are in place, or where they proceed with the existing procedures even if these are substantially different from the requirements of the new Act?a situation with potential for disputes and litigation. Alternatively, contracting officers may try experimenting with their own innovative procedures?a situation that could lead to similar levels of confusion and undesirable diversity in implementation.
Given the expected paradigm shift in the Indian public contracting system, it may be especially relevant that work on drafting procurement regulations starts concurrently with the drafting of the proposed Bill. It may also be equally important that the process of stakeholder consultations begins early, so that all stakeholders?in particular, procuring entities, contractors and legal professionals?are in maximum alignment when the new law and regulations kick in, thus delivering enhanced efficiency in government procurement as intended.
The author holds an LLM with specialisation in government procurement law, and is the author of http://www.BuyLawsIndia.com
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