CVC’s Notification Addresses a Major Concern

For the civil and military bureaucracy responsible for defence acquisitions, it meant scanning through 72 CVC circulars containing issue-specific guidelines, as well as instructions issued by other organisations, in addition to following the complex procedural instructions contained in the Ministry of Defence’s (MoD’s) voluminous manuals running into hundreds of pages.

Updated: August 31, 2022 13:00 IST

The general impression is that in addition to the rules and procedures laid down in the departmental procurement manuals, one must also comply with the sporadic guidelines issued by the CVC.

By Amit Cowshish

An unsigned and undated notification quietly posted by the Central Vigilance Commission (CVC) on its website last month can go a long way in dispelling the insuperable impression many in the government have about the extent of their responsibility in complying with the procedural requirements.

The general impression is that in addition to the rules and procedures laid down in the departmental procurement manuals, one must also comply with the sporadic guidelines issued by the CVC and, at times, other organisations like NITI Aayog and the Department for Promotion of Industry & Internal Trade.

Some sticklers also insisted on satisfying themselves that the action they were about to take did not fall foul of the General Financial Rules (GFRs) laid down by the Ministry of Finance’s Department of Expenditure (DoE). The GFRs, first promulgated in 1947 and last revised in 2017,govern all public procurement in the absence of any specific central law on the subject, apart from perfunctorily dealing with diverse issues like budgeting, government accounts, inventory management, and grants-in-aid.

The complexity of rules, guidelines, and instructions -not always in harmony with one another- sometimes created confusion or resulted in prolonged indecision, more so in big-ticket defence acquisitions. A classic example of this is the ambiguity about conducting commercial negotiations with the lowest vendor, frowned upon by the CVC but a norm with the MoD. The concept of ‘reasonable price’ with reference to which the acceptability of the lowest commercial offer is assessed is affected by this complexity.

No wonder then that expeditious decision making has never been a strong point with the MoD, as evident from several stalled acquisition programmes. The July 2022 CVCnotification puts these apprehensions to rest, albeit not entirely.

Recognising that the procurement executives were ‘facing problems in having a single authoritative source of reference’, the notification declares that it would be appropriate if public procurement guidelines were issued only by the DoE. Hopefully, it will not be interpreted by some overzealous bureaucrats in the MoD to mean that DAP 2020, and other manuals like DPM 2009 that deals with revenue procurements, will not be valid anymore.

The aforesaid manuals were promulgated by the MoD under an enabling clause in the GFRs which permitted individual ministries and departments to issue detailed instructions ‘broadly in conformity with the general rules contained in’ the relevant chapter of the GFRs. The DoE itself issued three manuals containing detailed guidelines on procurement of goods, consultancy and other services, and execution of civil works. These are followed by the smaller ministries and departments whose expenditure on procurement of goods and services is not as substantial as that of the MoD or Railways.

In keeping with the decision to make DoE the nodal authority for issuing all procurement related instructions, the aforesaid manuals have also been revised and the latest versions, updated up to June 2022, released incorporating all instructions issued by the CVC and other organisations. Consequently, CVC has withdrawn all its earlier guidelines on public procurement.

Going forward, all organisations are required to update and align their procurement guidelines and manuals with the DoE’s updated manuals and upload them on their websites at the earliest for the benefit of their officials and other stakeholders.

What the CVC notification does not make very clear, however, is that it is not a one-time action and that every time any other organisation feels the need to take some procurement-related decision, it must inform the DoE for updating the GFRs or the procurement manuals, as necessary. The notification also does not specify a procedure for other departments which have their own manuals being intimidated by the DoE about any change that they need to make in their manuals.

It should be recognised, and a formal notification issued to the effect, that it is not the responsibility of the individuals responsible for procurement of goods and services to go hunting for latest instructions and guidelines issued by other departments, or now the DoE, if the department they belong to has promulgated a bespoke procurement manual. The responsibility for keeping it updated at all times by incorporating instructions issued by the DoE is that of the head of the department concerned.

It is now for the MoD to urgently review DAP 2020, DPM 2009, DRDO Procurement Manual 2020 and the Defence Works Procedure 2020 to ‘align’ it with the DoE’s updated manuals and put the apprehensions of the procurement personnel at rest, which often stymied decision making in the past, despite being irrational in the first place.

The author is Former Financial Advisor (Acquisition), Ministry of Defence.

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This article was first uploaded on August twenty-eight, twenty twenty-two, at seventeen minutes past seven in the morning.