Beruflich Dokumente
Kultur Dokumente
Public Procurement
INDIA
Amarchand & Mangaldas & Suresh A. Shroff & Co.
CONTACT INFORMATION:
Jatin Aneja
Amarchand & Mangaldas & Suresh A. Shroff & Co.
216, Amarchand Towers, Okhla Industrial Estate, Okhla Phase III
New Delhi, India - 110020
91.99.1009.8314
jatin.aneja@amarchand.com
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(ii)
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iv.
v.
vi.
any company in which more than fifty per cent of the paid-up share capital
is held
(a) by the Central Government; or
(b) by one or more companies in which the Central Government holds
more than fifty per cent. of the paid-up share capital; or
(c) by the Central Government and one or more companies in which the
Central Government holds more than fifty per cent. of the paid-up share
capital;
any body established or constituted under the Constitution whose
expenditure is met from the Consolidated Fund of India;
any body or board or corporation or authority or society or trust or
autonomous body (by whatever name called) established or constituted
under an Act of Parliament or a body owned or controlled by the Central
Government;
any other entity which the Central Government may, by notification,
specify to be a procuring entity for the purpose of this Act, being an entity
that receives substantial financial assistance from the Central Government
in so far as the utilization of such assistance towards procurement is
concerned.
The other regulations and guidelines of the general public procurement regime (as
discussed in the response under paragraph 8 above) may be additionally
applicable to a public agency, depending on the (a) the nature of the procuring
entity and (b) the sector to which the underlying public procurement relates to.
4. What public agencies are not subjected to the application of the general
Public Procurement regime?
Please see response to Question B.3 above. All agencies that fall under the ambit
of the understanding of state entity for the purposes of the Constitution of India,
would fall within the purview of the restrictions and regulations prescribed for
public procurement. Entities that do not fall within this understanding of state
entities, would therefore not be subject to such restrictions.
5. Are there any non-public entities subjected to the application of the general
Public Procurement regime?
Non-public entities are typically not subject to the provisions of the general public
procurement regime. However in certain cases, where projects/ contracts are
awarded to private entities by a governmental authority, the terms of the project
agreements/ bid documents may require that the successful bidder undertake all
downstream procurements in accordance with prescribed guidelines, which interalia mandate procurement through international competitive bidding (ICB)
processes.
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2.
(ii)
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3. Are there any contracts or matters from which foreign companies are
restricted (eg. national defense, hazardous waste disposal, security services,
etc)?
Unless otherwise specified under the applicable bid documents, there typically no
direct restrictions on the participation by foreign companies. However, it is
pertinent to note that, as discussed under paragraph C.1:
(i)
(ii)
(iii)
(iv)
There may exist certain specific host nation specific restrictions, including
illustratively, restrictions on import of rough diamond from Cote dIvoire
or arms and related material from Iraq, as specified under the terms of the
Foreign Trade Policy.
It is also noteworthy, that where the procuring entity has prior commercial
arrangements with other international entities, the procuring entity may
also be subject to requirements of such international entities. Illustratively,
where any (Indian) procuring entity has existing loan arrangements with
Export-Import Bank of United States, such procuring entity, may on
account of such prior contractual arrangements, be required to not have
such dealing with entities based in Iran (to such extent that the same is
restricted under applicable laws of the United States of America).
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(ii)
(iii)
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6. What are the modes of selection processes and when are they applicable?
Subject to the applicable sector specific regulations and legislation,
mechanism for the selection of the successful bidder, is typically subject to
requirements prescribed in terms of the applicable bid documents. Some
commonly adopted mechanism for the selection of the successful bidder in
documents, are enumerated below:
(i)
(ii)
(iii)
(iv)
(v)
the
the
the
bid
Further selection of the bidder may also be based on the combined scores from the
evaluation of their technical bid and financial bid, on the basis of a predetermined weightage mechanism. In this mechanism the financial proposals
would continue to be evaluated on the basis of the methods identified above, as
applicable, given the nature of the bid process.
It is pertinent to note that procuring entities are not bound to accept the bid of the
highest evaluated bidder and select other bidders, subject to the procuring entity
being able to demonstrate that the selection process was undertaken on a
reasonable, fair, transparent, and non-arbitrary basis.
We may also note that certain procuring entities may also reject bids that are
extremely low or otherwise on financial terms extremely prejudicial to the bidder
(this is typically evaluated on the basis of the prevailing market rates).
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(ii)
(iii)
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(ii)
(iii)
In certain cases, the procuring entity may, pending the execution of the
contractual documentation, issue a letter of award/ letter of intent, to the
successful bidder, encapsulating the key terms of the proposed contractual
arrangement, and the successful bidder would be required to execute
requisite assents and confirmations in respect of such letter of award/ letter
of intent.
(iv)
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(ii)
(iii)
(iv)
(v)
In this regard it is pertinent to note that the proposed national public private
partnership policy of the Central Government, presently contemplates that swiss
challenge based proposals should not be the preferred. At the same time, various
state governments, such as those of the states of Gujarat, Andhra Pradesh, and
Karnataka, specifically recognize swiss challenge as a mode of procurement by
governmental agencies, and have prescribed guidelines and regulations in respect
thereof.
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2. Does the private company proposing the project have any advantage for
purposes of bidding?
The private project proponent initiating a public procurement process would in
any event, have the benefit of substantially higher time periods to evaluate
viability of the said project, and put in place mechanisms for creation of cost
efficiencies and obtain necessary technical qualifications for such project.
Further, where the project is undertaken on a swiss challenge basis (as discussed
in our response under paragraph E.1 above), the developer has a preferential right
to such project, in the form of a right of first refusal on the project, and would be
entitled to undertake such project, where it is able to able to match the offer of the
highest evaluated bidders.
F. Review Procedures
1. Are there any judicial review procedures applicable to the bidding
processes?
Bid processes of all state entities (as discussed under the response in paragraph
B.1 above), are subject to limited judicial review in exercise of the writ
jurisdiction of the High Courts and the Supreme Court of India. Typically, the
courts intervene in the bid process only on the grounds of violation of
constitutional or statutory provisions, or on account of, the lack of probity,
fairness and transparency, or reasonableness, or the presence of arbitrariness.
2. Are there any judicial review procedures applicable when the contract has
been executed?
The judicial review mechanism specified in the response under paragraph F.1
above, would be equally applicable to contractual arrangement executed in
furtherance of a bid process undertaken by state entities or entities otherwise
subject to public procurement laws.
Further, the contractual arrangement would also be subject to judicial review/
specific performance through intervention of the courts having the requisite
jurisdiction, with respect to non-compliance with the terms of such contractual
arrangement.
G. Overview of Public Procurement Contracts
1. What are the regulations applicable to contract terms and its extension?
The terms of the contract governed by Indian law would be governed by the terms
of the Indian Contract Act, 1872. Where the contract relates to the sale of goods
or transfer of any property it would additionally be subject to the Sale of Goods
Act, 1930 and the Transfer of Property Act, 1882 respectively. Additionally,
contractual arrangements may be subject to the terms of sector specific
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2. Are there any guarantees that have to be posted for the performance of the
contract?
As discussed in our response under paragraph D.7, above, the successful bidder
may be required to submit requisite performance security for the performance of
its obligation under the contract, which may take the form of performance bank
guarantees, parent company guarantees, and/ or payment retention mechanisms.
3. Are there any special powers upon the State?
The State under Indian law is entitled to sovereign immunity with respect to
exercise of its sovereign functions. However, such immunity, is not available in
the context of purely commercial contractual arrangements, such as those
undertaken pursuant to a typical public procurement process, and the contractual
obligations of the Indian State may, to such extent, be specifically enforced in
accordance with their terms, including inter-alia through the means of appropriate
judicial processes in India.
4. Can fines or penalty clauses be agreed upon?
Under Indian contract law, and specifically under Section 73 of the Indian
Contract Act, 1872, the non-defaulting party is entitled to be compensated by the
defaulting party for actual and direct loss and damage, arising from the breach of
the contract by the defaulting party. Thus, while Indian law permits the
incorporation of compensatory provisions in a contract, no compensation can be
claimed in respect of any remote or indirect loss or damage. Further, provisions of
a punitive nature, such as fines or penalties are typically not permissible.
It is pertinent to note that parties may elect to prescribe liquidated damages under
a contract, subject to the contract specifically recording an agreement of the
contracting parties to the effect that (a) the occurrence of identified event of
default under the contract, would cause loss and damage to the non-defaulting
party and (b) the specified amounts of liquidated damages, constitute a genuine
pre-estimate of amounts required to compensate the non-defaulting party for such
loss and damage. We may also note that such liquidated damages are typically
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conciliation
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(ii)
It is also pertinent to note that Indian governmental agencies typically prefer the
applicability of the provisions of Indian law as the governing law for contracts,
and the Arbitration Act as the law governing the arbitration proceedings under
such contract.
9. Is there any procedure for liquidation of the contract?
In the Indian context, liquidation of contracts is understood as a termination of the
contractual arrangement. Under the Indian law, termination is typically the subject
matter of the contractual arrangement between the parties, and is required to be
undertaken in the manner agreed to by the parties under the contract.
However, it is also pertinent to note that Indian law recognises two specific
instances of termination by way of frustration and by way of repudiatory breach,
which are enumerated below:
(i)
(ii)
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H. Applicable Regulation
1. Please list any relevant regulation and, if possible, web links to up-to-date
versions of the same.
Some of the applicable legislations governing public procurements are
enumerated hereunder:
The Constitution of India, 1950
http://www.lawmin.nic.in/coi/coiason29july08.pdf
Manual of the Directorate General of Supply & Disposals:
http://www.dgsnd.gov.in/manualpdf1.zip
Prevention of corruption Act, 1988:
http://persmin.nic.in/DOPT/EmployeesCorner/Acts_Rules/PCAct/pcact.pdf
E:Procurement: Central Public Procurement Portal :
https://eprocure.gov.in/eprocure/app
Defense Procurement Procedure, 2011:
http://mod.nic.in/dpm/
E-Procurement Office Memorandums:
http://finmin.nic.in/the_ministry/dept_expenditure/ppcell/index.asp
Draft Public Procurement Bill:
http://164.100.24.219/BillsTexts/LSBillTexts/asintroduced/58_2012_LS_EN.pdf;
Errata
http://164.100.24.219/BillsTexts/LSBillTexts/Errata/Cor_EN_58_2012_LS.pdf
Central Vigilance Commissions Guidelines on Procurements
http://www.cvc.gov.in/proc_works.htm
Master Circular on imports of goods and services
http://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=7315
Indian Contract Act, 1872
http://indiacode.nic.in/fullact1.asp?tfnm=187209
Sale of Goods Act, 1930
http://indiacode.nic.in/fullact1.asp?tfnm=193003
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