Sustainable Public Procurement: Towards a lowâcarbon economy

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26 Sustainable Public Procurement: Towards a low carbon economy comply with the procurement process. The essential mechanism of support is through the implementation and benefits accruing from the Rate Contract System (RCA). Under the RCA the procurement agency enters into contractual relationship with pre-approved suppliers for provision of goods at pre-determined rates over a period of time. This is similar and functionally equivalent to the Framework Agreement that is prevalent in Europe and the USA. One of the major drawbacks of such a decentralized set up has been that it has been impossible to develop a centralized database of the nature and scope of procurement carried out both at the central and state level. The lack of a tracking service has made it difficult to respond to the functioning gaps within the current procurement set up and identify mechanisms to respond to such gaps. It also makes a harmonized policy formulation in incorporating energy efficiency standards in procurement difficult. Box 2.1 Energy Conservation Act The Energy Conservation Act 2001 was enacted by India with the objective of setting a coordinating mechanism, which could oversee India’s transition to a more energy efficient and sustainable future. The primary aim was to launch a host of measures targeted in the medium and long term towards incentivising the adoption of energy efficiency measures at the industrial and household level. For this purpose the, Bureau of Energy Efficiency (BEE) was set up as a statutory body under the Ministry of Power. The BEE is empowered to perform a range of functions that spans the value chain from the adoption of policies for mandating energy efficiency to the setting up of analogous services like energy auditing, setting up of standards, labeling, etc. Section 13 of the Act provides for a range of recommendatory powers to the BEE. This includes the power to recommend, energy consumption standards, labeling norms, formation of classes of energy consumers, etc to be legislated by the central government. Amongst the various other provisions Section 14(c) states that the central government in consultation with the BEE, could prohibit manufacture or sale or purchase or import of equipment or appliance specified under clause (b) unless such equipment or appliances conforms to energy consumption standards This provides a clear basis for the BEE to undertake policy measures targeting public procurement of energy efficient products. Interestingly the DGSD website contains a listing of “contributions to the national interest.” This section lists a number of sectors like transport, drinking water supply, public utilities, health, etc wherein the DGSD has overseen procurement within the projects implemented in this sector. Under this the DGSD also lists a separate category called “energy conservation” which includes the following listing; room air conditioners, T E R I Report No. 2007GL01
27 Sustainable Public Procurement: Towards a low carbon economy Rules & guidelines evaporative air coolers, ballasts (electromagnetic and electronic), laminates electoral light fittings and also disaster management. 13 These presumably allude to sectors and category of equipments in which the DGSD has consciously followed an energy savings/conservation path in terms of prioritizing the more energy efficient alternative in these sectors. This also reflects that the DGSD is not completely unaware of achieving energy efficiency being one of the objectives of the procurement process itself. This is not surprising given that in the latter half of last year the government of India has taken several preliminary steps to work towards a plan for procuring energy efficient products across several sectors. 14 The Bureau for Energy efficiency is responsible for institutionalising energy efficiency in Indian policy making. It was set up under the Energy Conservation Act of 2001. (See box 2.1) The foundational legal basis can be found in the constitutional provision of Article 299 that forms the basis of all contractual agreements between the Government of India and any other party. It provides for legally binding contracts to be entered into by the President or the Governor on behalf of the Government of India. The other legislations providing for the basic legal structure for entering into legal contracts in India is provided for under the Indian Contract Act 1872 and the Sale of Goods Act 1930. In the specific case of procurement, however, there are two primary legal instruments, which guides public procurement in India. These include the General Financial Rules that guides the major quantum of all public procurement; the Central Vigilance Commission (CVC) guidelines form the other half of the regulatory paradigm that influences the procurement process in India. General Finance Rules 2005 The General Financial Rules 2005 (GFRs) is the primary framework on the basis of which all public procurement is undertaken within all the offices of the Government of India. The GFR includes general principles governing financial matters in all government transactions including procurement of goods and 13 See Supra Note 10. 14 See http://www.thehindubusinessline.com/2007/07/10/stories/20070710522410 00.htm accessed 12 February 2008. T E R I Report No. 2007GL01
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