Sustainable Public Procurement: Towards a lowâcarbon economy

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44 Sustainable Public Procurement: Towards a low carbon economy Chapter III: Stakeholder Perspectives on SPP Criteria for procurement Performance Technical This chapter discusses the findings from our first round of stakeholder consultations, and summarises the procurement practices and procedure as followed by the companies. Then it locates sustainability within the existing practices in terms of their awareness about SPP, and identifying the positive as well as negative influences on making sustainable procurement choices. Procurement is generally governed by three key factors – technical requirements/ performance, cost, and timely delivery, of which performance is usually the most instrumental factor. Besides these, certain social and environmental criteria also become apart of the public procurement process. The primary purpose behind procuring any given item is to meet the need for any goods or services required in carrying out various functions in special circumstances as well as regular course of the company/ institution. Considering the objective, with which it is procured, is to meet these manufacturing and operational requirements, one of the main criteria to be fulfilled is vis-à-vis performance. Performance forms the basis of any procurement decision, whether before the actual bidding, that is, designing of specifications, notice inviting tenders, or during the evaluation of a bid document. For the purposes of clarity, one can classify performance on the basis of technical performance and timeliness. All the companies, whether public or private, rate technical performance very high and ensure that the items procured by them are able to meet the technical parameters required. The indentor department raises a request for procurement or initiates a procurement exercise with a certain mechanical or procedural activity planned and the role of the item to be procured already identified. Therefore, other factors like cost, sustainability etc. are taken into consideration only after the technical requirements are T E R I Report No. 2007GL01
45 Sustainable Public Procurement: Towards a low carbon economy Timely Delivery up to the mark and as per the needs of the company/ department. This is a criteria rated high by all the companies consulted, irrespective of their nature of activities, whether large manufacturing, energy, or service industry. Since most of our stakeholders, except the railways, are competing with other players in the market, they are bound to maintain the quality of their products, hence give performance related criterion a high weightage in the course of evaluation of a bid. Another parameter on which performance of an item to be procured is evaluated is in terms of timeliness. Companies expressed that timely delivery for them is as important as any other performance measure since they deal with products and processes which are fast moving and have to meet sharp deadlines. In fact this emphasis on timely delivery is one of the drivers of the trend in outsourcing of procurement. Unlike some other developed countries, when public procurement is outsourced, it is not done so as to ensure sustainability, but to ensure timeliness and technical requirements. In a two-parts bid process, the first part deals with these specifications only. Normally, performance guarantee is given by the supplying agency but some organizations, e.g. BHEL, IOCL and NTPC have a quality department that conducts quality tests at different stages of procurement. Depending on the nature of the goods to be procured, monitoring of a performance guarantee test is done. Companies that are ISO certified and have a quality manual and audit, are under an even greater obligation to meet established standards, which demands technically sound purchases and a timely delivery of the same. Cost Price of the product is one of the driving factors in evaluating a bid for purchase. Once a technical bid is evaluated and a vendor meets the requisite technical and performance related specifications as laid down in the NIT, the financial bid is opened and the cheapest option is procured. The financial bid is normally opened only after the technical bid has been evaluated and any modification or alteration required has been made or any explanation from the vendors is sought. No consultation with the supplier takes place after the financial bid is opened. T E R I Report No. 2007GL01
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