This article is written by Khushboo Bharti ,BALLB(Hons) 3rd year,Institute of Law, Jiwaji University,Gwalior durimg her internship.
ABSTRACT
The government contracts are important in order to facilitate and organize the implementation and delivery of public projects and services as well as govern the relationship between the government and the contractor. This article aims at examining the legal environment in regard to government contracts in India with emphasis on the legal and regulatory measures such as the Indian Contract Act, 1872 and the public procurement rules. Scholars learn about the pattern as well as landmark judgements including Ramana Dayaram Shetty v International Airport Authority of India and Tata Cellular v Union of India, which have created the fair treatment in doing government contracting business by valuing on fair treatment and Judicial review. Modern advancements in the area of e-Procurement that has been practiced through GeM platform has transformed the ways government contracts are awarded and has reduced corrupt practices to a large extent. Also, arbitration under the Arbitration and Conciliation Act, 1996 has more importance in the process of resolving the dispute that arises from the government contracts compared to other legal actions as they are more time efficient and specifically specialized. This reader carries a detailed evaluation of these aspects of the legal regulation of government contracts and innovations that have occurred in the recent past. Thus, while primarily reviewing specific case laws and current practices the article tries to provide some ideas about the efficiency of the existing systems and the possibility of further reforms of the government contracting integrity and efficiency. The discussion is based on a critical analysis of legal prescriptiveness, administration, and technology to discuss government contracts in an attempt to expand on an understanding of how government contracting exists in the context of public administration and policy.
Keywords:
Government Contracts , Public Procurement, Indian Contract Act , Public Policy ,Tendering Process ,Administrative Law
Introduction
Government contracts are basic elements that define the implementation of projects in the course of public service delivery. These contacts define the legal relations between the government and contractors involved in undertaking different activities ranging from construction of infrastructure, to procurement of products and services. These contracts are governed by the Indian Contract Act, 1872, and various public procurement regulations in order to ensure that the award of public work is done in a transparent and more or less non-prejudiced manner.
For the formation, performance and enforcement of the Government Contracts there are laws regulating contracts in India which include the Indian Contract Act, 1872. Some of the sections of this Act which include sections 10, 11 and 23 require that the contracts entered by the government must meet the principles of legality, competency and fairness. Along with legal rules stated in statutes, government contracts are regulated by the public procurement regulations aimed at enhancing competition on contracts to supply goods, works, and services to the governments and avoiding corruption of the procurement process with an optimal and efficient utilization of public fund.
Modernization initiatives that have recently been implemented include the Digital platform of procurement which is through Government e-Marketplace (GeM). Moreover, arbitration in form of Arbitration and Conciliation Act,1996 has evolved to be crucial in seeking redress for disputes arising from these contracts through a more efficient and practical method than going to court.
It highlights the complex legal structure that governs the government contracts, scrutinizes important judicial precedents that have defined the legal regime and examines recent trends which still affect the effectiveness and the credibility of procurement procedures.
Legal Framework Governing Government Contracts
Indian Contract Act, 1872
The Indian Contract Act, 1872 provides the principal framework of the contract law in India which includes government contract as well. Key sections under this Act relevant to government contracts include:Key sections under this Act relevant to government contracts include:
– Section 10: Makes it mandatory that for any agreement to be enforceable it must be lawful.
– Section 11: It stipulates that only person of sound mind can make a contract.
– Section 23: Requires that in the formation of the contract, the consideration or object of the contract should not be unlawful.
The law also requires that, for any contracts to be considered valid and enforceable especially in government contracts; it should meet these provisions. This Act gives a legal approach to problems concerning the performance and breach of the contract among the two parties to a contract.
There are different Public Procurement Regulations which has been also described below briefly:
EUROPEAN UNION PROCUREMENT REGULATIONS:These Regulations are applicable to the contracts funded by the European Union and they cover all the procurement sectors. NIGERIAN PROCUREMENT REGULATIONS:These Regulations are applicable to the Nigerian government and they also include all the procurement sectors. Ghanaian Public
Public Procurement Regulations
Public procurement regulations are very crucial in minimizing bias and optimizing on the resources the government awards to PDs through contracts. Such regulations cover the mechanisms of purchasing and acquisition of various products, services and works from Governments by other private organizations. In India, most of the procurement is done by government organisations and is controlled with the help of several guidelines and rules whose intention is to encourage the competitive bidding system and protect public interests.
General Financial Rules (GFR), 2017
The General Financial Rules (GFR), 2017 are the guidelines to public procurement in India. They dictate the functioning of the government’s operations and set down the guidelines for the management of public funds. The GFRs emphasize the principles of:The GFRs emphasize the principles of:
– Transparency:The rules prescribe conditions which require that procurement processes should be publically tendered to all qualified suppliers. This includes advertisement of tenders and bid document, clear specification of criteria to be used to evaluate bids and effective elimination of bias in the procurement system.
– Competition: In relation to this, most procurement processes are subjected to competitive bidding with a view of discouraging monopolies in implementation of the GFRs. This is done with an intention of getting the highest value at the lowest price possible through comparing bids from different suppliers or contractors.
– Accountability: Hence the GFRs guarantee all procurement decisions are properly recorded in evidence and made subject to audit and review. These accountabilities are necessary and essential to avoid the loss of public trust and minimize sweet canker referred to as corruption.
Central Vigilance Commission (CVC) Guidelines
The CVC or Central Vigilance Commission supervises and watches over the purity of the public procurement phase. It has extra features to improve on this in regard to transparency and fight against corruption. Key aspects include:
– Pre-Tender Scrutiny: The CVC stated that it is important to review all the procurement processes before the tenders are issued with an aim of preventing any hitches.
–Tender Evaluation:In this respect, the CVC guidelines guarantee that tenders are evaluated satisfactorily and in a non-biased manner and supported by adequate documentation.
– Contract Management: The CVC also points at the proper compliance with the contracts and to escalate corrective measures to contractual breaches where required.
Public Procurement (Preference to Make in India) Order, 2017
The Public Procurement (Preference to Make in India) Order, 2017 is in line with the Make in India policy since it grants local products and services a preferential treatment in government procurement. The order aims to:
– Promote Local Manufacturing: According to the specifics of the order, preference will be granted to products and services that are made or produced in India, which aims at the development of the domestic economy and the creation of work places.
– Enhance Competitiveness: While making a call to clients to ensure that they consume locally produced products the order also prevents competition from being constricted a lot. Of course, foreign suppliers are also allowed in the procurement process though they have to satisfy certain conditions.
GeM Government e-Marketplace The GeM stands for Government e-Marketplace it is an e-market organized to ease the purchasing process.
Key features include:
-Electronic Auction: GeM manage’s the electronic auction of the goods and/ or services by the various government departments through provision of online tenders, receipts and award of contracts.
– Increased Transparency:The membership enables real time fix access to procurement data hence eliminating chances of corruption. – Simplified Processes: this is because GeM standardizes procedures it reduces the paperwork it automates most activities hence increasing efficiency of the procurement process.
The Public Procurement Bill, 2012
Though not yet enacted, the Public Procurement Bill, 2012, proposes a comprehensive framework for public procurement in India. It aims to:Standardize Procedures:The bill aims at standardizing the procurement procedures so as to reduce on varieties of procedures in the various government departments and establishments. – Introduce E-Procurement:It focuses on the application of electronic procurement systems whereby procurement business transactions are made more transparent.
– Strengthen Accountability:The bill also indicated steps in enhancing accountability with a view of reducing incidences of corruption in the procurement system. Public procurement regulations that exist in India are meant to ensure that contracting with the government is non-discriminatory, effective and transparent. And by following these regulations officials discharge the public resources, encourage the competition, and maintain their citizens’ trust.
Landmark Judgements on Government Contracts
Ramana Dayaram Shetty v. International Airport Authority of India (AIR 1979 SC 1628) . This landmark case established the principle that government contracts must adhere to a fair and transparent process. Based on the facts of the case, The Supreme Court held that the International Airport Authority of India was premature in awarding the contract thus violating the principles of natural justice. The case pointed at the need to have a clear tendering procedure and level playing field whereby all the contestants are given equal chance to bid. Regarding, it unveiled the electoral monitoring power of the judiciary where the judiciary reviews the decisions made by administrative bodies in order to curb the exploitation of the power endowed within. Tata Cellular International Ltd v. Union of India (1998) 7 scale 430 : (1996)1 ust 10 (400 words)
More specifically, they considered the rules of the judicial review concerning the government contracts. The Court said that a court interferes with the arbitration process only when it is arbitrary, irrational, or biased. The given decision gave a precedent in appreciating the lawfulness of the governmental actions as concerning the determination of the contracts awards, within highlighting the necessity of the legal non- arbitrariness of the criteria.
Recent Development Analysis: (Critical Analysis)
Digitalization in Government Contracts
Despite these challenges the adoption of the digital method of government procurement has led to massive improvements. Electronic procurement system is smoothly run through the Government e-Marketplace (GeM). Key benefits include:
– Reduced Corruption:Digital platforms involve less contact with the authorities hence less chances of corruption.
– Enhanced Efficiency:Tendering and contract management are done in an automatic manner hence taking less time.
– Increased Accessibility: GeM enables more participation of the Sme’s.
Role of Arbitration in Government Contract Disputes
The contracts entered into by the government can be regulated through the Arbitration and Conciliation Act the legal regime of which was enacted in 1996. Arbitration is preferred for its:Arbitration is preferred for its:
– Speed and Efficiency: Takes less time in solving the disputes when compared to the conventional trials.
– Confidentiality:Does not reveal any vital information to other people.
-Expertise:Enables the parties to decide on persons who are well equipped with the issues in relation to the dispute.
However, there was extensive amendment in the Arbitration Act in recent times that has added the features that made it very efficient and convenient to approach an arbitration.
Illustrations and Examples
1. Sterlite Industries (India) Ltd. v. Union of India: This case demonstrate the roles of the government contract law regarding environmental compliance disputes. The Supreme Court also focused on the situations connected to the violation of contractual duties in terms of environmental standards.
2. BSNL v. Motorola India Pvt. Ltd. :Emphasizes the incorporation of arbitration clauses in governmental contracts. It clarified the idea of arbitration asserting that they are useful in solving issues connected with contract implementation and adherence.
Conclusion
Public projects are implemented through the help of government contracts or agreements made possible. The Indian legal system through the use of Indian Contract Act, 1872 and the public procurement laws make sure that these contracts are provided and completed equitably. New trends, for example, the process of digitalization in contracts particularly in the procurement process and the elevation of the use of arbitration proceedings have enhanced the value of government contracts.
In light of the legal implications as well as obligations that are upheld by the policy, it is important to maintain the integrity of government contracting. With this in mind, it will therefore remain pertinent to track reforms and innovations to the structure of government contracts as the surrounding environment changes.
References:
1. [Ramana Dayaram Shetty v. International Airport Authority of India](https:>(accessed 20/08/2018) [WWW Available at: https://www. indiankanoon. org/doc/1709682/
2. [Tata Cellular v. Union of India](https:>(Source : //www. manupatra. com/articles
3. [GeM (Government e-Marketplace)](https://gem. gov. in/)
