Specification setting

A common problem in public procurement relates to defining the product/service requirements in tenders. It is done in two ways-

a) Organisations having strong engineering departments often design the products in house and invite tenders for manufacture/construction of these designs. E.g. in-house design of bridge and inviting tenders for its construction.

b) Organisation with strong managements set out output/functional parameters from a product/service e.g tender for a toll bridge.

Although, both of these methods may have their inherent advantages, within present setup of government departments, latter is being preferred over the latter because of following reasons:

Government departments often lack design capabilities due to

Limited market information available with engineers due to long working in single organisation

Very few officials in government try to keep themselves updated due to job security which is not so in private sector

1. Many times designs are adopted from the vendors who design them to their advantage. Examples of such cases are available in plenty when a different product is designed by a particular vendor and its advantages are told to public organisations and the organisations in turn place demands for procurement of these products on proprietary basis and little homework is done to define broad based functional requirements so that free competition can take place.There are issues of IPR (intellectual property rights) also in these cases.

2. Designs are not based on lowest cost inputs available in market but based on traditional high cost inputs e.g design of a building by government engineering department of costs many times as compared to one by a private developer.

3. Contractor has little liability for faulty design but is responsible for construction as per drawings.

4. Traditional design based construction/supply needs intensive inspections for material testing for quality and quantity. Contractor is free from obligations when her bills are cleared.

PPP (public private partnership) based construction projects are therefore turning out to be more successful on quality parameters as returns to the contractors depend upon quality of work done. It is therefore high time that these functional requirement based contracts are tried for supply of goods and services also.