federalism in india

The Ministries or Departments can hire an external professional, consultancy firm or a consultant for a specific job. Procedurally, it is important for the ministry / department to define the scope of the job and prescribe a time frame for its completion.

A Department or Ministry may engage consultants only in situations which require high quality services for which the concerned Ministry/ Department does not have requisite expertise. Approval of the competent authority should be obtained before engaging consultant. Such Ministry or Department which is proposing to engage consultant(s) should make an estimate of the reasonable expenditure for the service sought by taking into account prevalent market conditions and consulting other Ministries/Departments engaged in similar activities.


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Step 1: How to identify the consultants or service providers?

Though there are many consultants or service providers in the market, it might not be easy to find out the best players in the market who have competency in executing a particular service, especially if it is a niche or highly specialised service. The Financial Rules have laid down the following guiding principles for identifying the consultants:

For services upto INR 25 lakhs: A long list of potential consultants may be prepared on the basis of formal or informal enquiries from other Ministries/Departments or Organisations involved in similar activities, Chambers of Commerce & Industry, association of consultancy firms, etc.

For services above INR 25 lakhs: In addition to  consultation with other Ministries, industry bodies, etc, an enquiry for seeking ‘Expression of Interest’ from consultants should be published in at least one national daily and the Ministry’s web site. The web site address should also be given in the advertisements. On the basis of responses received from the interested parties, at least 3 consultants meeting the requirements should be short listed for further consideration.

Step 2: Short listing of consultants: On the basis of the responses received from the above interested parties, the ministry will short list minimum 3 consultants.

Step 3: Preparation of Terms of Reference (TOR)

The Ministry/Department should prepare terms of reference which should include:

  • statement of objectives,
  • outline of the tasks to be carried out,
  • schedule for completion of tasks, the
  • support or inputs to be provided by the Ministry or Department to facilitate the consultancy and
  • the final outputs that will be required of the Consultant.

Step 4: Issuance of Request for Proposal: Similarly Request for Proposal (RFP) should be issued to the shortlisted consultants to seek their technical and financial proposals. RFP is the document to be used by the Ministry/ Department for obtaining offers from the consultants for the required work/service. It should contain :

  1. A letter of Invitation
  2. Information to Consultants regarding the procedure for submission of proposal .
  • Terms of Reference (TOR).
  1. Eligibility and pre-qualification criteria in case the same has not been ascertained through Enquiry for Expression of Interest.
  2. List of key position whose CV and experience would be evaluated.
  3. Bid evaluation criteria and selection procedure.
  • Standard formats for technical and financial proposal.
  • Proposed contract terms.
  1. Procedure proposed to be followed for midterm review of the progress of the work and review of the final draft report.

Step 5: Acceptance of proposal forms

Proposals should ordinarily be asked for from consultants in ‘two bid’ system with technical and financial bids sealed separately. The bidder should put these two sealed envelopes in a bigger envelop duly sealed and submit the same to the Ministry or Department by the specified date and time at the specified place.

Step 6: Evaluation of bids

On receipt, the technical proposals should be opened first by the Ministry or Department at the specified date, time and place. Late bids should not be considered. Technical bids should be analysed and evaluated by a Consultancy Evaluation Committee (CEC) constituted by the Ministry or Department. The CEC shall record in detail the reasons for acceptance or rejection of the technical proposals analysed and evaluated by it. The Ministry or Department shall open the financial bids of only those bidders who have been declared technically qualified by the Consultancy Evaluation Committee.

Step 7: Monitoring the contract

Once the contract has been awarded, the Ministry should monitor the performance of the consultant from time to time, ideally by forming a special task force for this purpose.

Can a specific consultant be selected, without reference to the bids?

Under some special circumstances, selection of a particular consultant may be done, where adequate justification is available for such single-source selection. Full justification for single source selection should be recorded in the file and approval of the competent authority obtained before resorting to such single-source selection.

Outsourcing of services

A Ministry or Department may outsource certain services in the interest of economy and efficiency and it may prescribe detailed instructions and procedures for this purpose without, however, contravening the following basic guidelines.

Step 1: Identification of the contractors and preparation of tender enquiry: Identification of likely contractors can be done by the Ministry or Department by preparation of  a list of likely and potential contractors on the basis of formal or informal enquiries from other Ministries or Departments and Organizations involved in similar activities, scrutiny of ‘Yellow pages’, and trade journals, if available, web site etc.  The tender enquiry prepared by the Ministry or Department should contain:-

  • The details of the work or service to be performed by the contractor;
  • The facilities and the inputs which will be provided to the contractor by the Ministry or Department;
  • Eligibility and qualification criteria to be met by the contractor for performing the required work/service;
  • The statutory and contractual obligations to be complied with by the contractor.

Step 2: Invitation of bids:

For service up to Rupees ten lakhs or less: the Ministry or Department should scrutinize the preliminary list of likely contractors, decide the prima facie eligible and capable contractors and issue a limited tender enquiry (LTE) for inviting offers from there. Ideally, the LTE should be issued to more than six contractors.

For estimated value of the work or service above Rupees ten lakhs: The Ministry or Department should issue advertised tender enquiry asking for the offers by a specified date and time etc. in at least one popular largely circulated national newspaper and web site of the Ministry or Department.

Step 3: Evaluation of bids and selection under exceptional situation: The Ministry or Department should evaluate, segregate, rank the responsive bids and select the successful bidder for placement of the contract. In an exceptional situation, which needs to outsource a job to a specifically chosen contractor, the Competent Authority in the Ministry or Department may do so in consultation with the Financial Adviser. In such cases the detailed justification, the circumstances leading to the outsourcing by choice and the special interest or purpose it shall serve shall form an integral part of the proposal.

Step 4: Monitoring the contract: The Ministry or Department should be involved throughout in the conduct of the contract or consultancy and continuously monitor the performance of the contractor/consultant.


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