Industry leaders from the infrastructure sector have urged Prime Minister Narendra Modi to ensure the effective implementation of the amended General Financial Rules (GFR) that allow government contracts to be awarded based on Quality-cum-Cost-Based Selection (QCBS) rather than solely on the lowest bid.
According to the industry, despite the revised procurement framework, many government departments continue to award contracts to the lowest bidder (L1), a practice that often compromises project quality and leads to delays, disputes, and arbitration cases.
Highlighting the issue, K K Kapila, former President of the Indian Buildings Congress and President Emeritus of the International Road Federation, said the government had already amended the General Financial Rules to provide greater flexibility in awarding contracts.
“The amended GFR clearly states that contracts need not necessarily be awarded at the least cost. Works can be awarded at the lowest workable rate, and even single quotations can be considered where appropriate. This applies to procurement of consultants, contractors, as well as goods,” Kapila explained.
He noted that the revised framework also allows contracts to be awarded through the Quality-cum-Cost-Based Selection (QCBS) method, where quality carries a weightage of 30 percent and cost 70 percent. However, he pointed out that these provisions are yet to be widely implemented by several ministries and departments.
According to Kapila, the continued reliance on the lowest-bid system has encouraged contractors to quote unrealistically low prices, often resulting in compromised construction quality, extended arbitration disputes, and prolonged litigation.
“It is high time the government moves away from the age-old L1 procurement system. Despite the revised rules, many departments continue to follow the outdated approach of awarding contracts purely on the basis of the lowest bid,” he said.
Kapila also welcomed the Prime Minister’s recent review of the highway sector and the directive to the Ministry of Road Transport and Highways to prioritise improvements in project quality and establish robust Standard Operating Procedures (SOPs) to ensure consistency and accountability.
He further appreciated the government’s decision to take a stricter stance against underperforming contractors. The proposed measures include preventing blacklisted firms from indirectly participating in new bids and factoring litigative behaviour into contractor performance ratings.
However, Kapila emphasised that quality concerns are not limited to highway construction but affect infrastructure projects executed by multiple ministries.
He reiterated that the amended GFR provisions allowing QCBS-based procurement should be uniformly implemented across all government departments to improve construction standards and ensure long-term durability of public infrastructure.
“Adopting the QCBS framework for public works and procurement will significantly enhance project quality and ensure better utilisation of national resources,” Kapila stated.
He also urged the Prime Minister to issue clear directives to all ministries to immediately adopt QCBS-based procurement practices.
Kapila stressed that strengthening quality standards in infrastructure projects is essential for public safety, economic efficiency, and the optimal use of national resources.
