Procrastination over Prudence: The ‘Customary’ Way in Public Procurement

The case narrates the issues plaguing the procurement process at Hindustan Mineral Mining Limited (HMML), a Bhubaneswar-based miniratna central public sector undertaking that operates in the mining sector in the eastern region of India. HMML deploys a large fleet of heavy earthmoving equipment for its operations. A critical equipment in this category is the crawler dozer (or dozer). It is used to move the mined minerals and the excavated earth. Since each dozer has a rated productive life, new dozers need to be purchased at regular intervals to maintain continuity of operations efficiently. Mr Vijay Singh, upon taking charge as the head of the Equipment and Engineering Division (EED) at HMML, learns that the procurement of new dozers began in 2017–2018 with a requirement of 19 dozers but was pending until 2023 due to administrative and procedural roadblocks. By this time, the requirement of dozers had increased to 45. The case traces the sequence of events on how Mr Singh navigates these roadblocks to finally secure a go-ahead for the procurement. While there is no specific decision to be made in the case, the case analysis dwells on issues that induce inordinate delays in the public procurement process and suggests possible ways to address the same.

THE CONTEXT

Using the purchase of dozers at HMML as its context, the case highlights systematic issues in the public procurement process across government organizations in India. Public procurement is the central mechanism through which government organizations acquire goods, services and works to discharge their responsibilities to the public. Apart from its social implications, the sheer scale of public procurement has substantial economic significance. Globally, low-income, middle-income, as well as high-income countries procure around 13%–14% of their gross domestic product through public procurement (Bosio & Djankov, 2020). For India, a large emerging economy, this figure is around 25% (Goyal, 2022). Unlike the procurement undertaken by private firms, public procurement must comply with the tenets of fairness, transparency and predictability to ensure accountability (Hood, 1995). The case captures how public officials become excessively cautious in their decision-making and take refuge under these requirements even when doing so could lead to significant delays in procurement and consequent costs to the public exchequer. It outlines many such instances on account of which the purchase of dozers remains stalled for years, while the user department struggles to maintain productivity in operations. The reasons for delays highlighted in the case relate well to and could be analysed through the lens of ‘the five dilemmas in public procurement’ proposed by McCue et al. (2015).

DELAYS ATTRIBUTED TO ACCOUNTABILITY/ RESPONSIBILITY DILEMMA

The public procurement process faces a trade-off between promoting economic efficiency through flexibility and decentralization and fostering transparency in purchase decisions. Procuring authorities often place more emphasis on the latter and de-prioritize efficiency through a risk-averse behaviour that manifests in centralized control and layers of checks and balances (McCue et al., 2015). This is also evident in the case. After the scrutiny of the technical and commercial bids by the materials department and the user department, that is, EED, the recommendation was made by a tender committee to the Chairman-cum-Managing Director (CMD), who, in turn, sent it to the Director (Finance) for auditing the process. Subsequent queries from the finance department, highlighted in the case as ‘irrelevant or repetitive’, did not add any value but contributed to delays. Upon clearance, the proposal was submitted to the board, which did not grant immediate approval. Instead, it constituted a committee of functional directors to review the requirements for new dozers.

DELAYS ATTRIBUTED TO FRAUD/RED TAPE DILEMMA

Public procurement often suffers from red tape, defined as ‘excessive or burdensome regulation that impedes organisational performance’ (Glas et al., 2025). These regulations impose repetitive checks and close monitoring that slow down the procurement process, but their need is often justified to reduce fraud or mismanagement (McCue et al., 2015). The cancellation of the tender process for dozers at an earlier occasion exemplifies this problem. One of the bids that did not contain satisfactory evidence of a proven track record of dozers was rejected. However, upon receiving a representation from that bidder, the Independent External Monitors recommended cancelling the entire tender process.

DELAYS ATTRIBUTED TO BEST VALUE DILEMMA

All public procurement aims to provide the best value for money to buyers through judicious use of public funds. However, since different stakeholders associated with procurement—such as the finance department, user department and maintenance team—often have different perceptions of what constitutes best value (McCue et al., 2015), achieving it becomes an arduous and time-consuming task. This problem surfaced in the case when the tender was floated to procure 12 dozers in 2019. The bidders proposed to supply a more fuel-efficient variant of dozers with engines featuring an electronic fuel management system. The EED found better value in this offering, and hence cancelled the ongoing tender process. A new tender was then floated with revised engine specifications. Ironically, one of the bidders who had made the suggestion earlier could not provide supporting evidence, leading to rejection of its bid. This rejection ultimately led to the cancellation of the tender process once again, causing an enormous delay and wastage of resources.

DELAYS ATTRIBUTED TO IMMEDIATE ECONOMIC EFFICIENCY VERSUS LONG-TERM MONITORING COSTS DILEMMA

Public procurement process needs to balance short-term economic efficiency, through more flexibility and autonomy for decentralized procurement, with costs to be incurred for auditing and monitoring the fair use of this privilege by local units (McCue et al., 2015). Since economic gains due to localized procurement are often hard to quantify, organizations tend to prioritize saving on monitoring costs through the centralization of purchasing authority. But as demonstrated in the case, this practice could actually lead to costs associated with delays. Due to the delay in the purchase of new dozers, the mining areas had to continue to use existing dozers that were ‘either old and languishing or already surveyed off and working at half their capacity’. Losses due to reduced productivity and production were, therefore, a direct result of procurement delays in a highly regimented and centralized purchasing system.

DELAYS ATTRIBUTED TO THE USER RESPONSIVENESS DILEMMA

This dilemma is an extension of the previous one. A decentralized system that empowers user departments to initiate and conduct procurement may be more ‘responsive’ in terms of satisfying user requirements (McCue et al., 2015). But it also entails incurring significant costs in skilling the user department in the proper conduct of public procurement. While these costs are obvious and often avoided in favour of a centralized system, its flip side is the ‘invisible’ cost that may still be incurred. The case highlights this aspect too, as Mr Vijay Singh, who takes over as head of EED after being transferred from a mining command area, had no prior knowledge of public procurement norms. Due to this, he had a hard time navigating the queries from the Director (Technical) and the Director (Finance). In fact, the lack of knowledge of public procurement norms permeated the whole user department (EED). So, its members could not provide proper justification for the requirement of new dozers and changed the tender specifications based on representations made by a few suppliers without due diligence on the proposed solutions. These pitfalls led to infructuous queries from other departments and consequent delays during later stages of procurement.

BRINGING PUBLIC PROCUREMENT ON TRACK

Overall, the case highlights that delays in public procurement cannot be attributed to any specific individual or factor; rather, they stem from systems and processes typically embedded in government organizations. Consequently, two interesting questions that follow are: Can delays, which have become ‘customary’ in public procurement in India, be avoided? If so, then what needs to be done to make public procurement more agile, while keeping it true to the tenets of fairness, transparency and predictability? Due to the inherent interconnectedness of the dilemmas outlined earlier, any proposed solution would require a transformation of public procurement practices through a holistic, systems-based lens that recognizes the interactions among issues commonly leading to delays and inefficiencies in public procurement. Careful consideration of the deployment of more experienced procurement officers within the organization (e.g., Reis et al., 2024) could be one such intervention.