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ICAI letter to FM on evaluation of tendering for professional services

ICAI has certain suggestions regarding the evaluation process of tendering with respect to professional services. As per the present practice of tendering, the Least Cost Selection (LCS) Criteria are being adopted for awarding the work for professional services (audit service) however, for evaluation of tenders floated for services other than professional services, CVC also recommends the adoption of Quality & Cost Based Selection (QCBS) for evaluation.

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)

CA Naveen N.D. Gupta
President

PD/A-40/2018

25th September 2018

Shri Arun Jaitley
Hon’ble Minister of Finance
Ministry of Finance
Government of India, North Block
New Delhi

Respected Sir,

At the outset, we wish to express our sincere reverence as you are always a guiding force, helping hand to ICAI for all its endeavours.

You will kindly appreciate that ICAI has always been a supporter of the bold initiatives taken by the Government in strengthening the economic growth of our country. We ensure to continue our whole hearted support in all your future endeavours in the best interest of the Nation.

We wish to apprise that ICAI has certain suggestions regarding the evaluation process of tendering with respect to professional services.

To discuss these suggestions, we had also met Shri K.V Chowdary, Chief Vigilance Commissioner on 15th March, 2018 and 29th May, 2018 wherein we expressed that as per the present practice of tendering, the Least Cost Selection (LCS) Criteria are being adopted for awarding the work for professional services (audit service) however, for evaluation of tenders floated for services other than professional services, CVC also recommends the adoption of Quality & Cost Based Selection (QCBS) for evaluation.

Since, under the LCS criteria, the financial proposal is being ranked in terms of their total evaluated cost and the tender is awarded to the lowest bidder and lowest cost does not guarantee the requisite level of quality of the work assigned, hence, it is strongly felt that QCBS be adopted for evaluation of all the tenders meant for Professional Services. It may be stated that the criteria of QCBS is being adopted internationally for evaluation of Professional Services. Organisations such as World Bank, Asian Development Bank etc. are also evaluating on QCBS basis.

In view of above, we would like to submit that the process of selection requires modifications especially for hiring the professional services. ICAI is always ready to extend its support so as to have a uniform and rationale process of tendering of services and hereby submit the following for your kind consideration:

1. Adoption of Quality & Cost Based Selection (QCBS) uniformly giving due weightage to audit assignments. Evaluation of financial bids for professional services should be done through QCBS instead of LCS criteria. The same is being adopted internationally also as it provides fair chance to the technically qualified professionals of being awarded the tender.

2. It has been observed that as per the present guidelines of CVC, the criteria of selection of the Auditor to be adopted are LCS system while it should be done through QCBS system.

3. ICAI offer itself to develop software based allocation process for evaluation of tenders on certain fixed parameters / norms taking QCBS as base criteria.

As a partner in nation building, though Institute has issued a notification which prohibits its members to respond to the tender which has been issued without mentioning any minimum fees meant for the areas of services which are exclusively reserved for chartered accountants, but the real purpose can be achieved when it is mandated for all the organizations to allot the tenders related to professional services through software and evaluate them on QCBS criteria.

In this regard, ICAI will be pleased to support in formulating the parameters and eligibility criteria for hiring professionals for specific assignments to be followed by the organizations across the country.

We seek your guidance for above and will be obliged if you can kindly consider our suggestions favourably.

With kind regards,

Yours sincerely,

CA. Naveen N. D. Gupta

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Categories: CA, CS, CMA
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