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My Second Point of Agenda (https://bit.ly/3hchZlO) is to tackle the menace of low bidding for tenders and various assignments related to our Profession. These days professionals are quoting unrealistically and irrationally low fees for assignments that involve lots of work and a high level of accountability. This has deteriorated the standards and quality of our services and has seriously dented the image of our profession in the eyes of Govt., Regulators, Industry and Society at large. This also indicates that members of our profession are under distress and have no option but to accept assignments at a Fee, which in some cases, is unimaginably low. Some professionals are eager to quote even below the "minimum bid value" by quoting fees "inclusive of Taxes".
How can we improve the quality of Services is a big question? Without improving the method of selection and paying a respectable fee to service providers, we can neither improve the quality of work nor fix accountability for the same. Good quality always comes at a price. If you pay peanuts, you will only get monkeys.
The Govt., various regulators and Society at large are perplexed as to how big financial frauds are taking place (especially in various Urban Development Bodies, Cooperative banks, Govt. sponsored programs, etc.) and despite regular Audits being undertaken and despite following all norms of appointment of Auditors. The same goes for any other consultancy-related assignment in PSUs, Banks, or any other Govt. owned entities.
The only solution to this problem seems to be to do away with the practice of hiring service providers purely on L1 basis. Moreover, the present system of selecting service providers does not recognize an individual's caliber, who can be more experienced, knowledgeable, and may be having more capability than any established organization.
I believe that no one is happy with the present practice of selecting professional agencies purely on L1 basis. This system has done more damage to the quality of services and performance than anything else. Therefore, the blame squarely lies with the Govt. and its agencies like CVC, who are sleeping over this important matter for years now. The sufferers are professionals like us, who have to deliver services by following certain standards of quality, irrespective of the fee. Unfortunately, our Institute has never escalated this matter before CVC or various ministries and has no zeal to invest time on such issues.
I would like to suggest following measures for tackling this serious issue:
1) To overcome the menace of vague and abnormally low bidding in tenders related to our profession, the ICAI should frame certain standard guidelines to be followed by various Tender issuing agencies and allotment be done on the basis of points and categories allotted by CAG and MEF respectively, and past experience of the person/firm.
2) In order to protect the interest of small firms, all assignments valuing above certain value may be allotted jointly to two or more firms, where one firm could be a previously established large firm and the other(s) could be small or new upcoming firm. Even Individual professionals having rich domain expertise should be given a priority. This will address the constraint of lack of experience in any specific field and will eventually be a step towards capacity building. Otherwise, it remains a Chicken and Egg like situation where there is always a question over lack of capability of small and medium-sized firms.
3) Fee for the Professional Assignment should be decided by the Tender issuing authorities on the basis of man-days/man-hours required and according to the Standard Rate-Card published by ICAI. The Tender Issuing Authorities can always consult ICAI if the Rate-card cannot be followed for any specific assignment.
4) Strict Suo-Motto action should be taken against members who are involved in under-cutting and following unethical means of grabbing assignments at irrationally low fees. In the case of complaints, the matter should be referred to a designated team of experienced professionals directly reporting to PDC of ICAI, and such firm/agency/professional be debarred for at least THREE years, after due verification of facts. Unless such harsh measures are taken, things are not likely to change.
5) The World Bank has in place certain norms for handling “Abnormally Low Bidding” (https://pubdocs.worldbank.org/en/780...-ALB-FINAL.pdf) and the same can be referred for handling various assignments where CAs are bidding.
We cannot let things deteriorate in the hands of a few professionals who want to get assignments at any cost without caring about the quality and deliverance of work. This is adversely affecting the image and brand of our profession in the eyes of Govt., various regulators, Industry and Society at large. No amount of regulation and monitoring is likely to change this state of affairs unless professionals are paid reasobably for their Services.
Here, I would like to draw a clear distinction between local Firms and Multi-National Accounting Firms (MAFs), for whom there are separate set of rules in this country, and being a class of their own they command a premium over local Firms. A number of the high-value assignments go to them without any Tendering Process. I have seen cases where PSU/Semi-autonomous/Govt. entities calling for limited Tenders where only these MAFs can apply.
It is time for the PDC of ICAI to come forward with some concrete solution to this menace of low bidding. ICAI comes out with recommended scale of fee at periodic intervals, but I hardly see the same being followed anywhere. Instead of putting more thrust over seminars and webinars on Capacity-building, our Council Members should be working for improving the standards of our profession, where our members can claim respectable fees as per the recommended scale of fee for the hard work put in by them.
CA Kanta Sharma
How can we improve the quality of Services is a big question? Without improving the method of selection and paying a respectable fee to service providers, we can neither improve the quality of work nor fix accountability for the same. Good quality always comes at a price. If you pay peanuts, you will only get monkeys.
The Govt., various regulators and Society at large are perplexed as to how big financial frauds are taking place (especially in various Urban Development Bodies, Cooperative banks, Govt. sponsored programs, etc.) and despite regular Audits being undertaken and despite following all norms of appointment of Auditors. The same goes for any other consultancy-related assignment in PSUs, Banks, or any other Govt. owned entities.
The only solution to this problem seems to be to do away with the practice of hiring service providers purely on L1 basis. Moreover, the present system of selecting service providers does not recognize an individual's caliber, who can be more experienced, knowledgeable, and may be having more capability than any established organization.
I believe that no one is happy with the present practice of selecting professional agencies purely on L1 basis. This system has done more damage to the quality of services and performance than anything else. Therefore, the blame squarely lies with the Govt. and its agencies like CVC, who are sleeping over this important matter for years now. The sufferers are professionals like us, who have to deliver services by following certain standards of quality, irrespective of the fee. Unfortunately, our Institute has never escalated this matter before CVC or various ministries and has no zeal to invest time on such issues.
I would like to suggest following measures for tackling this serious issue:
1) To overcome the menace of vague and abnormally low bidding in tenders related to our profession, the ICAI should frame certain standard guidelines to be followed by various Tender issuing agencies and allotment be done on the basis of points and categories allotted by CAG and MEF respectively, and past experience of the person/firm.
2) In order to protect the interest of small firms, all assignments valuing above certain value may be allotted jointly to two or more firms, where one firm could be a previously established large firm and the other(s) could be small or new upcoming firm. Even Individual professionals having rich domain expertise should be given a priority. This will address the constraint of lack of experience in any specific field and will eventually be a step towards capacity building. Otherwise, it remains a Chicken and Egg like situation where there is always a question over lack of capability of small and medium-sized firms.
3) Fee for the Professional Assignment should be decided by the Tender issuing authorities on the basis of man-days/man-hours required and according to the Standard Rate-Card published by ICAI. The Tender Issuing Authorities can always consult ICAI if the Rate-card cannot be followed for any specific assignment.
4) Strict Suo-Motto action should be taken against members who are involved in under-cutting and following unethical means of grabbing assignments at irrationally low fees. In the case of complaints, the matter should be referred to a designated team of experienced professionals directly reporting to PDC of ICAI, and such firm/agency/professional be debarred for at least THREE years, after due verification of facts. Unless such harsh measures are taken, things are not likely to change.
5) The World Bank has in place certain norms for handling “Abnormally Low Bidding” (https://pubdocs.worldbank.org/en/780...-ALB-FINAL.pdf) and the same can be referred for handling various assignments where CAs are bidding.
We cannot let things deteriorate in the hands of a few professionals who want to get assignments at any cost without caring about the quality and deliverance of work. This is adversely affecting the image and brand of our profession in the eyes of Govt., various regulators, Industry and Society at large. No amount of regulation and monitoring is likely to change this state of affairs unless professionals are paid reasobably for their Services.
Here, I would like to draw a clear distinction between local Firms and Multi-National Accounting Firms (MAFs), for whom there are separate set of rules in this country, and being a class of their own they command a premium over local Firms. A number of the high-value assignments go to them without any Tendering Process. I have seen cases where PSU/Semi-autonomous/Govt. entities calling for limited Tenders where only these MAFs can apply.
It is time for the PDC of ICAI to come forward with some concrete solution to this menace of low bidding. ICAI comes out with recommended scale of fee at periodic intervals, but I hardly see the same being followed anywhere. Instead of putting more thrust over seminars and webinars on Capacity-building, our Council Members should be working for improving the standards of our profession, where our members can claim respectable fees as per the recommended scale of fee for the hard work put in by them.
CA Kanta Sharma
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