Preferential Purchase Incentives for Micro and Small Enterprises Scheme

What was the Preferential Purchase Incentives for Micro and Small Enterprises Scheme?

Preferential Purchase Incentives for Micro and Small Enterprises Scheme, 2008 was a public procurement preference scheme of the Directorate of Industries, Trade and Commerce, Government of Goa, framed in pursuance of clause 5.9(iii) of the State's industrial policy and published in the Official Gazette, Supplementary, on 30 January 2009, under a notification signed at Porvorim on 31 December 2008.

Its objective was stated bluntly in the notification: the scheme was intended to encourage and give a boost to the micro and small scale enterprise sector, and the Government added an unusual enforcement clause: non-compliance with the provisions of the scheme was to be viewed seriously and the officer concerned held personally liable.

The scheme is important to understand even though its stated window has passed, because it is the reference point for how Goa structured procurement preference for small industry, and because the myScheme portal continues to list it.

Status. The notification provides that the scheme came into force from the date of its publication in the Official Gazette and shall remain in force upto 31st March, 2011. Anyone planning around it today should confirm the current position with the Directorate of Industries, Trade and Commerce, since the preference may have been continued, replaced or superseded by later instruments.

Who was eligible for the preferential purchase incentive?

A unit could claim the preference if:

• It was a micro or small scale enterprise.
• It was permanently registered, or acknowledged with Entrepreneurs Memorandum II, by the Directorate of Industry, Trade and Commerce, Goa.
• Its turnover did not exceed Rs 6 crore per annum for the last preceding three financial years.
• It could match the standard of quality as required by the State Government department making the purchase.

A unit could not apply, or was not eligible, if:

• It was not a micro or small scale enterprise, the scheme's benefits were expressly framed as a preference for small units against non-small-scale bidders.
• It was not permanently registered or acknowledged with Entrepreneurs Memorandum II by the Directorate.
• Its turnover exceeded Rs 6 crore per annum in any of the last three preceding financial years.
• It could not match the required standard of quality. The preference was on price, not on specification.
• It was an individual with no registered enterprise. This scheme had no citizen application and conferred no personal benefit.

What did the scheme actually give?

Under the scheme, micro and small enterprises permanently registered or acknowledged with Entrepreneurs Memorandum II by the Directorate were given special treatment in any tender floated by a Government department, autonomous body, corporation, semi-Government department, or in any purchase made by them.

1. The right to match the lowest price. Micro and small enterprises were allowed to match the lowest tender price floated by a non-small-scale unit, provided the enterprise's quoted price was within 15% of the lowest quoted price floated by non-micro and small enterprises.

The explanation attached to this clause resolves the obvious question: where more than one micro or small enterprise fell within the 15% range, the lowest one was to be preferred.

2. Pro-rata preference in contractual tenders. In the case of contractual tenders for installation, commissioning of machinery or items, the preference of the quoted price — the pro-rata percentage over and above the lowest quotation: was to be granted to the concerned micro or small enterprise for being qualified to match the lowest one.

3. Quality still had to be matched. For the purpose of availing benefit under the scheme, micro and small enterprises were required to match the standard of quality as required by the State Government department.

4. Computer hardware included, with one exception. The scheme was applicable even for the purchase of computer hardware and other electronic items, except in cases of purchases by the Education Department.

5. Cheap tender documents. Tender documents were to be supplied to micro and small enterprises at a rate of maximum upto Rs 200.

6. Low earnest money, and no other deposit. Earnest money was required to be deposited at a maximum of Rs 500, and no other security deposit was required.

7. Payment priority, with interest for delay. Priority in payment was to be ensured to micro and small enterprises, and payment was to be effected by the concerned department within 60 days from the delivery of goods or completion of tendered work, failing which the department was liable to pay interest at the rate of 0.75% per month.

Taken together, these seven items address the real barriers a small unit faces in public tendering: the price disadvantage against a larger bidder, the cost of buying tender documents, working capital locked in earnest money and security deposits, and the cash-flow damage of delayed government payment.

What documents did a claim need?

How to apply for and claim the preferential purchase benefit

1. Obtain permanent registration, or an acknowledgement of Entrepreneurs Memorandum II, from the Directorate of Industry, Trade and Commerce, Goa. This is the document the whole preference rests on, and no benefit is available without it.
2. Confirm that turnover for the last three preceding financial years does not exceed Rs 6 crore per annum. Keep the audited figures ready, since this is the eligibility threshold.
3. Identify a tender floated by a Government department, autonomous body, corporation or semi-Government department in Goa, or a purchase made by any of them.
4. Buy the tender documents, claiming the concessional rate of a maximum of Rs 200 available to micro and small enterprises under the scheme.
5. Deposit earnest money of not more than Rs 500, and decline any demand for a further security deposit, since the scheme states that no other security deposit is required.
6. Submit your quotation, and ensure your product or service matches the standard of quality required by the department. The preference operates on price and does not relax specification.
7. If your quoted price is within 15% of the lowest price quoted by a non-micro-or-small enterprise, claim the right to match that lowest price, citing the scheme.
8. Track payment against the 60-day clock from delivery of goods or completion of the tendered work, and claim interest at 0.75% per month if the department pays late.

How was the scheme enforced?

The notification is unusually pointed on this. It records that non-compliance with the provisions of the scheme shall be viewed seriously and the officer concerned shall be personally held liable. That is a stronger enforcement clause than most incentive schemes carry, and it reflects the reality that procurement preferences are only worth what individual purchasing officers actually honour.

The scheme was issued with the concurrence of the Finance Department vide U.O. No. 1650 dated 26 June 2008, by order and in the name of the Governor of Goa, and was signed by the Under Secretary (Industries).

Why would a claim under the scheme fail?

• No permanent registration or Entrepreneurs Memorandum II acknowledgement with the Directorate.
• Turnover above Rs 6 crore in any of the three preceding financial years.
• Quoted price outside the 15% band from the lowest non-small-scale quotation. The preference is a matching right within a defined band, not an open entitlement.
• Another micro or small enterprise quoted lower within the same band and was preferred.
• Quality standard not matched, which takes the bid outside the scheme regardless of price.
• A purchase by the Education Department of computer hardware or electronic items, which was carved out of the scheme.
• The scheme's operative period has ended. The notification states it remains in force upto 31 March 2011.

Where do I complain?

The Directorate of Industries, Trade and Commerce, Government of Goa is the department that administers registration under the Entrepreneurs Memorandum and that framed the scheme. Its website is at ditc.goa.gov.in, which also hosts the scheme text.

Where a purchasing department declines the preference, the scheme's own personal liability clause makes the concerned officer answerable, and the Directorate is the natural first escalation. The Government of Goa's public grievance route is the further escalation path.

Practical points

• Confirm the current position before relying on this. The scheme's stated window ran upto 31 March 2011. Goa's procurement preference framework for micro and small enterprises should be re-checked with the Directorate of Industries, Trade and Commerce, and central provisions under the MSME procurement policy may also apply to State purchases.
• This is not a cash scheme. Nothing is disbursed. The benefit is a better position in a tender, cheaper participation, and faster payment.
• Individuals cannot claim. Only registered micro and small enterprises can.
• The 15% band is the whole mechanism. A unit quoting 20% above the lowest bidder gets nothing from the scheme, so pricing discipline still decides the outcome.
• Track the 60-day payment clock from delivery, not from invoice. The scheme ties the interest liability to delivery of goods or completion of tendered work.

How to check your claim and payment status

There is no online application or tracking ID under this scheme. The preference is claimed directly against a specific tender, so "status" here means the status of that tender, of the price-matching claim, and of the payment clock, not the status of a form filed with a portal.

1. Check the status of the tender itself first. Contact the tender-inviting authority, the Government department, autonomous body, corporation or semi-Government office that floated the tender, and ask whether bids have been opened and evaluated. The preferential purchase claim can only be assessed once the lowest non-small-scale quotation is known.

2. Ask the tender-inviting department, in writing, whether the 15% price-matching preference has been applied to your bid. Since the claim is decided at the point of tender evaluation and not through a separate sanction letter, a written query to the department's purchase or tender section is the only way to confirm whether your enterprise was invited to match the lowest price.

3. If the department does not respond or denies the preference without reason, escalate to the Directorate of Industries, Trade and Commerce, Government of Goa, the department that administers Entrepreneurs Memorandum II registration and framed the scheme. Reference the notification and your registration or acknowledgement number when writing.

4. Track the payment clock separately from the tender outcome. Once your bid is accepted, note the date of delivery of goods or completion of the tendered work, since the 60-day payment window runs from that date, not from the invoice date or the date of bid acceptance. Follow up with the department's accounts or payment section as the 60-day mark approaches.

5. If payment crosses 60 days, raise the interest claim in writing to the same paying department, citing the delivery or completion date and the 0.75% monthly interest rate the notification prescribes, rather than waiting for the department to calculate and offer it unprompted.

6. Keep a paper trail at each step. Since this scheme has no digital dashboard, the enterprise's own record of tender submission date, evaluation query, delivery or completion date, and payment date is what establishes whether the department met its obligations under the scheme.