The Department of Expenditure has asked central government ministries and departments to make eligibility conditions for consultancy tenders less restrictive, in a move that could give domestic consulting firms a better chance to compete with large multinational companies.
The Department of Expenditure, under the Ministry of Finance, has advised government procuring entities against setting unnecessarily high turnover requirements, giving excessive weight to a consultancy firm’s past experience, or prescribing minimum staff strength on a bidder’s payroll that is much higher than the manpower needed for the assignment.
The advisory follows a review of consultancy procurement tenders floated through the Government e-Marketplace (GeM) by central government procuring entities over the past three financial years.
What did the government find?
The Department of Expenditure identified three main concerns with the eligibility and qualification conditions used in consultancy tenders.
These included relatively high turnover requirements, greater weight being given to the consulting firm’s experience than to the qualifications and experience of the key personnel proposed for the assignment, and minimum staff requirements that were far higher than the manpower actually needed to execute the project.
“The above findings indicate that such eligibility and qualification criteria may unduly restrict competition in the procurement of consultancy services,” it said.
The department said that qualification conditions should be based on the actual capability and resources required to complete a particular consultancy assignment.
Why is the turnover requirement an issue?
The Department of Expenditure’s 2025 Manual for Procurement of Consultancy Services notes that some procuring entities have been setting minimum qualifying financial turnover at *five to 10 times the estimated cost of the consultancy work.
The manual says such requirements appear high and can reduce competition. While higher qualification thresholds can increase the likelihood of selecting firms with sufficient experience and capacity, they can also reduce the number of firms that can compete.
The department said the qualification criteria should be fixed on a reasonable basis, with higher minimum turnover requirements used only when there is adequate justification.
For higher-value assignments, minimum annual turnover should not be set blindly as a multiple of the assignment value. Instead, an upper cap on the required turnover may be considered so that competition is not restricted to the four or five biggest consultancy firms.
The manual also notes that excessively high qualification criteria could increase costs without improving the quality of the consultancy services.
Firms with lower turnover can compete
The latest memorandum reiterates guidelines that allow firms with lower turnover to participate in government consultancy contracts, provided they meet the requirements needed for satisfactory execution of the assignment.
The manual also provides for some relaxation in qualification criteria for start-ups. It says such criteria can be relaxed by up to 20 per cent, subject to the start-up meeting the quality and technical specifications during the request for proposal (RFP) stage.
This could help widen participation beyond larger firms with higher revenues and established financial capacity.
What about a firm’s past experience?
The department has also sought to prevent a consultancy firm’s past experience from receiving disproportionate weight in the evaluation process.
The 2025 procurement manual says the firm’s experience is considered during the shortlisting stage. At the technical evaluation stage, it recommends giving greater weight to the proposed methodology and the qualifications and experience of key personnel.
Its model evaluation framework assigns 5-10 per cent weight to the consultancy firm’s relevant experience, compared with 20-50 per cent for the proposed approach and methodology and 30-60 per cent for the qualifications and experience of key staff.
The manual says the firm’s experience can be given a relatively modest weight because it has already been considered during shortlisting.
Staff requirement should match project needs
The department has also raised concerns about requiring bidders to have a large number of employees on their payroll. It said that if minimum staff strength is prescribed as an eligibility or qualification condition, it should correspond to the manpower actually required to complete the consultancy assignment.
“Disproportionately high staff strength requirements, without adequate justification, may unnecessarily restrict competition,” the department said.
Rules should not favour foreign consultants
The procurement manual also makes clear that qualification conditions should be linked to the capability and resources needed for the specific contract.
It says there should be “no qualification criteria that would be advantageous to foreign consultants at the cost of domestically provided consultancy.”
For smaller assignments, the manual also allows shortlists to comprise only national consultants in certain situations, such as when qualified domestic firms are available at a competitive cost or when the nature of the assignment does not justify including a foreign consultant.
