Understanding PAC in GeM A Comprehensive Guide

The Government e-Marketplace ( GeM ) has transformed the manner in which governmental procurement is being performed in India. There are numerous functions and activities that are present within the GeM portal; however, one function takes a special place in it; namely PAC (Proprietary Article Certificate) which is especially relevant to exclusive or proprietary purchases. The lesson of PAC is fundamental to help suppliers, government buyers, and all the interested parties to come around to the GeM ecosystem in an efficient and transparent manner. This detailed guide will explain to you, what PAC is, when and how to use it in GeM, its implications and how the business can gear themselves towards PAC-based tenders, and finally, when and how it is used in GeM.

What is PAC in GeM

PAC is the abbreviation of Proprietary Article Certificate. It is an official statement of a reasonably appealing authority to prove that a particular product or brand is proprietary in character and cannot be replaced with another equal product. PAC is extensively applied during procurement as long as the goods or services offered have a certain brand or source, and there are no other suppliers or substitutes to be used. PAC in GeM enables a buyer to limit the procurement to a specific brand or manufacturer, and in most cases, this is prohibited unless under Rule 149 of the GFR 2017.

Why is PAC Required

Under normal circumstances, GeM encourages open and competitive procurement to ensure fairness and best value for public money. However, certain scenarios necessitate the purchase of a specific proprietary item:

• Technical Superiority or Unique Features: Only one product meets the technical specifications required for the project.
• Compatibility: The item must work with existing infrastructure, systems, or products.
• Standardization: To maintain uniformity across departments or sites.
• Legal or Licensing Constraints: The product is protected by patents, copyrights, or licensing terms.

In such cases, buyers are permitted to procure through PAC-based tendering after appropriate justification and approval.

Who Can Issue a PAC

A PAC must be issued by a competent authority in the procuring department. This includes:

• Head of the Department (HOD)
• Authorized Officer in the Ministry
• Technical Expert assigned to procurement

The issuing officer must ensure that due diligence is done and that the item indeed qualifies as proprietary. False or negligent issuance of PAC may lead to audit objections or disciplinary actions.

How PAC-Based Procurement Works on GeM

Here’s a step-by-step overview of how PAC-based procurement happens on the GeM platform:

Step 1: Uploading PAC Item

A buyer identifies a proprietary item and generates a PAC certificate. This item is then uploaded to GeM under the PAC process. The buyer must provide:

• Product details
• Brand name
• Manufacturer information
• Technical justification
• The PAC document (signed and stamped)

Step 2: Approval

The uploaded PAC item goes through a review and approval process by GeM authorities or designated officers, who ensure compliance with norms.

Step 3: Creation of Bid or Direct Procurement

After approval, the buyer can either:

• Issue a bid limited to the proprietary item, or
• Make a direct purchase if the value falls below the Direct Purchase threshold (currently ₹25,000 for most departments)

Step 4: Order Placement

Once the bid (if any) is finalized, or the procurement is confirmed, the buyer places the order with the listed OEM or authorized seller.

Format of a PAC

A standard PAC includes the following fields:

• Name and designation of the certifying officer
• Details of the product and manufacturer
• Justification for proprietary procurement
• Certificate of non-availability of substitutes
• Signature, date, and official seal

Sample declaration:

"I hereby certify that the goods to be procured are proprietary in nature and no alternative or substitute exists in the market. The procurement is essential for compatibility with the existing infrastructure/system."

Benefits of PAC-Based Procurement

• Ensures Compatibility: PAC allows procurement of products that work seamlessly with existing equipment or software.
• Saves Time: For urgent projects, PAC-based procurement skips the lengthy competitive bidding process.
• Standardization: Enables uniformity across departments, especially in IT, security, and infrastructure domains.
• Access to Niche Products: Makes it possible to procure highly specialized or technically unique items not available through general listings.

Challenges and Criticisms

Despite its usefulness, PAC is often scrutinized due to the potential for misuse:

• Lack of Transparency: Restricting procurement to a single brand may raise concerns about favoritism.
• Audit Risks: Improper PAC issuance can attract objections from the Comptroller and Auditor General (CAG).
• Reduced Competition: Bypasses the competitive bidding process, which may result in higher procurement costs.
• Vendor Exclusion: Limits participation for other capable suppliers or brands.

To mitigate these issues, PAC issuance must be justified with technical documentation and comparative analysis.

GeM’s Checks and Balances

GeM has implemented the following safeguards to avoid misuse of PAC:

• PAC Justification Mandatory: Without valid justification, the PAC request is rejected.
• Audit Trail: All PAC uploads and approvals are tracked in the GeM system.
• Random Reviews: Periodic reviews and audits by GeM and government authorities ensure compliance.
• Public View of PAC Items: Other sellers and departments can view PAC-listed items for awareness and feedback.

How Sellers Can Respond to PAC Items

If you're a seller on GeM and notice a PAC-based tender for a product you offer under a different brand, here’s what you can do:

• Challenge PAC: If you believe the PAC was issued without proper justification, you can escalate it through GeM support.
• List Comparable Products: Keep your product catalog updated with detailed technical specs to show comparability.
• Engage with Buyers: Provide technical documents or demo videos to prove your product meets the requirements.

PAC and Rule 149 of GFR 2017

The General Financial Rules (GFR) 2017 in Rule 149: Goods and services purchased by the Ministries or Departments will be purchased under GeM as per the rules and guidelines as issued by GeM. Provided that a specific item is unavailable on GeM or the item is proprietary, a PAC shall be filed to give justification on the necessity of deviation.” This law is the legal backbone of PAC in GeM, so that the law is not compromised during the procurement process but a few necessary exceptions are made.

Conclusion

PAC in GeM is a vital mechanism that balances the need for specific, proprietary items with the principles of transparency and efficiency. While it opens the door for the procurement of unique or technically compatible items, it also comes with responsibilities and procedural checks. At Tender 18, we empower businesses to understand and navigate public procurement systems like GeM. Whether you're a buyer looking to justify a PAC-based purchase or a seller aiming to participate in such tenders, a thorough understanding of the PAC process is key to success.