Government Tightens Procurement Rules: Labour Law Violations Can Now Lead to Debarment from Bidding
GFR 2017 Amended: Labour Law Violations and Wage Defaults Can Lead to Debarment from Government Tenders
The Government of India has introduced significant amendments to Rule 151 of the General Financial Rules (GFR), 2017, strengthening provisions related to the debarment of bidders participating in public procurement. The amendments, notified by the Department of Expenditure, Ministry of Finance, through Office Memorandum dated 08 May 2026, aim to enhance accountability, ensure compliance with labour laws, and protect the rights of workers engaged in government contracts.
Under the revised provisions, bidders may now be debarred not only for corruption-related offences and criminal acts causing loss of life, property damage, or threats to public health, but also for violations of key labour and social security laws. Convictions under the Code on Wages, 2019, Code on Social Security, 2020, Industrial Relations Code, 2020, and Occupational Safety, Health and Working Conditions Code, 2020 have been added as grounds for debarment.
A major addition to the rule is the treatment of contractors who fail to pay wages or remit statutory social security contributions for workers engaged under government contracts. If a procuring entity is compelled to make such payments due to the contractor’s default, the bidder may face debarment. Contractors who are debarred on more than one occasion by one or more procuring entities for such violations may become liable for debarment across all government procurement entities.
The amendment also introduces a more robust monitoring mechanism. The Department of Expenditure will maintain a centralized list of debarred bidders, which will be displayed on the Government e-Marketplace (GeM). Additionally, Ministries and Departments must report cases of debarment to GeM, enabling the creation of a consolidated database of debarred firms.
The revised rule retains the provision that a bidder cannot be debarred without being given a reasonable opportunity to present their case. This ensures adherence to principles of natural justice while maintaining strict standards of compliance.
Further, corresponding provisions in the Government's procurement manuals relating to goods, consultancy services, non-consultancy services, and works have also been amended to align with the revised Rule 151.
The amendment reflects the Government's commitment to promoting ethical procurement practices, ensuring timely payment of wages and social security benefits to workers, and enhancing transparency and accountability in public procurement. Contractors participating in government tenders will now need to demonstrate stronger compliance with labour and social welfare laws to remain eligible for public contracts.
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GFR 2017 Amended: Labour Law Violations and Wage Defaults Can Lead to Debarment from Government Tenders