ONGC eases financial criteria in tenders to accommodate US firms

New Delhi: To accommodate US firms in its procurement tenders, Oil & Natural Gas Corp (ONGC) will allow bidders to submit parent firm’s consolidated accounts for assessing their financial capability. However, the turnover period for evaluation is being extended to last three financial years from existing last two financial years.

This will allow a subsidiary to use the financial strength of its parent company in bidding for ONGC tenders. In many instances, the parent entity does not undertake operational activities itself and hence, the subordinate does not demonstrate a significant turnover on a standalone basis.

“The existing requirement for ‘Audited Standalone Financial Statements’ is being modified to allow ‘Audited Standalone/Consolidated Financial Statements’ and bidders from countries without a requirement for standalone statements can submit consolidated statements,” said an official.

However, all financial parameters must be met by either standalone or consolidated statements, but not a mix of both, and the average turnover period for evaluation should be of the last three financial years, instead of current two years, he said.

A Procurement Management Cell circular of April 2025 allowed only audited standalone annual financial statements in bidding. This drew requests from bidders, particularly from the US, who highlighted that they do not prepare separate audited standalone financial statements as it is not required under applicable Securities and Exchange Commission regulations.

Under US GAAP, companies with subsidiaries are generally required to prepare consolidated financial accounts. In contrast, under the Indian Companies Act, 2013, both standalone and consolidated financial statements are mandatory.

The PMC April 2025 circular has also been revised to consider average turnover of the bidder for the previous three financial years to align with the provisions of Department of Expenditure manual and norms followed by other public sector undertakings, the official.

The third change in bidder financial criteria allows a 15 per cent turnover relaxation for startups and micro and small enterprises, provided quality and technical standards are met, excluding public safety, health, security, or offshore contracts.