Repeat offenders may face a total ban, the Department of Expenditure (DoE), under the ministry, said in an office memorandum.
The directive is aimed at strengthening enforcement and protecting workers and will override all previous procurement manuals.
The changes, which follow a recommendation from the labour ministry, are aimed at ensuring uniform treatment of debarment cases across ministries while strengthening enforcement against contractors that repeatedly violate labour obligations in government-funded projects.
An official said when the procuring entity is forced to make payments due to contractor default, the ministries can push for a wider ban.
Under the revised framework, ministries and departments will continue to maintain and publish lists of debarred firms while reporting all such cases to the Government e-Marketplace (GeM), which will maintain a consolidated national database.
GeM will identify firms that have been debarred more than once by one or more procuring entities and refer those cases to the Ministry of Labour and Employment for examination.In cases where a ministry seeks to ban a firm from bidding across all central government departments, it must submit a detailed proposal to the DoE after obtaining approval from the secretary of the concerned ministry or department.
The DoE will have the final authority to decide on cross-government bans and issue a reasoned order where such debarment is approved. All government-wide debarment orders will be published on the GeM portal.