Chief Engineer K. Suresh Kumar of the Andhra Pradesh Public Health Engineering Department sits relaxed in his Hyderabad office even though he has to vet some 30 contracts worth Rs 900 crore of the Jawaharlal Nehru National Urban Renewal Mission in the next few weeks. The reason: he no longer has to sell sets of the bulky documents of each contract to prospective bidders, some of whom earlier used to gang up outside his office to manipulate the bids. But now, bidders have to stake their claims online through the electronic tendering system that makes processing as well as awarding of the contracts simpler.This web-based procurement process enables enterprises and government departments to manage their purchases online—from requisition to payment. It reduces the time and cost of doing business for both vendors and the government; prevents formation of cartels; standardises the procurement process across government departments and agencies; increases buying power through demand aggregation; provides a one-stop shop for all procurements; allows equal opportunity to all vendors and, thus reduces corruption. Around 150 government departments and 22,000 vendors and suppliers have used the platform so far. Old systemDiscrepancy: In the earlier bidding process, there was discrimination in the issue of tender schedules.Security issues: Many bidders faced physical threats from competitors.Cartel formation: Contractor cartels invariably formed in the earlier system, which suppressed competition.Politics: Officials of different departments faced political pressure.Slow process: There used to be inordinate delays in tender finalisation.Lack of transparency: The human interface led to manipulations. Small traders were adversely affected. The process includes three components: information and registration, e-purchasing and e-tendering. It creates specialised networks of supplies on the Internet where one can place requests for proposals, post tender documents, exchange specifications, receive bids and approve quotations. It enables organisations to automate their purchases and reduce processing costs.The state spends in excess of Rs 18,000 crore a year on government procurements. Within four months of the launch, e-procurement transactions have crossed Rs 40,000-crore mark to make it the largest procurement portal in India. It has resulted in savings of more than Rs 2,700 crore as lead time for the tendering process has shortened from 120 to 36 days, says e-procurement Project Manager K. Bikshapathi. And the biggest of all is the savings of Rs 1,800 crore in the Rs 30,000-crore Jalayagnam programme under the irrigation and command area development sector.E-procurement has made the suppliers happy. “The procurement process is now encrypted and clears apprehensions of leakage,” says Vikas Kumar Thakur, an e-tendering executive with infrastructure developer IVRCL, who has relied on it for several contracts totalling about Rs 230 crore. The system also benefits the small trader. In the past, they would complain that they got to know of tenders only once the bids had closed, as the ads usually appeared in newspapers which had low circulation. Now tenders can be accessed online 24x7.The system has been outsourced to Commerce One India that gets 0.04 per cent of the tender value as fees from the bidders. It is paid a maximum fee of Rs 10,000 by each bidder for contracts worth less than Rs 50 crore and Rs 25,000 for contracts of a higher value through an exclusive payment gateway. Therefore, the government does not have to pay to run this project. More significantly, greater competition— 4.75 players per tender as against 3.5 earlier—has also brought down the price quoted by bidders. E- advantagesBoosts competition: Total anonymity generates more competition.Discounted quotations: Even singlebid tenders quoted low.Increase in savings: The discounted quotations result in cost savings.Faster processing: Tender lead time shortened from 120 days to 36 days.Efficiency and transparency: Online access to information on procurement ensures efficiency and transparency.No advertising cost: Savings in print media advertisement costs.Empowerment: Smaller traders are empowered against bigger ones.Prices quoted are down by 16 per cent, which once again translates into savings for the government.Some other states—Gujarat, Madhya Pradesh, Chhattisgarh, Rajasthan, Karnataka, Assam and Delhi— the South Central Railway and the Northern Railway have also introduced the electronic processing system. The departments and agencies of the Union government put together buy material worth about Rs 5 lakh crore a year. A 10 per cent cut in procurement costs would mean savings of around Rs 50,000 crore.The e-procurement scheme figured among the top 20 global programmes in 2007 for the Innovations in Transforming Government award of the Ash Institute for Democratic Governance and Innovation at Harvard University’s Kennedy School of Government. It also received the UN Public Service Award 2007 for its role, professionalism and vision. The international recognition of the system will hopefully prompt the government to go for the kill.Published By: AtMigration Published On: Nov 7, 2007--- ENDS ---
