A NASSCOM Study
eGovernance & IT Services Procurement
Issues, Challenges, Recommendations
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study2
Copyright ©2010
The material ...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study3
The rise of India as a global...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study4
This study was conducted and ...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study5
We would like to thank the fo...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study6
Executive Summary
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study7
In the past few years, eGover...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study8
e) Consultancy organisations ...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study9
Industry issues & challenges
...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study10
- Themodeldocumentswerecomme...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study11
Table of Contents
Foreword 3...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study12
Introduction
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study13
In the past few years, eGove...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study14
The term of such comprehensi...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study15
amongst others have been suc...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study16
2. Bidding phase process inc...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study17
Guiding Principles for
Publi...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study18
In a study focused on eGover...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study19
The GFR Rule 129 in Chapter ...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study20
Procurement of goods
The fol...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study21
c) The supplier(s) will be r...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study22
iii) Date, time and place of...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study23
16) Rule 161 prescribes the ...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study24
regarding the engagement of ...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study25
Contract management
Chapter ...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study26
12. A warrantyclauseshouldbe...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study27
Consequent upon promulgation...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study28
10. Mandates publishing of t...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study29
23. eTendering
a. Directs or...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study30
Summary of various guideline...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study31
No Office Order
No.
File No....
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study32
No Office Order
No.
File No....
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study33
No Office Order
No.
File No....
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study34
No Office Order
No.
File No....
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study35
No Office Order
No.
File No....
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study36
No Office Order
No.
File No....
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study37
No Office Order
No.
File No....
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study38
No Office Order
No.
File No....
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study39
The Asian Development Bank (...
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study40
deadline and opened and eval...
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
Nasscom e-Governance Study
of 105

Nasscom e-Governance Study

Nasscom has recently published a study of procurement practices in the e-Governance sector. The original study is hosted in www.egovreach.in
Published on: Mar 3, 2016
Published in: Business      
Source: www.slideshare.net


Transcripts - Nasscom e-Governance Study

  • 1. A NASSCOM Study eGovernance & IT Services Procurement Issues, Challenges, Recommendations
  • 2. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study2 Copyright ©2010 The material in this publication is copyrighted. No part of this can be reproduced either on paper or electronic media without permission in writing from NASSCOM. Request for permission to reproduce any part of the report may be sent to NASSCOM. International Youth Centre, Teen Murti Marg, Chanakyapuri New Delhi – 110 021, India Tel: +91 11 2301 0199 Fax: +91 11 2301 5452 Email: egovreach@nasscom.in Designed by CREATIVE INC Tel: +91 11 4163 4301 Email: contact@creative-inc.net Disclaimer Theinformationcontainedhereinhasbeenobtainedfromsourcesbelievedtobereliable.Theinformation contained in sections of the report reflects content that was derived from both public and confidential information collected and received during the conduct of a study by NASSCOM. Readers should note that NASSCOM has not independently verified all of the assumptions stated in the report. Each reader of this report should conduct their own independent evaluation of the information provided herein. NASSCOM disclaims all warranties as to the accuracy, completeness or adequacy of such information. NASSCOM shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.
  • 3. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study3 The rise of India as a global IT hub is well-chronicled. Coupled with this global footprint, we are now witnessing a strong thrust within the country to partner with the government in enhancing governance and to enable inclusive growth. eGovernance initiatives at the centre, state, districts as well as the block, village level are creating the channel for the government to build citizen-centric services, enable delivery of government rural schemes, provide access to information and enhance its overall governance and service delivery. The eGovernance initiative in India is now entering its next phase of ICT-led governance reforms and public private partnership is an important enabler for realising the vision of transformed, citizen-centric governance. NASSCOM is building a close partnership with the government to achieve this vision. There is also a fundamental shift in the way the government is procuring IT and eGovernance services with a clear focus on outcomes and service delivery. The relationship between the government and industryismovingfromavendor-buyertowardsamorestrategicpartnership.Toenablethispartnership, it is imperative that the process of procurement is aligned, transparent and accountable for both the industry and government. NASSCOM through an extensive research and interview process has put together a detailed report ‘eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study’. The study identified key issues and challenges, faced during the various phases of an eGovernance project lifecycle. From conceptualisation through bid process, contracting to execution and Post Go-Live phases. The report has also studied the best practices in India and overseas. The recommendations of the report outline the key steps that need to be enabled for an effective public procurement process, for IT services, in the country. With support from the government, NASSCOM will take these findings and recommendations across central and state departments and initiate a process to address the current challenges and build a procurement process, that will help the country realise its eGovernance vision through partnership with the IT industry. I would specially like to thank the officials at the Department of Information Technology, Ministry of Communications and Information Technology and all the state IT secretaries and department officers, NeGP mission leaders, who proactively participated in this study, and shared candid feedback and suggestions. I hope this report will lay the foundation for a deeper dialogue between the government and the IT industry partners, in improving the way, IT services and eGovernance projects are procured and executed. Som Mittal President Foreword
  • 4. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study4 This study was conducted and report was developed by NASSCOM, with support and guidance from several members from the state, central governments, consultancy organisations, and IT industry. We would like to thank various people for their valuable contributions without which this report would not have been possible. First, we would like to thank all officers of the central, state governments and their departments and agencies who have helped us successfully conduct the study and provide very valuable government perspective. We would like to specially thank Shri S R Rao, Mr J Satyanarayana, for helping us frame the scope of study and its methodology. Special thanks are due to TAGUP team chaired by Mr Nandan Nilekani. We would like to thank the Canara Bank IT team, and Mr B Shandilya. We would also like to thank our executive council for their valuable counsel and guidance. Special thanks are due to Ashank Desai, Ganesh Natarajan, Krishna Kumar, Ravi Venkatesan, who have guided the study and report development from concept to closure. We would like to acknowledge the valuable inputs from Srinivasan Ramakrishnan Ex-DG of CDAC, Prakash Kumar and Joan McCalla of CISCO, IDFC, NISG and PwC teams. We would also like to acknowledge the valuable feedback provided by several government and IT industry participants on this study and its findings, during the five regional consultations workshops conducted by the Department of IT, in partnership with NASSCOM, during September to November 2010, at Chandigarh, Chennai, Kolkata, Mumbai, Lucknow. A special acknowledgement to the NASSCOM eGovernance team, Pratap Reddy and Anirban Mukerji, for their efforts and contribution towards this report. Som Mittal President Acknowledgements
  • 5. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study5 We would like to thank the following organisations and their teams for participating in this study and providing invaluable inputs on issues, challenges and also helping in drawing up the recommendations. Government Department of Information Technology, Government of India and its units, NeGD, UIDAI, Planning Commission, Ministry of Home Affairs, Department of Industrial Promotion and Policy Government of Andhra Pradesh, ELCOT, Gujarat Informatics, Government of Karnataka, Government of Tamil Nadu, Government of West Bengal Consultants Ernst & Young, IDFC, IL&FS, NISG, PwC IT Industry 3i Infotech, ABM Knowledgeware, CISCO, CMS Computers, COMAT Technologies, HCL Infosystems, HCL Technologies, Humanitics, Infosys, L&T Infotech, Mastek, Microsoft, Mindtree, MobMe, NIIT Technologies, Payada Technologies, Radiant, Ram Informatics, TCS, UTL, Wipro, Zensar, Zylog Systems
  • 6. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study6 Executive Summary
  • 7. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study7 In the past few years, eGovernance has gained considerable momentum in India, with many high impact projects being implemented in both Government to Citizen (G2C) and Government to Business (G2B) domains, across central ministries and state departments. NeGP Mission Mode Projects, and several strategic eGovernance initiatives in states, executed in partnership with the IT industry, have helped redefine the government service delivery to rural, urban citizens and businesses, by making several services online and 24/7. MCA21, UIDAI, Customs and Central Excise, Integrated Citizen Services like MP Online, Karnataka One, CSCs, NREGA, eProcurement, HRMS, SWANs and SDC are just a small sample of eGovernance initiatives, executed successfully with the support and partnership of the industry. From the earlier focus on hardware-centric procurement, most projects are now moving to defining servicesandoutcomes.MostprojectDPRs,RFPsandservicesagreements,contractsaredemonstrating a fundamental shift in the way the government is procuring IT and IT services. Hardware and even application development are now being considered more as building blocks towards an end outcome rather than as key requirements. The relationship between the government, the buyer and industry, the service provider, is moving towards a more strategic outsourcing relationship over a 5-7 years term. This has been the direction for some of the larger Mission Mode NeGP projects both in centre and states and eGovernance infrastructure projects like SWAN, SDC. An objective analysis of the entire eGovernance landscape shows that, several projects and their execution are faced with a lot of challenges. Several projects have failed, and have been shelved because of flaws at different stages: their conceptualisation, scope definition, vendor selection and poor execution due to the shortcomings both on the government and the implementing vendor’s side. Issues related to public procurement of IT projects (eGovernance projects) are a cause of concern for both buyers (i.e. government departments) and potential bidders. NASSCOM through an extensive research and interview process has put together a detailed report ‘eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study’. The study initiated by NASSCOM, in consultation with the Department of IT, is broadly targeted to identify key issues and challenges, faced during the various stages of an eGovernance project lifecycle. From conceptualisation through bid process, contracting to execution and Post Go-Live phases. The report has also studied the best practices in India and overseas. The recommendations of the report outline the key steps that need to be enabled for an effective public procurement process, for IT services, in the country. To understand the issues related to public procurement of eGovernance projects, and obtain best practices and recommendations, the following methodology was adopted. 1) Discussions with a cross-section of organisations engaged in the eGovernance domain. The cross-section included to name a few: a) Established large System Integrators (SIs) who have been implementing many eGovernance projects like HCL Infosystems, TCS, Wipro b) Established SME’s like ABM Knowledgeware, CMS, COMAT Technologies, UTL c) Large and small organisations that have become active in the eGovernance domain like HCL Technologies, L&T Infotech, Mindtree, MobMe, Payada Technologies d) Global OEM organisations like CISCO, Microsoft Executive Summary
  • 8. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study8 e) Consultancy organisations like Ernst & Young, IDFC, IL&FS, NISG and PriceWaterhouseCoopers 2) Studying a few landmark projects that have been outsourced in centre and states, to understand the various issues, best practices regarding implementation a) Elicit feedback of the government officers of the IT department and line departments at both HoDandmidandjuniorofficersdrivingeGovernanceprojects.Thecross-sectionincludedseveral states, central ministries, state nodal agencies, NeGP mission leaders b) Speak to implementing service providers to identify issues and best practices from contract, Go-Live and Post Go-Live phases 3) Studying the World Bank guidelines regarding public procurement 4) Studying the best practices and policies and model documents of PPP projects in the infrastructure sector 5) Studying the IT procurement practices of the Government of Canada, Singapore 6) Understanding the IT outsourcing strategy and best practices of a public sector bank Based on our research and interactions with a wide cross-section of state and central government officers, NASSCOM team obtained some insightful feedback. Government Perspective Key highlights of feedback from government officers is as follows: Internal eGovernance capacity • Government needs to develop overall capacity of the government employees in managing IT and eGovernance projects - Bolster capacity within the government by training, recruiting staff - Establish a specialist service for handling eGovernance projects & IT function • Government officers do not have deep understanding of technology solutions and their implementation and hence, are constrained in devising and monitoring service level agreements and contract management of IT projects Government feedback to industry • Industry project teams should build eGovernance and functional/domain skills • Delivery resources assigned to eGovernance projects is not at par with resources being assigned to their global customers • The eGovernance sector is not a priority for a majority of industry members • Industry members should refrain from submitting low, unviable commercial bids, as it not only impacts the vendor’s quality of delivery, but often leads to the termination and litigation, impacting the government’s plans and service delivery to citizens • “Industryshouldchangeitsfocusfromproduct orientation tocitizen servicedeliveryin eGovernance projects. The industry is still oriented towards the supply of goods and services and the service orientation which is the core of all eGovernance services is lacking” – a state IT secretary
  • 9. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study9 Industry issues & challenges • A wide cross-section of the industry respondents, provided a total of 296 issues which were distilled to 170 unique issues related to the procurement of eGovernance and IT services • These issues can be grouped into 19 categories of issues • Maximum issues & challenges are witnessed in - Project execution - Project conceptualisation & Scope of Work (SoW) - Contract, Terms and Conditions (T&C) • Lack of continuity of project champion is a challenge across most projects - Sign-off’s given by a government officer regarding a project, are not accepted by the successor. Many times the successor likes to re-evaluate/review the certification of work, and even SoW & Contract • Delays in deliverables from the government • Delays in giving timely sign-offs to vendors both by the department and third-party audit - Department PMU not empowered to take appropriate decisions, in the interest of project implementation. This issue was highlighted even by the government respondents • Project bids incorporate many non-IT items as well, which increase the project cost manifold. This leads to an increase in pre-qualification turnover criteria, impacting the opportunity of small and medium players, and also risk overload by all vendors • Projects incorporate requirements like lease rental, diesel for running of gensets - Cost estimation is a guesswork, both on the extent of grid power outages, and cost of diesel over a five year tenure. Indexing such input costs to a base price and factoring escalation is missing • No counter guarantees, built into the SLAs, for default by the government and government agencies • Pre-qualification norms is a challenge for both incumbent SME and large, SME organisations entering the eGovernance domain • Some contracts have unlimited liability terms with no caps linked to contract value and payments to date • Most PPP projects are first-of-a-kind project and it is difficult to anticipate transaction volumes. Further, they are dependent on a number of upstream activities like computerisation of back-end departments - Given the risks in these projects, there should be some risk mitigation measures, counter guarantees to reduce the investment risk of the bidders - PPP projects not designed in a manner to enable re-negotiation in both cases of windfall gains or losses to vendor. This point was also reiterated by the government respondents Key recommendations from the study • Model RFPs, contracts, MSA for different category of projects
  • 10. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study10 - Themodeldocumentswerecommend,arepreparedbyajointgovernment-consultants-industry team (including representatives from the banking sector, IDRBT) - Review by a joint government-consultants-industry panel including DIT, Department of Expenditure - Customise these for state projects, and drive uniformity - Contracts should incorporate ‘Conditions of Precedent’ and obligations of the government departments and agencies - SLAs and events of default to be defined for both vendor and government departments and agencies - Incorporate the best practices of infrastructure concessionaire agreements and model documentspublishedbythePlanningCommissionfortheinfrastructuresector,intoeGovernance PPP projects - Toolkits for PPP, BOOT projects and business model options to guide departments • Similar to pre-bid meetings, standardise on suppliers debriefing, post project award • Project governance structure - Publish a model for different category of projects - Government project team resourcing & skills profile across lifecycle stages - Consult enterprise CIOs, industry and banking PSUs in finalising this • Dispute resolution & arbitration guidelines - Panel of retired officers from the government and academia, knowledgeable with IT projects execution - Evaluate alternative dispute resolution mechanism on the lines of procurement Ombudsman of Canada • Centralised digital repository of all information assets of bids, projects – on a secure government network - RFPs, pre-bid queries, bid amendments, contracts, MSAs - Project reviews, audit reports, impact assessment reports - Vendor defaults/force majeure situations Industry actionables • eGovernance functional/domain skills for delivery teams • Sensitisation of industry leadership on failed projects due to unviable bids, vendor defaults, project termination, litigation and their impact on the government - Help drive rigor into bid review process of their sales teams • NASSCOM to build a repository of - Success stories, case studies in eGovernance - Learnings from failed projects The study report and its findings and recommendations, we hope will initiate a deeper dialogue between the government and industry, to address the current challenges and help the country realise its eGovernance vision, through partnership with the IT industry.
  • 11. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study11 Table of Contents Foreword 3 Acknowledgements 4 Executive Summary 6 Introduction 12 Guiding Principles for Public Procurement 17 eGovernance Projects – Government Perspective 47 Industry Perspective 68 Study of Global Public Procurement Practices – Canada/Singapore 80 Study of IT Management in a PSU Bank 90 Summary, Recommendations 94 Annexures 97
  • 12. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study12 Introduction
  • 13. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study13 In the past few years, eGovernance has gained considerable momentum in India, with many high impact projects being implemented in both Government to Citizen (G2C) and Government to Business (G2B) domains, across central ministries and state departments. NeGP Mission Mode Projects, and several strategic eGovernance initiatives in states, executed in partnership with the IT industry, have helped redefine the government service delivery to rural, urban citizens and businesses, by making several services online and 24/7. MCA21, UIDAI, Customs and Central Excise, Integrated Citizen Services like MP Online, Karnataka One, CSCs, NREGA, eProcurement, HRMS, SWANs and SDC are just a small sample of eGovernance initiatives, executed successfully with the support and partnership of the industry. From the earlier focus on hardware-centric procurement, most projects are now moving to defining servicesandoutcomes.MostprojectDPRs,RFPsandservicesagreements,contractsaredemonstrating a fundamental shift in the way the government is procuring IT and IT services. Hardware and even application development are now being considered more as building blocks towards an end outcome rather than as key requirements. The relationship between the government, the buyer and industry, the service provider, is moving towards a more strategic outsourcing relationship over a 5-7 years term. This has been the direction for some of the larger Mission Mode NeGP projects both in centre and states and eGovernance infrastructure projects like SWAN, SDC, etc. 1.1 Various modes of contracting for IT services Dependinguponthesizeandnatureofprojectsindifferentministriesanddepartments,thegovernment has been adopting different modes of contracting for IT services. 1.1.1 Outright procurement of IT goods and services The government department issues a RFP with requirements and timelines for delivery of the goods and services and makes payments for the same based on delivery milestones. Commonly these requirements are simple in nature like the development of a software solution, supply of hardware. Most RFP’s have a clause related to maintenance of the software application or IT equipment which is paid for separately. 1.1.2 Turnkey contracts The government department identifies a complex project with a set of services, and prepares a RFP for all components required for the delivery of these services, to the government department. The components would include application solution development, supply, installation of hardware and system integration. Guarantee of performance as per SLA; and Operation & Maintenance (O&M) of the solution, infrastructure for a specified period of time is often part of the scope. Such turnkey projects may encompass a comprehensive scope of work including components of data entry of legacy data, training for government officers, implementation support comprising staffaugmentation of operators. In some cases, provisioning the facilities including civil work, supply of furniture, back-up power through generators, may also be included in the scope of work. Mostly turnkey contracts may be milestone-based payments or on a deferred payment (quarterly guarantee) mode, subject to the turnkey operator meeting the prescribed SLA’s for both installation and operation of the IT systems and solution. Introduction
  • 14. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study14 The term of such comprehensive turnkey contracts normally range from 3-7 years and post completion, the vendor transfers the operations to the government or a designated government agency or to an alternate vendor selected by the government. 1.1.3 Public Private Partnerships (PPPs) PPPs are projects involving investments by the private sector partner with its associated risks and rewards based on volume and type of services delivered. The government in such case, contracts for delivery of services over an agreed project tenure. Well known examples of such projects are those like eSeva, eProcurement in Andhra Pradesh, Bangalore One in Karnataka, MP Online, the recently commenced Passport Seva Project for Ministry of External Affairs. In the case of projects like eSeva, Bangalore One, the vendor is mandated to create both the physical citizen service centre and the IT infrastructure and receives fee based on the services delivered to the citizens, though subject to stringent service level agreements. The time period for operations of such PPP projects are normally 5-7 years and the vendor would mostly transfer the assets and project operations to the government or another identified vendor. PPP projects may be Build Own Operate Transfer (BOOT) or Build Own Operate (BOO). 1.2 Issues in eGovernance project implementation An objective analysis of the entire eGovernance landscape shows that, several projects and their execution are faced with a lot of challenges. Several projects have failed, and have been shelved because of flaws at different stages: their conceptualisation, scope definition, vendor selection and poor execution due to the shortcomings both on the government and the executing vendor’s side. Issues related to public procurement of IT projects (eGovernance projects) are a cause of concern for both buyers (i.e. government departments) and potential bidders. Lack of capacity in several government departments to conceptualise, design, execute and monitor projects has been a big constraint. The conceptualisation of the project including technology choices, business model choices, SLAs need to be thought through differently for each category of project and articulated in the RFP. In many cases like the, SWAN, SDC and eDistrict projects, DIT has been playing a supportive role by appointing consultants both at the central and state level for preparing RFP’s, assisting in bid evaluation and also providing for third-party audits. However, there continues to exist significant challenges during the implementation of these projects. Private sector bidding for eGovernance projects also face many issues like improperly drafted scope of work, requirements and terms and conditions, SLAs which could lead to potentially heavy liabilities and penalties during implementation. The ecosystem of organisations focused on eGovernance implementation consists of diferent types of organisations with very large global & national System Integrators (SIs) to smaller local organisations. Often there is seen a mismatch in the project scope and sizing, and bidder eligibility criteria. The issues range from over specking, thereby denying a level playing field for small & medium players and even for large players who are new entrants into eGovernance. In some projects, the eligibility criteria may be diluted, thereby impacting successful execution and leading to termination, re-tendering or scrapping of the project. 1.3 Role of National Informatics Centre (NIC) NIC has played a pioneering role in the computerisation of several departments both at the state and central level. Several flagship eGovernance initiatives in Land Records, Transport, and Agriculture
  • 15. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study15 amongst others have been successfully implemented by the NIC across the country. Historically, the NIC has been the promoter of computerisation, thus becoming internal EDP department of the central government departments and state governments. However, over time, nature and type of eGovernance service delivery and mandated service levels and business models, have undergone significant changes. Currently, all projects are awarded to the NIC on a nomination basis, without a competitive bid process and also without the associated terms and conditions, service level agreements, contracts that are applied when goods and services are procured from or outsourced to private sector entities. NIC plays a technical advisory role in some projects being executed by the private sector. When projects are handed over to the NIC, the departments have had the comfort of avoiding a complex RFP process, bid and project management. However, for eGovernance projects outsourced to the private sector, the government departments need to undertake the exercise of project conceptualisation and scoping, bid, project management, governance structures, SLAs monitoring, third-party audit and so on. Internal capacity and resources to support this exercise has been a barrier in many eGovernance initiatives. 1.4 Existing public procurement guidelines There exists comprehensive guidelines regarding public procurement issued by 1) Department of Expenditure of Ministry of Finance, has issued a Manual of Policies and Procedures for Employment of Consultants, for Works Contracts & Purchase of Goods and General Financial Rules 2005 2) Most states have a financial code and procurement guidelines, mostly for public works contracts 3) Ministry of Finance has issued very comprehensive guidelines, forms, policy documents for PPP projects in infrastructure sector 4) Karnataka has legislated a Karnataka Transparency in Public Procurement Act and rules 5) Central Vigilance Commission has issued various circulars and guidelines regarding public procurement procedures A comprehensive review of all existing guidelines, and identifying their best practices would help customise and/or incorporate relevant guidelines, policies in procuring/outsourcing eGovernance Projects too. 1.5 Objectives of the NASSCOM study The study initiated by NASSCOM, is broadly targeted to identify key issues and challenges, faced during the various stages of an eGovernance project lifecycle. From conceptualisation through bid process, contracting to execution and Post Go-Live phases. 1. Project conceptualisation and development including associated processes of a. Pre-qualification norms for bidders b. Payment model/Business model c. Requirements definition and Scope of Work (SoW) d. Contract (terms and conditions document, services agreement) including associated processes of i. Dispute resolution process
  • 16. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study16 2. Bidding phase process including associated processes of a. Tender publication b. Process of pre-bid meetings and issue of pre- bid clarifications c. Tender submission process d. Tender evaluation process e. Awarding of contract to selected bidder 3. Project execution including associated processes of a. Third-party audit 4. Post implementation 5. Specific issues related to a. PPP projects 6. Unfair procurement practices and vendor defaults 1.6 Methodology for study of public procurement of eGovernance projects To understand the issues related to public procurement of eGovernance projects, and obtain best practices and recommendation, the following methodology has been adopted. 1) Discussions with a cross-section of organisations engaged in the eGovernance domain. The cross-section included to name a few: a) EstablishedlargeSIswhohavebeenimplementingmanyeGovernanceprojectslikeHCLInfosystems, TCS, Wipro b) Established SMEs like ABM Knowledgeware, CMS, COMAT Technologies, UTL c) Large and small organisations that have now become active in the eGovernance domain like HCL Technologies, L&T Infotech, Mindtree, MobMe, Payada Technologies d) Global OEM organisations like CISCO, Microsoft e) Consultancy organizations like Ernst and Young, IDFC, IL&FS, NISG and PriceWaterhouseCoopers 2) Studying a few landmark projects that have been outsourced in centre and states, to understand the various issues, best practices regarding implementation a) Elicit feedback of government officers of the IT department and line departments at both HoD and mid and junior officers driving eGovernance projects. The cross-section included several states, central ministries, state nodal agencies, NeGP mission leaders b) Speak to implementing service providers to identify issues and best practices from contract, Go-Live and Post Go-Live phases 3) Studying the World Bank guidelines regarding public procurement 4) Studying the best practices and policies and model documents of PPP projects in the infrastructure sector 5) Studying the IT procurement practices of the Government of Canada, Singapore 6) Understanding the IT outsourcing strategy and best practices of a public sector bank
  • 17. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study17 Guiding Principles for Public Procurement
  • 18. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study18 In a study focused on eGovernance and IT services procurement in the government, we considered it was important to review and summarise the existing public procurement guidelines, and delineate their applicability to IT services domain. The following guidelines were reviewed through documents available in the public domain, coupled with discussions with key stakeholders: • General Financial Rules 2005 (GFR) • Central Vigilance Commission (CVC) Guidelines • Procurement Guidelines of IBRD, IDA - ForprojectsfinancedbyaloanfromtheInternationalBankforReconstructionandDevelopment (IBRD) or a credit or grant from the International Development Association (IDA) 2.1 General Financial Rules 2005 Introduction The General Financial Rules (GFR) 2005 of the Department of Expenditure, Ministry of Finance were evolved after an extensive review of four-decade old GFR 1963. The review was necessitated by changes in system of procurement, developments in information technology and alternative service delivery systems including the outsourcing of services. GFR 2005 is a compendium of rules and guidelines for the expenditure of Government of India and includes a complete chapter on rules, for procurement of goods and services. Execution of works The Chapter 5 of the GFR lays down rules for the execution of works, where ‘works’ broadly refers to constructions and alterations, repairs to existing works or structures. For most works above a certain value, it recommends execution of the work through a public works organisation. Rule 124 – ‘Administrative Control’, highlights the assumption of full responsibility for construction, maintenance and upkeep, and provision of funds for execution of these functions. Although the rule is explicitly defined in the context of construction works, it has a pertinent point for eGovernance projects, namely: • The need for ongoing maintenance and support of IT systems and solutions and provision of funds beyond the initial phase of an eGovernance project, IT solutions/services procurement • Several eGovernance initiatives have been constrained by being primarily focused on the ‘construction’ or development phase and its funding. Several eGovernance projects are initiated through one-time funding under a central government programme, or an external aid agency, and states or departments have not been able to sustain the funding, needed for ongoing maintenance, enhancements. An equal focus on ‘maintenance, upkeep’ when a new eGovernance initiative is conceptualised, will ensure investment in information technology solutions, services continues to serve government objectives, in the long-term • In the context of IT solutions and eGovernance projects, ‘maintenance, upkeep’ indicates ongoing support, solution and features enhancements, upgrades of hardware, software, and provisioning for their funding, on a year-on-year basis Guiding Principles for Public Procurement
  • 19. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study19 The GFR Rule 129 in Chapter 5 on works provides the following directive regarding the execution of works: No works shall be commenced or liability incurred in connection with it unless 1. Administrative approval needs to be obtained from appropriate authority 2. Sanction to incur expenditure to be obtained from competent authority 3. A properly detailed design has been sanctioned 4. Funds to cover the charge during the year have been provided by competent authority This rule also has applicability in some eGovernance initiatives in states, that get launched in a hurry, and get shelved due to non-availability of necessary approvals, budgetary sanctions or inadequate funding. Rule 134 provides important guideline on review of projects as following: “After a project costing INR 10 crore or above is approved, the Administrative Ministry or Department will set up a Review Committee consisting of a representative each from the Administrative Ministry, Finance (Internal Finance Wing) and the Executing Agency to review the progress of the work. The Review Committee shall have the powers to accept variation within 10 per cent of the approved estimates”. While the NeGP Mission Mode Projects and large state eGovernance initiatives may have had clearly defined Review Committees, several eGovernance initiatives have suffered due to the absence of an empowered committee to review. Most review committees, have also not had the empowerment or probably the flexibility to approve variations in cost estimates, approved during the bid phase. Several eGovernance initiatives are first-of-its-kind projects, and it is usually not possible to determine the entire scope of work and solution features, and real constraints in delivering these services across the entire state or country, spanning so many locations with their unique challenges. A Review Committee empowered to accept a “10 per cent variation in approved estimates”, when a project so demands it, will go a long way in successful implementation of eGovernance projects. Learnings Chapter 5 mainly concerns itself with construction works and additionally mandates as per Rule 126 that construction works above a certain value should be executed through a public works organisation. Despite the emphasis of the chapter on construction works, the following learnings can be applied for the implementation of IT projects by government departments during the project conceptualisation phase. 1. Due process in working out estimates, schedule of quantities, procedure and approvals from competent authority 2. Equal focus on ongoing maintenance and upkeep and their funding, by the project implementing department/agency 3. ReviewCommitteeforprojectsaboveacertainthreshold,withnecessaryempowermenttosanction variations in cost estimates upto 10 per cent 4. Given that a ‘Public Works Organisation’ is not applicable in the context of eGovernance, IT services projects, the government both at the states and centre could evaluate the role of the Department of IT, or its IT nodal agency, as an enabling nodal department to guide all other departments.
  • 20. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study20 Procurement of goods The following rules regarding the procurement of goods and services is prescribed in Part 1 of Chapter 6 of the GFR 1) Rule 137 lays down fundamental principles of public buying as following – Every authority delegated with the financial powers of procuring goods in public interest shall have the responsibility and accountability to bring efficiency, economy, transparency in matters relating to public procurement and for fair and equitable treatment of suppliers and promotion of competition in public procurement. The procedure to be followed in making public procurement must conform to the following yardsticks: a) The specifications in terms of quality, type, etc., as also quantity of goods to be procured, should be clearly spelt out keeping in view the specific needs of the procuring organisations. The specifications so worked out should meet the basic needs of the organisation, without includingsuperfluousandnon-essentialfeatures,whichmayresultinunwarrantedexpenditure. Care should also be taken to avoid purchasing quantities in excess of requirement to avoid inventory carrying costs b) Offers should be invited following a fair, transparent and reasonable procedure c) The procuring authority should be satisfied that the selected offer adequately meets the requirement in all respects d) The procuring authority should satisfy itself that the price of the selected offer is reasonable and consistent with the quality required e) At each stage of the procurement, the concerned procuring authority must place on record, in precise terms, the considerations which weighed with it while taking the procurement decision 2) Rule 140 delegates full powers to ministries and departments to make their own arrangement for the procurement of goods. However, if a ministry or department does not have the required expertise, it may project its indent to the Central Purchase Organisation 3) As per Rule 141, the Central Purchase Organisation (e.g. DGS&D) shall conclude rate contracts with the registered suppliers, for goods and items of standard types, which are identified as common user items and are needed on recurring basis by various central government ministries or departments. The Central Purchase Organisation will furnish and update all the relevant details of the rate contracts in its website. The ministries or departments shall follow those rate contracts to the maximum extent possible 4) Rule 142 lays down detailed guidelines for registration of suppliers which are as following: a) The Central Purchase Organisation (e.g. DGS&D) will prepare and maintain item-wise lists of eligible and capable suppliers. Such approved suppliers will be known as ‘Registered Suppliers’. All ministries or departments may utilise these lists as and when necessary. Such registered suppliers are prima facie eligible for consideration for procurement of goods through limited tender enquiry. They are also ordinarily exempted from furnishing bid security along with their bids. A head of department may also register suppliers of goods which are specifically required by that department or office b) Credentials, manufacturing capability, quality control systems, past performance, after-sales service, financial background, etc. of the supplier(s) should be carefully verified before registration
  • 21. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study21 c) The supplier(s) will be registered for a fixed period (between 1-3 years) depending on the nature of the goods. At the end of this period, the registered supplier(s) willing to continue with the registration are to apply afresh for renewal of registration. New supplier(s) may also be considered for registration at any time, provided they fulfil all the required conditions d) Performance and conduct of every registered supplier is to be watched by the concerned ministry or department. The registered supplier(s) are liable to be removed from the list of approved suppliers if they fail to abide by the terms and conditions of the registration or fail to supply the goods on time or supply substandard goods or make any false declaration to any government agency or for any ground which, in the opinion of the government, is not in public interest 5) Rule 145 & Rule 146 allow only goods below INR 1 lakh to be purchased without a tender 6) Rule147prescribesrulesfordirectpurchaseofgoodsunderratecontractfromsuppliers.Itmandates that the Central Procurement Organisation (e.g. DGS&D) should host specifications and prices on its website 7) Rule 149 mandates unless the price of goods is below INR 1 lakh or is being purchased under a rate contract, the department should follow a tendering process for goods procurement 8) Rule150prescribesdetailedguidelinesforopen‘Advertised’tenderenquiryforallgoodsprocurement above INR 25 lakh 9) Rule 151 prescribes limited tender enquiry for goods procurement below INR 25 lakh where the tender enquiry is limited to pre-registered suppliers as per Rule 142 10) Rule 152 prescribes a two bid system comprising a technical bid and a commercial bid for complex procurement. It states that commercial bids of only technically acceptable offers should be opened for further evaluation and ranking before awarding the contract 11) Rule 154 provides guidelines for single source procurement 12) Rule 155 prescribes the various section of a bidding document 13) Rule 157 provide guidelines for obtaining bid security from all bidders to safeguard against bidder withdrawing or altering the bid during the bid validity period. It prescribes that the bid security should be between 2-5 per cent of the value of goods to be procured and such bid security can be of forms like demand draft, fixed deposit receipt, bank guarantee, etc. 14) Rule 158 states the requirement of obtaining a performance security from bidders 15) Rule 160 states detailed guidelines (15 in number) on requirement of transparency, competition, fairness and elimination of arbitrariness in the procurement process. Some of the salient guidelines are: a) The text of the bidding document should be self-contained and comprehensive without any ambiguities. All essential information, which a bidder needs for sending responsive bid, should be clearly spelt out in the bidding document in simple language. The bidding document should contain, inter alia; i) The criteria for eligibility and qualifications to be met by the bidders such as minimum level of experience, past performance, technical capability, manufacturing facilities and financial position, etc. ii) The procedure as well as date, time and place for sending the bids
  • 22. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study22 iii) Date, time and place of opening of the bid iv) Terms of delivery; special terms affecting performance, if any b) Suitable provision should be kept in the bidding document to enable a bidder to question the bidding conditions, bidding process and/or rejection of its bid c) Suitable provision for settlement of disputes, if any, emanating from the resultant contract, should be kept in the bidding document d) The bidders should be given reasonable time to send their bids e) The bids should be opened in public and authorised representatives of the bidders should be permitted to attend the bid opening f) The specifications of the required goods should be clearly stated without any ambiguity so that the prospective bidders can send meaningful bids. In order to attract sufficient number of bidders, the specification should be broad based to the extent feasible. Efforts should also be made to use standard specifications which are widely known to the industry g) Pre-bid conference: In case of turn-key contract(s) or contract(s) of special nature for the procurement of sophisticated and costly equipment, a suitable provision is to be kept in the bidding documents for a pre-bid conference for clarifying issues and clearing doubts, if any, aboutthespecificationsandotheralliedtechnicaldetailsoftheplant,equipmentandmachinery projected in the bidding document. The date, time and place of pre-bid conference should be indicated in the bidding document. This date should be sufficiently ahead of the bid opening date h) Criteria for determining responsiveness of bids: Criteria as well as factors to be taken into account for evaluating the bids on a common platform and the criteria for awarding the contract to the responsive lowest bidder should be clearly indicated in the bidding documents i) Bids received should be evaluated in terms of the conditions already incorporated in the bidding documents; no new condition which was not incorporated in the bidding documents should be brought in for evaluation of the bids. Determination of a bid’s responsiveness should be based on the contents of the bid itself without recourse to extrinsic evidence j) Negotiation with bidders after bid opening must be severely discouraged. However, in exceptional circumstances where price negotiation against an ad-hoc procurement is necessary due to some unavoidable circumstances, the same may be resorted to only with the lowest evaluated responsive bidder k) In the rate contract system, where a number of organisations are brought on rate contract for the same item, negotiation as well as counter offering of rates are permitted with the bidders in view and for this purpose special permission has been given to the Directorate General of Supplies and Disposals (DGS&D) l) Contract should ordinarily be awarded to the lowest evaluated bidder whose bid has been found to be responsive and who is eligible and qualified to perform the contract satisfactorily as per the terms and conditions incorporated in the corresponding bidding document m) The name of the successful bidder awarded the contract should be mentioned in the ministries or departments notice board or bulletin or website
  • 23. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study23 16) Rule 161 prescribes the need for efficiency, economy and accountability in public procurement system. To achieve the same, it states that the following areas need to be addressed: a) To reduce delay, appropriate time frame for each stage of procurement should be prescribed by the ministry or department. Such a time frame will also make the concerned purchase officials more alert b) The ministries or departments should ensure the placement of contract within the original validity of the bids. Extension of bid validity must be discouraged and resorted to only in exceptional circumstances c) The Central Purchase Organisation, should bring into the rate contract system more and more common user items which are frequently needed in bulk by various central government departments Relevance to IT procurement by government departments The GFR is fairly elaborate regarding goods procurement by central government departments and endeavours to promote transparency in procurement. While the rate contracts of a Central Purchase Organisation is relevant for standard procurement and supply of goods, most eGovernance projects havecustomisedsolutions,servicestobeimplemented,includinginstallationandsupportrequirements which vary from project to project. GFR also recommends use of rate contracts method. While both DGS&D and state IT nodal agencies, have effectively used this method for procurement of IT hardware and COTS software, there are some challenges with respect to procurement of IT products. 1. IT products, particularly hardware see continuous upgradation and often downward decline in pricing 2. Many IT products have a high rate of obsolescence and version changes. Sometimes upgrades to products and new versions and releases may be unique to one or few vendors. Hence, a rate contract administration may need to specially factor constant revision 3. There may be a variation in features and prices between similar categories of products from different manufacturers. Most hardware and even COTS software like operating systems, databases are usually configurations unique to a vendor, with specific features and enhancements. Hence, a standardised rate contract for a similar category of IT product from different vendors is a challenge 4. DGS&D rate contracts don’t incorporate the concept of a committed volume of procurement which usually determines volume pricing 5. Most eGovernance and IT services projects do not procure ‘Goods’ in isolation, and hence, a rate contract with a Central Purchasing Organisation, or a central IT nodal agency in the state, has limited applicability 6. The GFR also states that a minimum of three weeks should be given for bid submission, and four weeks for global bids. For a complex IT procurement tender, this time period may be extended to six weeks, to ensure that all eligible bidders can participate Procurement of services The Part II of Chapter 6 provides guidelines on the procurement of services which as per Rule 163 relate to procurement of consultancy services. Rule 164 states that Part II provides the fundamental principles
  • 24. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study24 regarding the engagement of consultants, and ministries can issue detailed instructions which should not contravene the basic rules of the Part II of Chapter 6. The various guidelines are as following: 1) Rule 165 states that consultants should be engaged only for high quality work for which the department does not have expertise 2) Rule 166 states that the departments should prepare in simple and concise language the requirement, objectives and the scope of the assignment. The eligibility and pre-qualification criteria to be met by the consultants should also be clearly identified at this stage 3) AsperRule168,forconsultancyassignmentsbelowINR25lakh,thedepartmentscanfloatrequests for expressions of interest to a list of organisations gathered on the basis of formal or informal enquiries with other departments, industry associations, however, for value of above INR 25 lakh, the EOI should be advertised in one national daily and the department’s website 4) As per Rule 169, the evaluation of responses to the EOI should enable the shortlisting of a minimum of three consultancy organisations 5) Rules 170 and 171 state the components of the terms of reference and the request for proposal respectively 6) Rule 172 states that RFP should compulsorily ask for separate technical and financial responses with both these responses being sealed separately 7) Rule 174 states that technical bids should be analysed and evaluated by a Consultancy Evaluation Committee (CEC) constituted by the ministry or department. The CEC shall record in detail the reasons for acceptance or rejection of the technical proposals analysed and evaluated by it 8) Rule 175 states that the ministry or department shall open the financial bids of only those bidders who have been declared technically qualified by the CEC as per Rule 174 mentioned above for further analysis or evaluation and ranking and selecting the successful bidder for placement of the consultancy contract 9) Rule 176 states that in case of single source procurement, justification should be recorded and approval should be obtained from competent authority prior to resorting to single source selection 10) Rule177mandatesthatthedepartmentshouldbeinvolvedthroughoutintheconductofconsultancy, preferably by taking a task force approach and continuously monitoring the performance of the consultant(s) so that the output of the consultancy is in line with the department’s objectives Outsourcing of services A sub-section of Part II of Chapter 6 of the GFR deals with the outsourcing of services. Rule 178 states that services may be outsourced in the interest of economy and efficiency. The directives regarding the outsourcing of services are not as comprehensive as those for goods and consultancy services. Comments on procurement of services to eGovernance services The section of procurement of services is not as comprehensive as the section for procurement of goods. However, it provides a broad framework for procurement of consultancy services. eGovernance projects where the entire conceptualisation of services, service delivery framework is determined during the consultancy phase, may need a clear set of guidelines to be spelt out.
  • 25. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study25 Contract management Chapter 8 of GFR provides directives on management of contracts. The general principles for entering into contracts have been given in Rule 204, and some of these salient principles are: 1. The terms of contract must be precise, definite and without any ambiguities. The terms should not involve an uncertain or indefinite liability, except in the case of a cost plus contract or where there is a price variation clause in the contract 2. Standard forms of contracts should be adopted wherever possible, with such modifications as are considered necessary in respect of individual contracts. The modifications should be carried out only after obtaining financial and legal advice 3. In cases where standard forms of contracts are not used, legal and financial advice should be taken in drafting the clauses in the contract 4. In respect of contracts for works with estimated value of INR 10 lakh or above or for purchase of above INR 10 lakh, a contract document should be executed, with all necessary clauses to make it a self-contained contract. If however, these are preceded by invitation to tender, accompanied by General Conditions of Contract (GCC) and Special Conditions of Contract (SCC), with full details of scope and specifications, a simple one page contract can be entered into by attaching copies of the GCC and SCC, and details of scope and specifications, Offer of the Tenderer and Letter of Acceptance 5. Contract document should be invariably executed in cases of turnkey works or agreements for maintenance of equipment, provision of services, etc. 6. No work of any kind should be commenced without proper execution of an agreement as given in the foregoing provisions 7. Contract document, where necessary, should be executed within 21 days of the issue of letter of acceptance. Non-fulfillment of this condition of executing a contract by the contractor or supplier would constitute sufficient ground for annulment of the award and forfeiture of Earnest Money Deposit 8. Rule 204 also provides a framework for price escalation clause, which should be allowed only for long-term contracts that extend beyond 18 months. Where a price variation clause is provided, the price agreed upon should specify the base level viz., the month and year to which the price is linked 9. Contracts should include provision for payment of all applicable taxes by the contractor or supplier 10. The terms of a contract, including the scope and specification once entered into, should not be materiallyvaried.Wherevermaterialvariationinanyofthetermsorconditionsinacontractbecomes unavoidable, the financial and other effects involved should be examined and recorded and specific approval of the authority competent to approve the revised financial and other commitments obtained, before varying the conditions. All such changes should be in the form of an amendment to the contract duly signed by all parties to the contract 11. All contracts shall contain a provision for recovery of liquidated damages for defaults on the part of the contractor
  • 26. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study26 12. A warrantyclauseshouldbeincorporatedineverycontract,requiringthesupplierto,withoutcharge, repair or rectify defective goods or to replace such goods with similar goods free from defect. Any goods repaired or replaced by the supplier shall be delivered at the buyers premise without costs to the buyer 13. All contracts for supply of goods should reserve the right of the government to reject goods which do not conform to the specifications 14. As per Rule 205, regarding the management of contracts, the following directives are provided: (1) Implementation of the contract should be strictly monitored and notices issued promptly whenever a breach of provisions occurs (2) Proper procedure for safe custody and monitoring of bank guarantees or other instruments should be laid down. Monitoring should include a monthly review of all bank guarantees or other instruments expiring after three months, along with a review of the progress of supply or work. Extensions of bank guarantees or other instruments, where warranted, should be sought immediately (3) Wherever disputes arise during implementation of a contract, legal advice should be sought before initiating action to refer the dispute to conciliation and/or arbitration as provided in the contract or to file a suit where the contract does not include an arbitration clause. The draft of theplaintforarbitrationshouldbegotvettedbyobtaininglegalandfinancialadvice.Documents to be filed in the matter of resolution of dispute, if any, should be carefully scrutinised before filing to safeguard government interest Comments on section on contract management Chapter8ofGFRdealingwithmanagementofcontractsisfairlycomprehensiveandoutlinesthevarious best practices of contract management. Adherence to these directives will lead to the improvement in contract management in eGovernance projects too. Adoption of standard contracts with necessary modifications, in individual contracts is a key directive, that can be considered for adoption in eGovernance projects. A central initiative to develop standard contracts for different categories of eGovernance projects, could contribute to cutting down time and effort in bid phase, for both the buyer and seller. Standard contracts and their adoption by both central and state government departments, as base templates with necessary modifications, additions for specific projects will surely cut down bid development and bid response phases. Price escalation indexed to a base price, in long-term contracts, is another important directive in GFR, that could be evaluated, in long-term eGovernance services outsourcing projects. These projects span a tenure of 5-7 years, and have several factors that are subject to cost escalations, that cannot be predicted during bid/contracting stage. Central Vigilance Commission (CVC) CVC was set up by the government in 1964 to advise and guide the central government agencies in the field of vigilance. CVC is conceived to be the apex vigilance institution, free of control from any executive authority, monitoring all vigilance activity under the central government and advising various authorities in the central government organisations in planning, executing, reviewing and reforming their vigilance work.
  • 27. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study27 Consequent upon promulgation of an ordinance by the President, the Central Vigilance Commission has been made a multi-member commission with ‘statutory status’ with effect from August 25, 1998. The CVC Bill was passed by both the houses of the Parliament in 2003, and CVC functions under an act of the Parliament. Additionally vide resolution of Government of India on ‘Public Interest Disclosure and Protection of Informer’ dated April 2004, the Government of India has authorised the Central Vigilance Commission as the ‘Designated Agency’ to receive written complaints for disclosure on any allegation of corruption or misuse of office and recommend appropriate action. Summary of recommendations of the CVC relating to public procurement The CVC has studied public procurement practices in detail and over the past 12 years, has issued circulars to improve these practices. A study of the various circulars issued by the CVC shows both attention to detail, attempt to plug loopholes and improve upon its past directives, in tune with new developments. CVC has issued several circulars on various aspects of public procurement, including eTendering, which can be reviewed from their website – http://cvc.nic.in/proc_works.htm. Some of the relevant directives are as follows: 1. The CVC has issued a detailed Circular, 12-02-1-CTE-6, on framing of pre-qualification criteria. Some relevant excerpts – the purpose of any selection procedure is to attract the participation of reputed and capable organisations with proper track records. The PQ conditions should be exhaustive, yet specific. The factors that may be kept in view while framing the PQ criteria includes the scope and nature of work, experience of organisations in the same field and financial soundness of organisations. 2. Organisations may suitably modify these guidelines for specialised jobs/works, if considered necessary. However, it should be ensured that the PQ criteria will allow fair competition 3. Mandates that the pre-qualification criteria, performance criteria and evaluation criteria be incorporated in the bid documents in clear and unambiguous terms as these criteria are very important to evaluate bids in a transparent manner 4. Whenever required the departments/organisations should follow two-bid system, i.e. technical bid and price bid. The price bids should be opened only of those vendors, who were technically qualified 5. Mandates that evaluation criteria both for pre-qualification and bid evaluation should be explicit and should not be post facto decided after the opening of the tenders 6. The department should go for techno commercial evaluation to ensure that bidders are technically qualified prior to the opening of the technical bids 7. Mandates that due process of tendering should be followed, commercial bids of only those organisations that meet the eligibility criteria and qualify in technical evaluation should be opened 8. Tenders should not mention brand name or even reference multinational brands 9. No negotiation with L1 bidder on price, it also clarifies that there can’t be any negotiation with the L2, L3 or any other bidder
  • 28. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study28 10. Mandates publishing of tender awards in the website of the organisation and also other details like estimated date of completion, progress of the work 11. Prohibits consultants from undertaking downstream work and for bidders for downstream work to provide consultancy services 12. Mandates time bound finalisation of tenders 13. Discusses the practice of short-term tenders where newspaper advertisements are not published, however, CVC mandates publishing short-term tender on the departmental website 14. Widest possible publicity should be given to tender documents including the uploading of the tender document on the website of the organisation 15. Payments to organisations implementing projects as far as possible, should be made through ePayment. Prescribes that by July 2004, 50 per cent of payment should be through ePayment mode 16. Clarifies that works can’t be automatically awarded to public sector organisations on a nomination, without tendering 17. Discusses the practice of PSU’s obtaining work (construction works) without tender and thereafter sub-contracting 100 per cent of the work. The circular prescribes practices for transparency in the process of sub-contracting of work by PSU and such open tenders to be invited for selection of sub-contractors as far as possible 18. Regarding splitting of work, CVC states that in case the quantity for supply exceeds the capacity of the L1 tenderer, the balance can be distributed to other suppliers 19. Observes practice of adding unnecessary and miscellaneous components in case of procurement of turnkey contracts (specifically for networking). Advices departments to take an independent third party view about the scope of turnkey projects so that the tendency to include unrelated products as part of the turnkey project is avoided 20. In case of presence of clauses in tender documents such as ‘Tender Inviting Authority can reject tender applications without assigning any reason’, such clauses should not promote arbitrary behaviour, and clear logical reasons for rejecting any tender application should be provided 21. Commenting on a complaint on procuring textiles and clothing, raises a specific issue of submission of tender samples, inspite of detailed specifications for items, and samples being rejected on subjective basis. The guideline advises government departments to consider the procurement of items on the basis of detailed specifications, and if required, provide for submission of an advance sample by successful bidder. This guideline is also relevant in the context of tender samples for IT equipment and hardware. 22. Provides operational guidelines on a. Measures to help organisations against counterfeit and refurbished IT products and counterfeit software b. Mitigate problems of vendors submitting forged/false bank guarantees, by adopting a best practice recommended by Canara Bank c. Giving of mobilisation advance to suppliers
  • 29. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study29 23. eTendering a. Directs organisations to follow a fair and transparent process to select the application service provider that will provide eTendering services b. Prescribing guidelines for security considerations of eProcurement systems 24. Provides detailed instructions for the implementation of integrity pacts in organisations, selection of independent external monitors, and standard operating procedures for integrity pacts 25. The CVC also circulates the summary of observations of the Chief Technical Examiners’ inspection of various tenders in central government and central government organisations. This summary provides details of deviations by organisations, regarding various aspects of tendering like pre-qualification criteria, contract terms, giving of mobilisation advance, preparing specifications, etc. 26. Provides directions and checklists to chief vigilance officers in departments to audit tenders floated by the organisation 27. Directs chief vigilance officers to review time taken for payment of bills by the organisation 28. Guidance on good practices such as members of tender evaluation committees should not have personal interest in the bidders 29. Expresses concern on the practice of an agent bidding on behalf of manufacturer, and the manufacturer also making a direct offer in the same tender. Prohibits this practice and directs that either the Indian agent on behalf of a foreign principal or the foreign principal directly could bid in a tender, but not both 30. Reverse auctions should be conducted in a fair and transparent manner 31. Recommends that mobilisation advance for works be considered only for select works and advance should be interest bearing 32. For projectsabove5crorevalue,theCVCrecommendstheappointmentofconsultants.Further,such consultants should be appointed after a due process and approval regarding their appointment
  • 30. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study30 Summary of various guidelines issues by the CVC from latest to oldest A detailed overview of specific CVC circulars is given below for easy reference No Office Order No. File No. Date of Issue Subject Details of the Circular 1 01/01/10 005/ CRD/012 Jan 20, 2010 Negotiation with L1 Clarifies that guidelines on no negotiation with L1 also implies that there cannot be negotiation with L2, L3 or L4 on pricing. Further clarifies Circular 3/3/2007 2 29/9/09 009/ VGL/002 Sep 17, 2009 Implementation of eTendering solutions Prescribes guidelines for security considerations for procurement of eProcurement system by the department 3 13/6/09 009/ VGL/030 Nov 8, 2009 Intensive examination of CTE – Steps for early finalisation Gives details of issues which have been pointed out by the Chief Technical Examiner’s office of CVC and for which response from the department is awaited 4 17/7/09 005/ VGL/4 Jul 14, 2009 Posting of details on award of tenders/ contracts on websites Reiterates guideline to publish details of tender award on the departmental website 5 10/5/09 008/ CRD/013 May 18, 2009 Adoption of integrity pact – Standard operating procedure Provides details of standard operating procedure regarding the implementation of integrity pacts in organisations 6 1/1/09 009/ VGL/002 Jan 13, 2009 Implementation of eTendering solutions Directs organisations to follow a fair and transparent tendering process to select the application service provider that will provide eTendering services 7 31/11/08 008/ VGL/083 Jun 11, 2008 Time bound processing of procurement Observes that at times the processing of tenders is inordinately delayed which may result in time and cost overruns and also invite criticism from the trade sector. Therefore, directs departments to finalise tenders, and contracts are awarded in a time bound manner within original validity of the tender, without seeking further extension of validity 8 24/8/08 007/ VGL/033 May 8, 2008 Adoption of integrity pact in major government procurement Provides guidelines related to the implementation of integrity pact in organisations 9 22/7/08 008/ CRD/008 Jul 24, 2008 Referring cases of procurement to the commission Cautions departments from referring cases of a general nature having elements of managerial decision making and concerning a particular procurement 10 18/5/08 008/ VGL/001 May 19, 2008 Adoption of integrity pact in major government procurement Selection and appointment of independent external monitors for the purpose of monitoring of integrity pacts
  • 31. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study31 No Office Order No. File No. Date of Issue Subject Details of the Circular 11 9/2/2008 008/ VGL/016 Feb 18, 2008 Workshop/ seminar regarding IT procurement Organise seminars/workshops and lecture classes at frequent intervals to keep the officials particularly those dealing with IT procurement activities educated and updated regarding the procurement procedures, CVC guidelines. Raises concern on a number of bank officials lacking basic skills in computer operations and knowledge of the banking software. Tendency on the part of senior officers to disclose their password to junior officials/staff for operating the system on their behalf, citing reasons, including work pressure and ignorance is criticised. Therefore, imparting of proper training to such officers and staff at various levels particularly those working in the branches is advised 12 7/2/2008 007/ CRD/008 Feb 15, 2008 Measures to curb the menace of counterfeit and refurbished IT products Provides directions on how organisations can avoid buying counterfeit and refurbished IT products and pirated software 13 1/1/2008 02-07- 01-CTE- 30 Dec 31, 2007 Acceptance of bank guarantees Provides guidelines to mitigate the problem of forged bank guarantees issued by vendors and buyers 14 43/12/07 007/ VGL/033 Dec 28, 2007 Adoption of integrity pact in major government procurement activities Simplifies forwarding of names for the panel of independent external monitors 15 41/12/07 007/ VGL/033 Apr 12, 2007 Adoption of integrity pact in major government procurement activities Prescribes adoption of Integrity pact, a vigilance tool promoted by Transparency International. The pact envisages an agreement between prospective vendors and the buyer committing both parties not to exercise any corrupt influence on any aspect of the contract. The integrity pact also envisages a panel of independent external monitors approved for the organisation that will review compliance to the integrity pact 16 NA NA NA Common irregularities/ lapses observed in stores/ purchase contracts Detailed report from the chief technical examiners of the CEC. Looks at flaws in all aspects of tendering from live field examples in government departments like preparation of specifications, pre qualification criteria, submission of EMD, etc. and prescribes changes required to mitigate these issues
  • 32. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study32 No Office Order No. File No. Date of Issue Subject Details of the Circular 17 23/7/07 005/ CRD/19 Jul 5, 2007 Transparency in works/purchase/ consultancy contracts awarded on nomination basis (Office Order No 23-7-07) Faults the thinking among departments that works can be automatically awarded to public sector units on a nomination basis without need for tendering. States that awarding of works to PSU’s on nomination basis should be an exception justified only during natural calamities and emergencies as declared by GOI and where procurement is possible from a single source only 18 14/4/07 98/ VGL/25 NA Use of products with standard specifications As far as possible, items with standard specifications should be prescribed in bid documents as procurement of non-standard products can lead to cost increase 19 10/4/2007 4CC-1- CTE-2 Oct 4, 2007 Mobilisation advance Gives additional directions related to mobilisation advance to contractors. Approval for such advance should be taken at the highest level of the organisation 20 4/3/2007 005/ CRD/12 Mar 3, 2007 Tendering process – Negotiations with L1 States that post tender negotiations even with L1 can be a source of corruption and this should happen in only certain exceptional situations. Convincing reasons must be recorded by the authority recommending the negotiation. In case, the quantity required is more than what L1 can supply, splitting of quantities should be done in a fair and equitable manner. The departments should also examine if guidelines regarding splitting of quantities can be disclosed in the tender 21 37/10/06 005/ CRD/012 Oct 3, 2006 Tendering process – Negotiations with L1 With respect to clarifications received from organisations regarding no negotiation with even the L1 bidder, the commission states that its guidelines were framed with a view to ensuring fair and transparent purchase procedure in the organisations. The guidelines are quite clear and it is for the organisations to take appropriate decision, keeping these guidelines in view. In case, they want to take action in deviation or modification of the guidelines, to suit their requirements, it is for them to do so by recording the reasons and obtaining the approval of the competent authority for the same. However, in no case, should there be any compromise to transparency, equity or fair treatment to all the participants in a tender
  • 33. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study33 No Office Order No. File No. Date of Issue Subject Details of the Circular 22 31/09/06 005/ VGL/004 Jan 9, 2006 Posting of details on award of tenders/ contracts on websites/ bulletins Reiterates previous circulars on regular posting of tender awards on website. Further such tender awards should comprise atleast 75 per cent of the total work tendered by the department. Additionally this information shall be available to the general public and shall not be restricted through passwords or only available to registered suppliers, etc. 23 15/05/06 005/ CRD/19 Sep 5, 2006 Transparency in contracts awarded on nomination basis CVC feels the need to bring greater transparency and accountability in awarding of contracts without tendering to PSU’s by other PSU’s or Government of India. In the circumstances, of awarding of contract on nomination basis to a PSU, commission recommends that (i) all works awarded on nomination basis should be brought to the notice of the board of the respective PSUs for scrutiny and vetting post facto, (ii) the reports relating to such awards will be submitted to the board every quarter, (iii) the audit committee may be required to check at least 10 per cent of such cases 24 21/05/06 006/ VGL/29 Jan 5, 2006 Examination of public procurement contracts by CVOs Direction to CVOs with enclosed checklist to audit the tenders floated by their department 25 71/12/05 005/ VGL/66 Sep 12, 2005 Undertaking by members of tender committee The members of the tender committee should give an undertaking that none of them has any personal interest in the organisations/agencies participating in the tender process. Any member having interest in any organisations should refrain from participating in the tender committee 26 NA 98/ VGL/25 Oct 11, 2005 Intensive examination of works by CTEs organisation CVO’s of departments will include all procurement activity in their quarterly progress report including service, consultancy contract, medicine supply, civil works, etc.
  • 34. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study34 No Office Order No. File No. Date of Issue Subject Details of the Circular 27 68/10/05 005/ CRD/12 Oct 25, 2006 Tendering Process negotiation with L1 Summarises the conference proceedings on procurement issues. Summary as following: 1) There should not be any negotiations. Negotiations if at all shall be an exception and only in the case of proprietary items or in the case of items with limited source of supply. 2) Negotiations shall be held with L1 only 3) Negotiations can be recommended in exceptional circumstances only after due application of mind and recording valid, logical reasons justifying negotiations 4) Further, it was observed that at times the competent authority takes unduly long time to exercise the power of accepting the tender or negotiate or re- tender. Accordingly, the model time frame for according such approval to completion of the entire process of award of tenders should not exceed one month from the date of submission of recommendations. In case, the file has to be approved at the next higher level, a maximum of 15 days may be added for clearance at each level. The overall time frame should be within the validity period of the tender/contract. 5) In case of L1 backing out there should be re-tendering as per extant instructions 28 57/09/05 005/ VGL/4 Sep 20, 2005 Details on awarding of tender Directs organisations for complying with directives regarding publishing of tender awards and states that this is a continuous process 29 46/07/05 005/ VGL/4 Jul 28, 2005 Details on awarding of tenders, contracts publishing Clarifies earlier directive regarding the publishing details of tender awards and says that the value of tender awards to be published should be so set that atleast 60 per cent of the tender awards are published on the website 30 NA 2EE-1- CTE-3(Pt) May 16, 2005 Issues pertaining to negotiations with L1 Expresses a view that negotiation with L1 can also lead to corruption and cites examples of World Bank directive regarding banning negotiation with L1. Invites responses in this regard from organisations 31 NA 2EE-1- CTE-3 Apr 12, 2005 Issues pertaining to negotiations with L1 Invites responses from organisation regarding negotiations with L1 bidder 32 11/3/2005 005/ ORD/1 Oct 3, 2005 Delays in payments to contractors CVOs will review the time taken for payment of bills by organisations 33 13/3/05 005/ VGL/4 Mar 16, 2005 Details on awarding of tenders/ contracts The departmental website should provide details of all works above a predetermined value, procured by the organisation with the following details a) actual date of start of work; b) actual date of completion; c) reasons for delays if any
  • 35. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study35 No Office Order No. File No. Date of Issue Subject Details of the Circular 34 18/3/05 000/ VGL/161 Mar 24, 2005 Banning of business dealing with organisations Commission states that banning of business is an administrative matter to be decided by the management of the organisation and the Central Vigilance Commission does not give its advice in such matters 35 15/3/05 OFF-1- CTE-1(Pt) V Mar 24, 2005 Notice inviting tenders In case of clauses such as tender inviting authority can reject tender applications without assigning any reason, such clauses should not promote arbitrary behaviour, however, clear logical reasons for rejecting any tender application should be provided 36 NA 98/DSP/3 Dec 24, 2004 Participation of consultants in tender Prohibits consultants from undertaking downstream work and for bidders for downstream work to provide consultancy services 37 72/12/04 004/ ORD/9 Dec 10, 2004 Transparency in tendering system – Guidelines regarding Due process of tendering should be followed, commercial bids of only those organisations that meet the eligibility criteria and qualify in technical evaluation should be opened 38 69/11/04 004/ ORD/8 Nov 3, 2004 Turnkey contracts for networking of computer systems Observes practice of adding unnecessary and miscellaneous components in case of procurement of turnkey contracts for networking. Advices departments to take assistance of third parties to determine requirements properly 39 68/10/04 98/ ORD/1 Oct 20, 2004 Leveraging technology – ePayment and eReceipt Reiterates CVC guideline of April 6, 2004 for moving over to ePayment mechanism 40 47/7/04 98/ ORD/1 Jul 13, 2004 Commission’s directives on the use of website in public tenders Webpage comprising all circulars related to uploading of tender documents on the department website 41 43/7/04 98/ ORD/1 Jul 2, 2004 Improving vigilance administration Issues numerous clarifications regarding the hosting of tender documents on websites of department. Clarifies on issues like huge size of tender document, issues related to security of websites, limited tenders. For limited tenders to empanelled vendors, CVC clarifies that the exercise for empanelment of vendors should be atleast undertaken every year. Clarifies that procurement of proprietary goods from original equipment manufacturers/suppliers need not be published on the departmental website 42 NA 4CC-1- CTE-2 Jun 8, 2004 Mobilisation advance Prescribes a due process for giving mobilisation advance including providing such details in RFP, obtaining equivalent amount bank guarantee and deducting the same over the course of the project
  • 36. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study36 No Office Order No. File No. Date of Issue Subject Details of the Circular 43 NA 05-04-1- CTE-8 Jun 8, 2004 Receipt and opening of tenders In case the tender documents can’t be submitted in a tender box and need to be submitted by hand to officials, the names of atleast two officials should be displayed prominently in the department 44 25/4/04 12-02- 6-CTE- SPI(1)2 Apr 21, 2004 Consideration of Indian agents Expresses concern about the practice of Indian agents bidding on behalf of manufacturers in one tender and in a similar tender representing some other organisations and the foreign organisations bidding directly in the second tender. Prohibits this practice 45 20/4/04 98/ ORD/1 Apr 6, 2004 Cutting delays by ePayments and eReceipt by government organisations Payments to organisations implementing projects as far as possible should be made through ePayment. Prescribes that by July 2004 50 per cent of the payment should be through ePayment mode 46 10/2/2004 98/ ORD/1 Feb 11, 2004 Increasing transparency (tender process) Discusses the practice of short-term tenders where newspaper advertisements are not published, however, CVC mandates publishing short-term tender on the departmental website 47 9/2/2004 98/ ORD/1 Feb 9, 2004 Increasing transparency (sale) Reiterated that organisations that have websites should publish tender documents on their websites 48 NA 98/ ORD/1 Dec 18, 2003 Improving Vigilance administration: increasing transparency in procurement/ sale, etc. Widest possible publicity should be given to tender documents including uploading of the tender document on the website of the organisation 49 NA 06-03- 02-CTE- 34 Oct 20, 2003 Back-to-back tie-up by PSUs Discusses the practice of PSU’s obtaining work without tender and thereafter sub-contracting 100 per cent of the work. The circular prescribes practices for transparency in the process of sub-contracting of work by PSU and such sub-contracted work also shall be tendered 50 NA 2EE-1- CTE-3 Oct 15, 2003 Tender sample clause Tenders call for submission of sample inspite of detailed specifications for items and samples are rejected on subjective basis. The guideline forbids rejection of tenders on the basis of defective samples 51 46/9/03 98/ ORD/1 Sep 11, 2003 eProcurement/ reverse auction Reverse auctions should be conducted in a fair and transparent manner
  • 37. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study37 No Office Order No. File No. Date of Issue Subject Details of the Circular 52 44/9/03 98/ ORD/1 Sep 4, 2003 Irregularities in the awarding of contracts The circular mandates that the pre-qualification criteria, performance criteria and evaluation criteria are incorporated in the bid documents in clear and unambiguous terms as these criteria are very important to evaluate bids in a transparent manner. Whenever required the departments/organisations should follow two-bid system, i.e. technical bid and price bid. The price bids should be opened only of those vendors who were technically qualified 53 33/7/03 98/ ORD/1 Jul 9, 2003 Short-comings in bid documents Mandates that evaluation criteria both for pre-qualification and bid evaluation should be explicit and should not be post facto decided after the opening of the tenders 54 NA 98/ ORD/1 May 5, 2003 Purchase of computers by government departments/ organisations Tenders should not mention brand name or reference to as multinational brands 55 NA 12-02- 6-CTE- SPI(1)2 Jan 7, 2003 Consideration of Indian agents An Indian agent of a foreign supplier can’t represent two organisations in the same tender. He/she should exclusively represent only one organisation in the tender 56 NA 98/ ORD/1 Aug 3, 2001 Improving vigilance administration – Tenders (H1) In case of sale of government goods, negotiation if at all, should be held with H1 bidder only 57 NA 98/ ORD/1 Aug 24, 2000 Improving vigilance administration – Tenders In case L1 withdraws bid the project should be re-tendered, department should go for techno commercial evaluation to ensure that bidders are technically qualified prior to the opening of the technical bids 58 NA 3(v)/99/9 Oct 1, 1999 Applicability of CVC’s instruction No 8(1)(h)/98(1) dated 18/11/98 on post-tender negotiations to projects of the World Bank & other international funding agencies While CVC guidelines will not be applicable specifically to projects funded by the World Bank, the department for other matters shall be bound by CVC guidelines 59 NA 8(1) (h)/98(1) Nov 18 1998 Improving vigilance administration (L1) Suggests implementation of good practices for a clean work environment. Bans post tender negotiation except with L1 60 NA UU/ POL/19 Oct 8, 1997 Grant of interest free mobilisation advance Recommends that mobilisation advance should not be given interest-free, but an interest component should be attached to such advance
  • 38. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study38 No Office Order No. File No. Date of Issue Subject Details of the Circular 61 NA 98/ ORD/1 Mar 15, 1999 Improving vigilance administration – Tenders States that preference may be given to PSUs for procurement, however, PSUs should not be covered for other private undertakings. In case the quantity for supply exceeds the capacity of the L1 tenderer to supply, the balance can be distributed to other suppliers 62 NA OFF1 CTE 1 Nov 25, 2002 Appointment of consultants For projects above 5 crore value, the CVC recommends the appointment of consultants. Further, such consultants should be appointed after a due process and approval regarding their appointment 63 NA 3L – IRC 1 Jan 10, 1983 Appointment of consultants The circular specifies that PSUs should recruit consultants in a structured manner 64 NA 12-02-1- CTE-6 Dec 17, 2002 Pre-qualification criteria (PQ) Detailed circular on framing of pre-qualification criteria – Extract and Summary ‘While framing the pre-qualification criteria, the end purpose of doing so should be kept in view’. The purpose of any selection procedure is to attract the participation of reputed and capable organisations with proper track records. The PQ conditions should be exhaustive, yet specific 65 12-02-1- CTE-6 May 7, 2004 Pre-qualification criteria (PQ). Organisations may suitably modify these guidelines for specialised jobs/works, if considered necessary. However, it should be ensured that the PQ criteria are exhaustive, yet specific and there is fair competition. It should also be ensured that the PQ criteria is clearly stipulated in unambiguous terms in the bid documents The complete version of the circulars may be reviewed at: http://cvc.nic.in/proc_works.htm While most of these CVC circulars are issued in the context of procurement of works and goods, several of the directives from CVC are relevant for IT procurement and eGovernance projects too. We recommend that a comprehensive review of all CVC guidelines be undertaken, and their applicability in the context of eGovernance projects, and information technology procurement, summarised in a guidance document from the Department of IT. Guidelines for procurement under IBRD loans or IDA credits Given that some information technology projects are funded by external donor/funding agencies, we thought it was necessary to review their procurement guidelines and recommendations. IBRD refers to International Bank for Reconstruction and Development (IBRD) and IDA refers to International Development Association (IDA) The guidelines can be reviewed at: http://siteresources.worldbank.org/INTPROCUREMENT/Resources/ProcGuid-10-06-ev1.doc.
  • 39. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study39 The Asian Development Bank (ADB) guidelines are available at: http://www.adb.org/documents/guidelines/procurement/default.asp Note – Wherever specific sections of guidelines are referred, they refer to the relevant sections and guidelines in the World Bank Document – ‘Guidelines Procurement under IBRD Loans and IDA Credits’. The ADB procurement guidelines are completely identical to the World Bank procurement guidelines. Summary of guidelines relevant to public procurement of IT services by government departments in India are as follows: 1. All goods and services including selection of the concessionaire for BOO/BOT/BOOT projects to be procured through international competitive bidding procedures with preference for domestically manufactured goods and where appropriate for domestic contractors 2. Section1.14oftheguidestatesthatitisthebank’spolicythatborrowersaswellasbidders,suppliers, and contractors and their sub-contractors under bank financed contracts, observe the highest standard of ethics during the procurement and execution of such contracts. In pursuance of this policy, the World Bank has specifically defined terms such as ‘corrupt practice’, ‘fraudulent practice’, ‘collusive practice’, ‘coercive practice’. In case the borrower or bidders or contractors commit any of the above breaches, the bank has defined penalties which include cancellation of bids, cancelling portion of loan, blacklisting such organisations that engage in corrupt practices or undertaking any combination of the above measures 3. In order to verify that corrupt practices have not been followed, the bank has inserted the following clause: “Will have the right to require that a provision be included in bidding documents and in contracts financed by a bank loan, a provision be included requiring bidders, suppliers and contractors to permit the bank to inspect their accounts and records and other documents relating to the bid submission and contract performance and to have them audited by auditors appointed by the bank”. 4. Procurement Plan: As a part of the preparation of the project, the borrower shall prepare a procurement plan acceptable to the bank setting forth: (a) the particular contracts for the goods, works, and/or services required to carry out the project during the initial period of at least 18 months; (b) the proposed methods for procurement of such contracts that are permitted under theloanagreement,(Note–Inmostcases,ICBorotherprocurementmethodswithduejustification) and (c) the related bank review procedures. The borrower needs to update the procurement plan annually or as needed throughout the duration of the project. The borrower will implement the procurement plan as has been approved by the bank. 5. SelectionofConsultants:Iftheprojectincludestheselectionofconsultingservices,theprocurement plan should also include the methods for selection of consulting services in accordance with the Guidelines: Selection and Employment of Consultants by World Bank Borrowers 6. The bidding documents shall clearly state the type of contract to be entered into and contain the proposed contract provisions 7. The bank is flexible regarding the quantum of work to be tendered under a single tender or for splitting a work and tendering parts of the work separately to attract interest of both small and large organisations. However, all bids and combinations of bids need to be received by the same
  • 40. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study40 deadline and opened and evaluated simultaneously, so as to determine the bid or combination of bids offering the lowest evaluated cost to the borrower 8. Two-stageBidding: In the case of turnkey contracts or contracts for large complex facilities or works of a special nature or complex information and communication technology, the World Bank desires a two-stage bidding procedure. As per the process suggested by the World Bank, at the first stage, unpriced technical proposals on the basis of a conceptual design or performance specifications will be invited, subject to technical as well as commercial clarifications and adjustments, to be followed by amended bidding documents and the submission of final technical proposals and priced bids in the second stage 9. WidePublicity: The bank desires timely notification of bidding opportunities to enable competitive bidding. All tenders for which the borrower has obtained a World Bank loan, the bank desires a detailed general procurement notice to be published in the UN Development Business online (UNDB online) and in the development gateway’s dgMarket. The tender will further be advertised in one nationally circulated newspaper in the borrowers country or in the official gazette, or in an electronic portal with free access 10. The tender shall be advertised such that there is sufficient time to enable prospective bidders to obtain pre-qualification or bidding documents and prepare and submit their responses 11. Pre-qualification of Bidders: Under Sections 2.9 and 2.10, the bank desires pre-qualification for large or complex works or where detailed bids are required. Pre-qualification also ensures that invitations to bid are extended only to those who have adequate capabilities and resources. Pre-qualification needs to be based entirely upon the capability and resources of prospective bidders to perform the particular contract satisfactorily, taking into account their (a) experience and past performance on similar contracts, (b) capabilities with respect to personnel, equipment, and construction or manufacturing facilities, and (c) financial position. In Section 2.10, the bank specifies certain guidelines regarding the practice of pre-qualification namely: a. The invitation to pre-qualify for bidding shall be advertised and the scope of the contract and a clear statement of the requirements for qualification shall be sent to those who responded to the invitation b. All such applicants who meet the specified criteria shall be allowed to bid c. Borrowers shall inform all applicants of the results of pre-qualification d. As soon as pre-qualification is completed, the bidding documents shall be made available to the qualified prospective bidders e. For pre-qualification for groups of contracts to be awarded over a period of time, a limit for the number or total value of awards to any one bidder may be made on the basis of the bidder’s resources f. The list of pre-qualified organisations in such instances shall be updated periodically g. Verification of the information provided in the submission for pre-qualification shall be confirmed at the time of awarding of the contract, and awarding may be denied to a bidder that is judged to no longer have the capability or resources to successfully perform the contract 12. Bidding Documents: Regarding the bidding documents, the bank has the following guidelines: a. The bidding documents shall furnish all information necessary for a prospective bidder to prepare a bid for the goods and works to be provided, the detail and complexity of these

Related Documents