Cracking the whip with e-procurement

Public procurement has always been a hotspot for scamsters and corruption-mongers in India. To get rid of this, the finance ministry had mandated e-procurement for all tenders of value above `10 lakh on March 30, 2012.

Even before that e-procurement or e-tendering system was in place, but loopholes were there in it as it could not keep corruption at bay in public procurement. So, the Government of India, through the Department of Information Technology (DIT), came up with a set of guidelines to ensure high standards of security, accountability, and transparency.

These e-procurement guidelines issued by DIT, if experts are to be believed, are the most ‘comprehensive' and ‘demanding' guidelines in the world, because of their ability to protect bid-confidentiality and other critical transparency requirements of the public procurement process.

Many solutions providers, including NIC, have not been able to comply their solutions to the guidelines, because of their comprehensiveness. While a number of companies are unable to comply, they are putting pressure on the government to relax the guidelines.

A Bitter Pill?

What has made it difficult for software providers is a circular by the Central Vigilance Commission (CVC) dated January 12, 2012, and office memorandum (OM) by the finance ministry that seeks that all e-procurement software/systems in the country have to be ‘certified for compliance to the DIT guidelines' by Standardisation Testing and Quality Certification (STQC), the testing arm of the Government of India under theMinistry of IT.

Many software companies are finding the guidelines a hard nut to crack as in order to achieve compliance they have to revamp their e-procurement systems. Unable to do this, they are sure to mount pressure on the authorities to relax the guidelines. But experts fear if the government succumbs to their pressure, the efforts to bring transparency in the e-procurement process will suffer a major setback.

The Successful One

One of the first companies that achieved compliance and got certification is ElectronicTender. On January 18, 2013, ElectronicTender got its e-procurement/e-tendering software duly certified by the testing body, STQC.

"Scope of the compliance also covers compliance with CVC guidelines for e-procurement application software; General Financial Rules (GFR) 2005; Information Technology (IT) Act 2000 (and its Amendment 2008). What is significant is that ElectronicTender is the only player to have earned the certification for its e-procurement/e-tendering system under the new guidelines till date," claims Jitendra Kohli, co-founder and managing director of Electronic Tender.

Significance of a Fully-certified System

Kohli told Dataquest that a system which is certified by CVC offers secure platform bringing efficiency and transparency into the bidding process.

Kohli says: "The guidelines, if taken in mind while building an application, will have near impenetrable security-standards. Nobody can ever point a finger at the buyer organization (ie, a government purchasing entity) and its concerned officers for any connivance relating to tampering of any important electronic record, or for breach of bid-confidentiality, even if clandestine copies of the encrypted bids are made through spyware."

"The highest standards of transparency incorporating various legal and transparency related nuances of the well-established public tender-opening processes have been implemented in the software in a user-friendly manner," adds Kohli.

Downplaying E-tendering

It is obvious that any tampering with the guidelines will downplay the importance of e-tendering. What bothers is that even the government organization like NIC has not been able to do this. It is important that government agency sets the example. Otherwise it is obvious to sense, for critics, a nexus between the government agency and private players to force the government to relax the guidelines to accom­modate their interests.

NIC is the government agency that offers e-procurement system. A number of players such as HP, SAP, Oracle, and Indian companies such as C1, NexTender, ABC, MetalJunction and others have e-procurement software. But all of them need to seek certification and tweak to the needs of the fresh guidelines.

STQC's Challenges

It is a challenge for STQC to maintain its high standards of testing and audit, and to thoroughly screen e-procurement software/systems before awarding certificates.

The truth is not hidden that there exist different kinds of bid-encryption methodologies (which is the equivalent of bid-sealing in the manual tendering system). These methodologies allow breach bid-confidentiality. STQC will have to exercise great caution while clearing/certifying any e-procurement software/ system which comes in these categories.

A Word of Caution

Another area of caution for STQC will be to ensure that any e-procurement software/ system which is certified should have a proper and very transparent online public tender opening event in the presence of bidders, and not merely an online opening event.

Section 6.3 of Annexure-I of DIT-guidelines elaborates the requirements of a proper online public tender opening event. "A public tender opening event is the backbone of transparency in public procurement. Hence, no compromise in this area should be acceptable," shares Kohli.

Conclusion

Any tampering with the guidelines will pave way for corruption in the system. It is high time that standard sets are followed. Vendors must be encouraged to get certification for their applications.