E-Tendering in India: Is There a Colossal Scam Brewing?

E-tendering in India seems to be riddled with a mammoth scam amounting to nearly 10,000 crores, which is just the tip of the iceberg

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The days where tenders were floated in a room full of people are erstwhile. With the advent of technology, nearly every process all the over the world has gone the ‘E’ way. E-tendering is a similar business to government purchase and sale system that was brought into the public sector for procuring and selling contracts. What this system was desired to achieve was benefits like increased efficiency, reduced costs and improved transparency to reduce corruption. In spite of that, seems like corruption has somehow managed to seep into the e-procurement system in India.


A recent report suggests that the Economic Offences Wing (EOW) is probing into a gigantic scam of approximately Rs. 10,000 crore in Madhya Pradesh. Documents are being collected from Madhya Pradesh state economic development corporation (MPSEDC), and Bengaluru based Antares Systems with TCS as a front, which operated tenders, says a report on TOI. The report suggests that a few individuals may have breached the software security system to check rates quoted by the companies and modified the rate of the company of their choice to the lowest.

This, however, is just the tip of the iceberg as this just one potential scam that is on its way on being uncovered. “There are many more vulnerabilities and functional deficiencies in most e-procurement systems provided by private, as well as, Government entities (including those of Govt/ PSU entities such as NIC, MSTC, ITI, Railways) being used in India, which could lead to potential scams in the future,” says Mr. Jitendra Kohli, Managing Director at Mr. Kohli has been trying to alert the government on the potential scams for fifteen years, he says.

Kohli has also written about and presented papers on avoiding scandals in the procurement system in reputed international conferences. In one such paper titled “Red Flags in E-Procurement/ E-Tendering for Public Procurement and Some Remedial Measures”, he suggests how the system can be manipulated and what could be the checks in place to maintain the process from being tampered with. Although e-tendering holds enormous potential for enhancing efficiency and transparency in public procurement if done properly, there are certain loopholes that need to be addressed or it could be worse than the traditional manual procurement/ tendering process in respect of preventing manipulation and corruption, he mentions in the paper.


Unlike the manual process of bidding wherein the bids are sealed in an envelope, in the e-tendering process the ‘sealed envelope’ could be an ‘encrypted bid’ to make the data ‘unreadable’. “However, if no such functional equivalent is provided in the re-engineered electronic system, or a vulnerable form of bid encryption is provided, it would vitiate the sanctity of the public procurement process under the garb of re-engineering,” says Mr. Kohli.

Also, in the manual tendering process, the sealed bids are opened in public in the presence of bidders, wherein in e-tendering the same is done online. But, Mr. Kohli adds, that unless the online bids are opened by authorized tender opening officers of the procuring entity in the simultaneous online presence of bidders, along with other important procedures such as digitally counter signing of the bids online by the TOE, corruption is bound to take place. He speaks about many more checks and measures that can be applied, which can be read about here.

Rs. 10,000 crore is no mean amount and to suggest that this figure can be added to is truly worrying. If the government officials do act upon this report with immediate effect and put the checks and measures in place to make the e-tendering process more secure, then the damage can be controlled. If not, then the country could yet again be staring at a colossal scam.

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