The 2G Resale: Learning from Past Mistakes

1 Pre-qualification Conducted Offline

Constraint: Applications for pre-qualification of bidders were not sent online. Moreover, they were sent by post to DoT, Sanchar Bhawan, 20 Ashoka Road, New Delhi.

Suggestion: As per CVC's and DIT's guidelines for e-tendering/e-procurement, the auctioneer should be able to electronically facilitate the pre-qualification round from the same portal. The same practice should be adopted in 2G e-auctioning also. "The pre-qualification part of the proposed 2G auction sale should also be handled through the e-tendering methodology, as even e-tendering is now being made mandatory by the government for all tenders above `10 lakhs in value," says Jitendra Kohli, a pioneer and expert in the area of e-procurement and e-auction.

2 Confidential Info Given to Third Party

Constraint: "..all confidential information contained within the Electronic Auction System will be accessible only to staff at DotEcon for the purposes of ensuring the smooth..." - As given in Notice Inviting Applications dt. February 25, 2010 by the department of telecommunications (DoT). The confidential information was handed over to DotEcon (a London-based consultant) who was an advisor to execute the 3G e-auction. The prerequisite can be irksome as the information can be easily exchanged without any monitoring.

Suggestion: Government officials should be effectively trained for conducting online auctions so as to not to remain dependent on advisors and not give out any information to the third/private party.

3 Security Not Prioritized

Constraint: In the latest RFP issued by DoT, security has been given the least weightage. 'E-security aspects in design and conduct of the auction' remain to be only 10% of the total parameters in the bid.

Suggestion: Other than focusing on reserve price, the Trai and Telecom Commission should also give a right of way to the security concerns, as the auctioning process involves third party as a consultant and huge money flows in by the bidders.

4 Third Party Audit Not Conducted

Constraint: According to a report in The Hindu dated April 14, 2010, "CVC had suggested that the DoT should conduct a third-party audit on the auction process to ensure transparency in compliance with the Commission's guidelines for e-commerce platforms. However, the DoT has taken a view that such an audit was not mandatory."

Suggestion: E-auction, as in case of spectrum sale, also involves lakhs of crores and is in the same generic category as e-tendering and e-procurement; it is therefore logical that e-auction systems should also be similarly certified and audited.

5 Multi-round Process: Best Price Not Extracted

Constraint: In the '3G Spectrum Auction' process, price enhancement in any given round was dependent only on acceptance by bidders of the Auctioneer's 'Reserved-Price'. In effect, this may not extract the best price from the bidders.

Suggestion: The methodology should have an element of 'Competitive Bidding' added in each round of the e-auction process. This will eliminate, or drastically reduce, the large number of auction rounds and will extract the best market driven price.