Power corrupts. Absolute power corrupts absolutely. And if the stakes are as
high as the Rs 12,400 crore national e-governance plan, allegations certainly
fly thick and fast.
While this reporter, under normal circumstance would not have taken note of
the "all and sundry" comments and charges that are levied by the dozen
each day, for we Indians are fond of criticizing and mud slinging, Umashankar C
is not just an ordinary Indian. Besides being part of the select Indian
Administrative Services cadre that is at the helm of the country's
e-governance initiatives, he is also the member of DIT's working group for
implementation of national e-governance action plan.
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Incidentally, the man who presently serves as the commissioner, Tribunal for
Disciplinary Proceedings, Salem, was responsible for unearthing high-level scams
in Tamil Nadu as the State's Joint Vigilance Commissioner. Prior to his
present position he has also worked as DC, Tiruvarur, and joint chief electoral
officer for Computerization.
His allegations against the highest echelons of e-governance found credence,
to a certain extent, when Dataquest was able to lay hands on a petition made by
the Karnataka State Electronics Development Corporation (KEONICS) chairperson
Manjula Nagaraj P to the Andhra Pradesh chief minister Dr YS Rajashekhar Reddy,
referring to the possibility of irregularity in the grant of Government of
Andhra Pradesh's (GOAP's) e-Procurement project.
While Manjula's letter (Ref: KSDC/CHMN/349/2004-05), dated October 14,
2005, made subtle reference to J Satyanarayana, the present National Institute
of Smart Government (NISG) CEO, as "secretary IT&C", Umashankar
decided to send him a mail directly seeking clarification on various cases of
irregularities within seven days-including that of the GOAP e-Procurement
project. The subject of Umashankar's mail, dated April 27 2005, shouted:
"Mr J Sathyanarayana of NISG-Are you corrupt?"
According to the copy of the mail, which was marked to the members of the
eGovINDIA e-group on Yahoo, Umashankar had alleged an unholy nexus between
Satyanatanaraya and PricewaterhouseCoopers (PwC), which warranted a closer look
and smelled of the possibilities of corruption in the process of awarding
several e-governance consultancy projects.
Dividing Satyanarayana's term as Department of IT & Communications
(IT&C) Secretary in GOAP and NISG CEO, Umashankar alleged, "One needs
to look closely at the consultancy projects awarded by J Satyanarayana and you
will see a pattern emerge. The only company to win most of the contracts was PwC."
He further stated that as the Principal Secretary (IT&C) in GOAP for four
years from 2000, Satyanarayana awarded consultancy jobs to PwC for five major
projects-OLTP, Social Benefits Management System (SBMS), Integrated Financial
Information System (IFIS), e-Procurement and Human Resources Management System (HRMS).
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PwC's job for all these projects, according to him, was to prepare the RFP
(request for proposal), call for tenders on behalf of GOAP, evaluate the
technical bids, qualify final bidders for commercial bid opening, and finally,
to recommend and leave the decision to the government to place orders on such
party.
"It may also be interesting to note that in some evaluations, it was
just left to PwC to sit through product demonstrations without any participation
of the government," he alleged, adding further that during his tenure
Satyanarayana had also recommended PwC to the commercial taxes department and
the department of municipal administration of the GOAP as a consultant. In fact,
delving on Satyanarayna's role as the CEO of NISG, Umashankar has also alleged
that the very first project taken up by the institution-e-Biz, for the
Department of Industrial Policy and Promotion-was archestrated to enable the
selection of PwC.
When contacted, Satyanarayna, PwC, and DIT refuted the allegations made by
Umashankar. The CVC, however, did not reply to the Dataquest e-mail that had
primarily sought information on whether the Commission had taken any action to
determine the veracity of the allegation and whether it had done anything to
demonstrate that the allegations were false.
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Terming it as baseless, factually incorrect and highly misleading,
Satyanarayna said in a written reply: "I have been dealing with
computerization and e-Government projects over the last 18 years. I have been
associated directly and indirectly with over 40 such projects. Companies like
TCS, PWC, Wipro, Ram Informatics have been awarded two or more projects or
assignments during this long period. Does it lead to the inference of 'unholy
nexus' with all these companies?"
Neel Ratan, executive director, PwC, on the other hand said, "PricewaterhouseCoopers
has played a significant role in the advent of e-governance in the country.
Being the thought leader, PwC was the first to set-up large e-governance
practice in India and made significant investments to grow its capabilities in
this domain. The e-governance projects are awarded on competitive bidding basis
as per applicable government guidelines. Accordingly, we won some projects and
also lost some."
Replying on behalf of the DIT, the Joint Secretary R Chandrashekhar said that
while DIT was not the competent authority to take action on any
"allegations" relating to his (Satyanarayna's) tenure with the GOAP,
"the facts referred to in the letter relating to his tenure as CEO NISG
have already been placed before the Board of NISG and the board has not found
any substance in the content of the petition."
Investigations by Dataquest, however, reveal that while PwC was not involved
with the GOAP's OLTP project or DIT's eGovWorld project, as claimed by
Umashankar in his mail, PwC did win seven out of 11 e-governance consultancy
projects that Satyanarayana had been involved in directly or indirectly-either
as the secretary-IT&C, GOAP or as the CEO of NISG. Was it a mere coincidence
after all?
According to Umashankar, NISG opted for the limited tender route for the
e-Biz project and just invited Crimson Logic (a Singapore-based firm),
Haselfre, and PwC. While the four-month old Haselfre was disqualified in the
pre-bid evaluation, Crimson Logic was disqualified on technical grounds paving
way for PwC to corner the contract.
"There are several consulting companies like KPMG, TCS, Wipro, Satyam,
Ernst & Young and Microsoft Consulting Services who could manage similar
jobs and hence it is difficult to understand why NISG floated limited enquiry
only to Crimson logic, Haselfre and PwC," argues Umashankar.
While Satyanarayna's defense that PwC was handling four of the 11 listed
projects- SBMS, IFIS, e-Procurement and HRMS-as per the Global Consultant's
mandate to handle five core projects does hold ground, his reply that "the
technical evaluation of the e-Biz pilot project was done by a committee
appointed by the Government of India and headed by Prof Phatak of IIT Mumbai,"
does not explain the basic question of why no other big player was invited to
bid for the same. PwC and DIT, on the other hand, have maintained a silence on
this allegation.
That all is not clearly overboard is evident from Manjula's petition
pertaining to the GOAP's e-Procurement project. She has alleged that PwC had
built the entire tender document in such a way-and again through a limited
tender route-that KEONICS was prevented from participating in the process.
"We really do not know why a tender of this magnitude was floated through
the limited tender process and violated the norms of the GOAP tendering
procedures," she remarked in her letter to Dr Reddy.
The petition also alleges that though the secretary, IT&C, GOAP (Satyanarayana
in this case) was aware of the irregularities, no action was taken by anybody
"to correct the procedure and prevent the losses to the public
exchequer." Soon, the GOAP Jt Secretary M Pratap at the behest of the Chief
Minister Dr Reddy sent instructions to the then GOAP IT&C Principle
Secretary J C Mohanty for an enquiry into the whole episode. Though, according
to GOAP officials, a reply was sent to Manjula within 15 days, the copy of the
enquiry report was not made available to Dataquest despite several requests. Our
Hyderabad reporter was, however, allowed to copy certain portions of the noting-most
of which insufficiently answered the KEONICS' chairperson's allegations.
There is another interesting angle to the story as well, the one that defies
all logic and raises a pertinent industry question-how vendor-neutral can
consultants like PwC remain, when they also partner some of the vendor
companies?
And before one jumps to conclusion or starts a counter offensive to this
poser, here is another startling fact: While PwC was a consultant for the GOAP
e-Procurement project that was bagged by C1 India, the two companies joined
hands as partners to bid and bag NIC's e-Procurement project recently. All
this, while PwC is still working as the consultant responsible for preparing the
RFP for the GOK and GOCG e-Procurement projects! (It's entirely a different
matter that Nextender has obtained a stay order at the Delhi High Court against
the awarding of the tender till the final decision. Indeed, ITI had at one point
of time complained that it was not allowed to bid on the basis of an eligibility
criteria that did not exist.)
Needless to say, this is not the desirable situation as the relationship
between the two companies may willingly, or unwillingly, have an adverse
influence on the RFP for all e-governance projects being prepared by PwC,
particularly, the two current consultancy assignments related to e-procurement.
To say that people at the helm of the affairs may not be aware of this or
might have missed this, would be worse than saying that we are living in a
"fool's paradise".
COUNTERPOINT: Read response by Srivatsa Krishna, IAS on the report "The Egovernance Muddle" published in Dataquest dated August 31, 2005. Krishna is currently working with the World Bank in Washington, DC.