Interview

Bringing Transparency Efficiency in Government Procurement : Sumeet Bhatt, Director-NexTenders India Pvt. Ltd

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“The single most critical outcome that should be expected out of adopting e-Procurement is the ability to assure each stakeholder (in the tendering process) that there has been no malpractice during the transaction, and that the highest levels of fair practices has been adhered to. This primarily refers to the integrity of the mechanism by which the tender has been processed,” says Sumeet Bhatt, Director, NexTenders India Pvt. Ltd.

What are the advantages of e-Procurement process in the public sector?

The advantages in adopting an e-Procurement Solution are manifold:

  • Greater transparency in the tendering process
  • Reduction in tender processing cycle time
  • Reduction in administrative and communication costs
  • Real-time access to information to decision makers
  • Instant and round-the-clock access to publicly accessible information on the Internet
  • Increased Levels of accountability
  • Capability to monitor the performance of state agencies
  • All transactions are truly auditable
  • Enhanced security
  • Demand aggregation across different divisions/departments leading to better negotiating power with suppliers and process efficiency
  • Supplier discovery / widening choice and the supplier base
  • In-built document management/file management system

Please discuss the deployment of NexTenders’ e-Procurement solution. What benefits does it offer?

NexTenders implements an e-Procurement solution based on the principle of appropriate change management which is the gradual introduction of e-Procurement so as to overcome initial resistance. Typically, the activities involved in an implementation are training (of buyer and supplier users) and hand-holding them through the transactions during the initial stages of implementation. Both electronic and manual traditional modes of transactions are usually permitted till the point the users reach a certain level of proficiency in using the system. This ensures smooth transitions to the electronic platform.

The various stakeholders (suppliers in particular) are educated about the benefits of e-Procurement. This is essential so that no misconceptions remain which can lead to rejection / boycotting of the electronic system. To start with an implementation plan is devised in conjunction with the buyer organisation that clearly defines the time-lines and sets the milestones of the implementation. The plan factors in the IT readiness of the various stakeholders and other prevalent realities in the organisation and the state. Once the plan is accepted, it is circulated and adhered to.

This approach ensures a high level of adoption of the electronic process both by the users in the buyer organisation and the suppliers. The concerns of each set of users (viz., the buyer users, the suppliers and those belonging to the regulatory bodies) are quite exclusive and get adequately addressed by this approach.

What are the specific features of NexTenders e-Procurement solution?

Our Electronic Government Procurement System (e-GP) provides an electronic platform that enables end-to-end automation of all activities in the government procurement process from requirement generation through contract fulfilment. The e-GP system is entirely web-based and browser based and assures the widest reach. While the system utilises the state-of-the-art technologies based on cryptography to secure transactions both in the public domain and those internal to the organisation, the application interfaces are highly optimised to work even on low bandwidth dial-up internet connections.  This ensures accessibility in the remotest and the most rural parts of the country.

The e-GP system implements 4-tier architecture and provides a common interface to all parties involved in the procurement process and enforces access-based privileges. All critical transactions in the various modules of the e-GP system are work-flow driven and all data definitions are template-based. This achieves two objectives: to guide the users through the transactions and, to ensure that only those transactions that are legally valid can be executed.

The e-GP system has three functional areas: electronic pre-tendering, electronic tendering and electronic post-tendering. electronic pre-tendering automates the transactions before the tendering process. These are the processing of requirements, indents through a work-flow. Electronic tendering is the most important and critical of the three areas of e-Procurement as it is mostly in the public domain. The e-GP system provides highly configurable work-flows to automate the tendering process. It is capable of processing multi-stage tenders with various bidding and bid opening rules. The solution also incorporates a reverse auction module which is gaining popularity as a negotiation tool after the bid opening.

Electronic post-tendering kicks in after the tendering process is completed. Here again the e-GP system provides specialised work-flows optimised for tracking the fulfilment of purchase orders. It provides options to log in details of the progress of the work / supply of material or service and the payment being made to the suppliers during the course of the contract.

In the case of rate approval tenders, the system automates the definition of a rate contract on award of contract. The rate contract catalogue can be referred to in the pre-tendering module while analysing requirements.

The e-GP system has the capability to map the entire organisation and to define the powers vested in the various officers to sanction an expense. This functionality is called in at sanction points during the electronic procurement process. Additionally, there exists the capability to define the committees and set escalation paths during critical decision points.

The NexTenders e-GP system is unique e-Procurement system in that it is entirely process-centric in approach. This means that all the information (tender specifications, bid formats, work-flow parameters, and other transaction rules) in the various modules are not captured in document but rather in data templates. This makes it possible to define data to a very high level of precision and detail. All the transactions are work-flow based thus eliminating any chance of making incorrect / conflicting specifications is entirely ruled out. As all transactions are electronic the process is entirely paper-less. This enables powerful MIS, audit capabilities and other benefits expected of the electronic platform.

The e-GP system provides end-to-end automation across pre-tendering, tendering and post-tendering and all (buyer and supplier) transactions are web-based and browser-based thus allowing maximum mobility and reach.

The system has evolved considerably since the version 1 series was launched in 2003 in Public Works Department (PWD)-Chhattisgarh, which was essentially an e-Tendering system addressing the processes from tender preparation to award. Version 2 series (also known as the Wipro-NexTenders EGPS), co-developed and launched in partnership with Wipro in 2005, was first deployed in Municipal Corporation of Delhi. This system is an end-to-end e-GP system and has subsequently been deployed in the Government of Chhattisgarh, the Punjab National Bank, the Government of Madhya Pradesh, etc.

The Version 3 series of the e-GP system (to be released to the market shortly) will be available in various flavours that are pre-configured to meet the functional requirements of various kinds of government entities. (e.g. state agencies predominantly executing works tenders, state agencies predominantly establishing and managing rate contracts, public sector undertaking {PSUs}, etc.). There will also be a flavour that will be truly comprehensive that span all the functional modules of e-Procurement with all its nuances and variations.

Version 4 series of the e-GP system which is in the pipeline will take e-Procurement to the next level of modularity, scalability, interoperability and compliance with global standards. Based on state-of-the-art technology and on our proven domain expertise in the field of e-Procurement, the new version will be as easy to use as desktop office software thereby revolutionising the way public entities procure globally.

What are the fundamental security requirements for tendering?

The following are the four most important security considerations and challenges in tendering:

  • From the point of tender notification through the opening of the first envelope of the bid response the identity of the bidder(s) and the number of bidders responding to the tender has to be confidential. It should not be known to even the officers in the buyer organisation (that has called for the tender). This is critical as the knowledge can be potentially misused.
  • The information contained in the bid should neither be physically accessible nor visible during any point of time from the point of bid submission to the point of the bid opening (of the envelope containing the bid information). This is because the mere act of viewing the bid data is a compromise of the entire tendering process.
  • It should not be possible that the tender data be modified after release (of the tender) or the bid data be modified after submission (of the bid) unless it is legally permitted under a provision to amend it.
  • It should not be possible for the person who has signed and submitted a document (tender or a bid) to repudiate the information contained in the document.
  • Most ‘secure’ e-Procurement systems in the market are dependent on the ‘principle of 4-eyes’ for their security requirements. In other words, the security of the tendering process is dependent on the personal integrity of specific individuals (usually the system administrator and a buyer officer). However, such systems are completely at risk since any collusion between these individuals completely exposes the system. A truly secure e-tendering system should not be dependent on any individual but should rely on sound logic and process sanctity, which are provable and audit able.

How secure is the NexTenders e-Procurement solution?

All versions of the e-GP system incorporate implementations of certain patented processes (viz., the Secure Bid Process and the Key Manager Process) that are incontrovertibly the only ones that adequately address key considerations and challenges in government procurement as outlined earlier. Additionally, the e-GP system addresses the issues that arise from e-Enabling the traditional processes. All known vulnerabilities introduced because of data exchange on the internet are addressed by deploying all the known and time-tested methods for securing the application hosting environment.

NexTenders caters exclusively to governments and the public sector. What are the best practices in public sector e-Procurement?

The single most critical outcome that should be expected out of adopting e-Procurement is the ability to assure each stakeholder that there has been no malpractice during the transaction, and that the highest levels of fair practices has been adhered to. This primarily refers to the integrity of the mechanism by which the tender has been processed (most importantly, from the point of tender release to the point of tender opening). While there are various methods that are in use to handle the bid data, only the NexTenders’ patented secure bid process has been able to assure these by rendering the tender processes tamper-evident.

In the electronic paradigm, it is best that tender, bids, requirements, indents, purchase orders, invoices, etc., be looked upon and transacted upon as a set of data (residing in templates) rather than as a document. This approach delivers the capability to harness the full benefits of the electronic platform and leads to process improvements which are fundamental requirement of e-Governance.
The system to be adopted should provide decision support so that the authorisers (of transactions) and the competent authorities are empowered with complete information pertaining to the transaction. This will enable the authorisers to take an informed decision, faster. This would mean that the system to be adopted should deliver document management capabilities to the required extent.

The system should also enforce accountability at every level by mandatorily securing each transaction with observations/comments, digital signatures and automatic time-stamps. Apart from the procurement transactions all modifications in the system should be completely auditable. For this reason, detailed audit trails of all transactions and modifications have to be maintained.

The solution being adopted should be modular and allow selective adoption of modules so that legacy systems (that may already be in place) need not be thrown away. In such a scenario, the e-Procurement solution should be capable of lending itself to integrate with the legacy systems at various functional points so as to enable a seamless enterprise.

As e-Procurement works on the Internet which is a global system, global interoperability is critical. For this reason the e-Procurement solution should adhere to global standards with respect to processes, transactions and data definition structures/formats.

What has been  your experience of deploying e-Procurement solutions in the different states in India, what are some of the factors for the success of e-Procurement project? Also, what are the reasons for slow adoption of the project here in India?

Firstly, the solution should provide an assurance to the various stakeholders that the e-Procurement initiative is for their betterment and that the solution imparts the transactions the highest levels of integrity.

The solution that is being deployed should be engineered appropriately so that the value proposition is demonstrable. The solution should deliver the following:

  • Non-duplication of work
  • Reduced transaction life cycles
  • Reduction in costs
  • Highest level of security
  • Easy access to critical information (at the time of decision making)
  • Mobility and logistical convenience

 The success of the implementation vastly depends on how well the users (of the system) are trained. There are various approaches to this (viz., classroom lectures, hands-on sessions, training-the trainer, etc.). In addition to training, it would be worthwhile to have a help-desk where the users can call in at the point of transaction in case of doubts and issues. Additionally, the conviction displayed by the government in adopting e-Procurement to its employees and to the supplier community plays a crucial role in the success of the implementation.

The primary reason for the non-adoption or delayed adoption of e-Procurement by any organisation or state government is the lack of political or bureaucratic will. Certain states that are considered to be ‘new’ or ‘backward’ are in reality front-runners. The Government of Chhattisgarh has been tendering electronically for the last four years and has now gone on to implement e-Procurement across the entire state. The Government of Assam has been tendering electronically for over three years and has been able to secure some of the highest amount of government sanctions for works as a result of adopting e-Tendering.

On the other hand, certain states and PSUs exist with the highest levels of IT capacities without having taken any material steps towards full-fledged adoption of e-Procurement despite strict guidelines from the Central Vigilance Commission and the Finance Ministry

Other factors in delayed/slow adoption are the poor technical evaluation by states/PSUs of a solution or solution provider. A combination of poor technical evaluation and the L1 mindset can lead to disastrous choices. Another factor is technology ideology– usually the Microsoft versus Open
Source debate, or obsession with brand names. These issues detract from the fundamental needs and evaluation criteria that are necessary to select a good system suitable for the public sector delivered at a fair price.

What are your recommendations for the government in
implementing e-Procurement projects?

Firstly, the organisation must internally debate key questions and issues and ensure it is prepared. The implementation model and the selection process to decide on the solution and the partner needs to be appropriately chosen. Some key questions that ought to be debated internally are:

  • What is the best method for my organisation to adopt and implement e-Procurement? Some  organisations are better off starting with e-Tendering and then gradually progressing to e-Procurement. Some organisations respond better to rapid implementation of e-Procurement.
  • What is the functionality required by my organisation?
  • What types of suppliers are best suited to provide the functionality and implementation plan that we require? Critical issues here in selection are the bonafi des, track record, functionality offered and the implementation plan proposed by suppliers.
  • What revenue model do we go for? e-Procurement offers a choice of revenue models, so the most appropriate model should be decided beforehand.
  • What is the best selection process for my organisation within the rules that I have to follow? This is essentially the tender conditions that are to be set out for selection of the supplier.
  • Are we capable of evaluating proposals or do we need external consultants?
  • What are the technology issues we will face if we adopt e-Procurement? Do we need to upgrade our skills and/or equipment?

Secondly, certain e-Procurement standards have to be formulated, published, adopted and    enforced. This is primarily with respect to the best practices outlined earlier. Thirdly, the organisation should ensure that political / bureaucratic and management will to implement e- Procurement percolates to the user level in the organisation (including suppliers). This is frequently the key differentiator of success/failure, even if the best system and service provider is chosen. This can be initiated through regular seminars, workshops, pilot projects, etc in partnership with e-Procurement solution providers prior to a formal implementation or roll out.

Fourthly, the government organisation should participate in the risk and reward with the service provider so that it has a stake in it. This could be a fi nancial stake, but need not necessarily be limited to fi nancial. Essentially, organisations need to feel a sense of ownership and pride in their adoption of e-Procurement.

e-Procurement is a critical component of e-Governance. Appropriate and timely governmental measures combined with a strong e-Procurement system will put India well on the path of becoming an e-Governed nation.

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