Core Issues in Linking e-GP and Procurement Reform Ram. SM, Project Manager National Institute for Smart Government 18 th May 2006

Presentation Overview 1. Defining characteristics of Public procurement scenario in India 2. Implementation of e-Government Procurement as an opportunity to implement reforms 3. The need for e-Government Procurement cells 4. The scenario after the implementation of e- Government Procurement cells 5. Next steps

Section 1: Defining Characteristics of Public Procurement Scenario in India

Public Procurement Scenario in India (1 of 3) 1. The Indian Government is estimated to spend about 100 Billion dollars in public procurement each year (Source: CPAR, World Bank) 2. Ministries in the Central Government, State Governments and Public Sector Enterprises (PSE) account for most of the procurement expenditure 3. While the budget for expenditure is prepared at the Ministry/State Government/PSE level, the procurement activities are handled in a decentralized manner at the departmental/regional offices level

Public Procurement Scenario in India (2 of 3) 4. The agencies handling procurement are guided by the standard principles of public procurement (i.e.) efficiency, transparency and accountability 5. Only a couple of State Governments in the country have enacted a legislation on public procurement, which mandates the adoption of certain prescribed procedures commonly across the State 6. Government agencies refer to certain procurement codes, manuals and the guidelines issued by the Central Vigilance Commission (CVC) and the Comptroller and Auditor General (CAG) of India for procedural guidance

Public Procurement Scenario in India (3 of 3) 7. In the manual system, Government lacks easily retrievable Management Information System (MIS) data on areas such as the following: - Procurement expenditure - Number of tenders - Number of bids received per tender - Supplier performance - Prices paid by government agencies elsewhere in the State/Nation for purchase of an item/service

Section 2: Implementation of e-GP as an Opportunity to Implement Reforms

Overview 1. The Need for Centralized e-GP Systems 2. Process Related Reforms 3. Technology Related Reforms 4. Institutional Reforms

The Need for Centralized e-GP Systems 1. As the procedures adopted for public procurement by Government agencies tend to be similar if not the same, multiple agencies within a logical unit (State Government/Ministry/PSE) can use a single, centralized system (e.g.) the case of Yahoo Mail 2. The adoption of a centralized system will minimize the cost of system development and “system ownership” 3. MIS reports and supplier performance can be prepared in a centralized manner 4. The centralized e-GP system can be the infrastructure through which procurement reforms could be introduced and systematized

Pictorial View of Centralized e-GP System Suppliers and Buyers Master Data e-Payment, Accounting and MIS Indent Management e-Tendering Contract Management e-Auctions Catalogue Management Dept. 1Dept. 2Supplier 1Dept. n…Supplier 2Supplier n

Process Related Reforms 1. Harmonize procurement procedures and formats and implement the standard procedures and formats through the centralized e-GP system 2. Replace the department-level supplier registration activity with a centralized supplier monitoring system 3. Put a stop to legacy practices such as the preparation of measurement book by government officers and through the e-GP system mandate the preparation of measurement book by the supplier community 4. Using item codes, classify the works, goods and services procured by the Government. Such classification can be used to automatically notify suppliers via about procurement opportunities and prepare MIS reports on the prices paid for purchase of an item

Technology Related Reforms 1. Downloading of tender documents 2. Online submission of bids 3. Receipt of tender document fee/EMD/performance guarantee with e-Payment 4. Movement and storage of procurement related files in electronic format 5. Handling and maintenance of engineering drawings in.CAD format 6. Electronic transfer of payments due to contractors

Institutional Reforms 1. Development of institutional capacity for training government officials on the most modern public procurement practices 2. Constitution of a procurement cell for managing the deployment of e-GP system and for implementing procurement reforms in a centralized manner (i.e.) at the Ministry, State or PSE level

Section 3: The Need for e-Government Procurement Cells

The Need for e-GP cells 1. To plan and deploy e-GP system across multiple agencies/offices in States/Ministries/PSE’s in a phased manner 2. To continuously analyze the procedures, policies, legislation etc. adopted for public procurement and incubate and implement the most modern practices 3. As a remedy to the lack of knowledge centers on public procurement at the State/Ministry/PSE levels

Section IV: Scenario After the Implementation of e-Government Procurement Cells

State GovernmentsMinistriesEnterprises (PSE) National e-Government Procurement (e-GP) Cell State 1 e-GP cell e-GP State 2 e-GP cell e-GP State n… e-GP cell e-GP Min. 1 e-GP cell e-GP Min. 2 e-GP cell e-GP Min. n… e-GP cell e-GP PSE 1 e-GP cell e-GP PSE 2 e-GP cell e-GP PSE n… e-GP cell e-GP

Role of National e-GP Cell (Technical and Functional Related) 1. Continuously evolve e-GP Functional Requirements Specification (FRS), Technology Requirements Specification (TRS) and Security standards 2. Certify e-GP products and e-GP installations on adherence to the evolved standards 3. Specify standards for inter-operability between e-GP systems and the many external systems

Role of National e-GP Cell (Process and Legislation Related) 1. Centrally coordinate amendments to the procurement code 2. Standardize of formats and procurement procedures 3. Regulate the many e-GP product vendors working with the Indian government agencies and ensure that a conducive market situation results (i.e.) avoidance of monopoly 4. Develop e-Procurement specific legislation and provide guidance to State level institutions in implementing the legislation

Section V: Next Steps 1. Prepare a well-thought out policy document on the approach to be adopted for implementing e-GP across government agencies in India 2. Develop institutional infrastructure for implementation of e-GP

Further Reading 1. Ramanathan, S. (2006) “Challenges in Implementation of e-Procurement in the Indian Government” in a book chapter titled “e-Procurement in emerging economies: theory and cases” edited by Amit Agrahari, XLRI, India 2. Ramanathan, S. (2006) “Rationale for Single State-wide e-Procurement systems”, ICTD newsletter, May edition

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