Procurement Reforms in GoAP by Sathish Chandra, IAS, Secretary, I&CAD (Projects)

1. Procurement Reforms in GoAP by Sathish Chandra, IAS, Secretary, I&CAD (Projects) Irrigation & Command Area Development Dept Government of Andhra Pradesh

2. Agenda • Irrigation Sector outlays in GoAP • About EPC Contracts • eProcurement outcome • Auto Bid Evaluation • Reforms/ BPR in Procurement • Future Road Map • Learnings

3. Out lays in Irrigation Sector in GoAP • Major Irrigation Prioritized Projects • Minor Irrigation Prioritized Projects • Targetted to complete by 2008

4. Type of contracts • Engineering : Procurement: Construction (EPC) • Expeditious delivery • Single agency approach • Offshore Construction Majors • Competition brings best of Engineering • Contractor responsible for delivery • Improved quality • Mile stone based payments • Turn key contracts • 180 EPC contracts of value Rs 20,000 Cr finalised through eProcurement • Two cover system

6. eProcurement outcome in Irrigation Dept • Irrigation Dept selected for Pilot in 2003 • eProcurement mode - A grand success • 100% eProcurement above Rs 10 Lakhs threshold • Contributed to 80% value and 20% to Numbers • Major advantage – Remote submission of Bids • Provided a level playing platform; Equal Opportunity • Created favorable environment for new suppliers • Bidder participation increased ( 4.75 to 6.5) • Yielded Significant Cost Savings to Department( • Tender cycle time reduced (from 120 to 36 days) • Transparency protects the interest of Bidders

7. Stakeholders Reaction • Satisfied Stakeholders, but high expectations from the System • Present system: Automated processes but linkages to databases is yet to happen • Technical Evaluation: Veracity of support documents is still manual • Grey areas: Subjectivity in evaluation persists • Dept could still tailor Bid conditions to help a favored supplier • Discretion exists in evaluation • Suppliers & Depts percieve eProcurement to be a Magic wand • To resolve all ills of the Govt Procurement system • System shall decide the successful bidder instantly • Prime demand: Auto Bid Evaluation

8. Too many evaluation Parameters • Technical Evaluation in works contracts is on multiple parameters • Valid Registration as Contractor with State Govt • Payment of Security Deposit • Similar work experience • Experience in execution of principal items • Key and critical equipment • Quality control equipment • Technical personnel to be employed • Annual turnover in previous years • Existing commitments on Hand • Bid capacity • Liquid assets • VAT registration • Income Tax returns • Litigation History • Criminal History • Any other criteria as indicated in Bid document

9. Standardisation of Processes • Govt appointed a Sub- Committee in 2003, chaired by Secretary I&CAD (Proj) • Standard Bid Document • Standard Processes across work Depts • Business process Reengineering to improve eProcurement efficiency • Auto Bid evaluation

10. Auto Bid evaluation- Road Map Components • Contractors Registration • Contractors/ Suppliers Database of Key details • Contract Management System • Linkage with VAT database • Linkage with Income Tax database • Standard Bid document • ePayments Requirements • Reforms in procurement processes to remove subjectivity • Business Process Reengineering to objectivise evaluation • A Sub committee constituted by GoAP to propose reforms/ BPR

11. BPR in Similar work experience • To be Responsive, a Contractor shall have ‘Similar work experience’ in previous years • Objective is to select a contractor with relevant experience • Definition unclear- gives scope for subjectivity • Case1: Disqualified for not having internal roads experience in a Building complex • Case 2: Disqualified for not having experience in C.D works in a Highway project • Case 3: Disqualified for not having experience in C.D works in a Canal Project • Similar work Criteria is redundant as Depts Prescribe one more criteria I.e., experience in execution of Prime items, which any way fulfils the objective. Reform: Dispense off ‘similar work’ criteria and instead seek for experience in Civil Engg works.

12. Documentation to prove credentials • Depts list out documents to be uploaded by bidder • Mismatch between the list in online form and bid document • Suppliers rely on the list in online form • Supplier is disqualified citing documentation requirement in the bid document Reform: Depts to give a comprehensive list of documentation requirement in online bid submission form. A bid shall be qualified if all the documents are attached properly as per this list.

13. Undertakings by bidders • Departments are prescribing undertakings from contractors on a Non-Judicial stamp paper • No Litigation History • No criminal record • Availability of equipment • Correctness of information given by contractor in the bid form • Contractors are facing disqualification if any of these are not uploaded at the time of online bid submission • The contractor has to repeat this for every tender Reform:Online Undertakings, Supplier clicks ‘ I Accept’ button

14. Modification of Eligibility criteria • The departments modify bid eligibility criteria after publication of tender notice on eProcurement platform. • In some instances it is done a few days before bid submission closing time, by which time a few bids could have been already submitted in the system. • This is a serious impediment to the transparency • Could be to tailor criteria to suit a favored supplier Reform:Bid eligibility criteria shall be freezed by the departments prior to publication of tender notice and any modifications of eligibility criteria through corrigendum shall not be allowed

15. Tasks Ahead • Backward Integration • Estimates • Standardisation & coding of Civil Engg Specs • UN Standard Products& Services Code(UNSPSC) • Forward integration • Contractor Data Base system • Contrator Registration system • Contrat Management system • ePayments • 100%Roll out to all Depts and World Bank projects

16. Contractors Database Information system • I&CAD Dept issued Govt orders in May 2004. • Online Contractors Database Information system hosted in 2004 • One time validated data would be available for auto bid evaluation • Ownership: Commissionerate of Tenders, GoAP • 800 Special Class/ Class I Contractors uploaded Data • Company details, experience details, Turn over • Manpower & equipment details • Data sent to Executing Authorities for validation • Validation reports are delayed making the system disfunctional • Now, Contractor is made accountable for the data genuineness • Data of All contractors will be in Public domain for objections • Penal action against Contractors uploading false data

17. On line registration of Contractors • Registration of Contractors into various classes and categories by departments – Manual process • No consolidated list of registered contractors due to multiple registering authorities • Difficult to Prevent re-registration of a black listed contractor • On line registration system will eliminate all these draw backs • Unique number is possible with online system to identify a Contractor

18. Contract Management & On line payments • Ineffective Contract Monitoring is resulting in cost & time overruns • Manual system is inefficient • Improper documentation • Tampering/ loss of records with passage of time • Arbitration cases are lost for want of documentation • Online Contract Management System improves the situation • Contract monitoring • Work bill generation • Scrutiny & passing of work bills • Online payments • Revised estimates • Completion reports • Good tool to meet RTI Act requirements • Ideal to tag on this module with eProcurement

19. 100% Roll out by March 2007 • Present thresholds : Rs 10 L for Works,Rs 5L goods • Targeted major procurement depts • Future target : All Depts above Rs 1.00 L • Phenomenal increase in Dept users/ Suppliers • Constraints • Connectivity • Trainings ( 2 day module) • Non availability of Service centers in small towns • Solution • Establish More Citizen Service Centers • Train RAJiv Kiosk operators ( Good commercial value) • AP Broadband Network with 2MB connectivity up to village

20. Learnings • Reforms/ BPR in Procurement processes and eProcurement to Synchronise to derive full potential of eProcurement • Statewide eProcurement portal beneficial • Stakeholders are demanding for complete automation • State Govts can either adopt Incremental approach or Monolithic approach for ‘End to End’ eProcurement depending on the maturity level of procurement processes • Desirable to Develop a Monolithic platform with all modules, but implement incrementally

21. Question & Answers THANK YOU For more details Visit www.eprocurement.gov.in