e-Way for the highway

Electronic procurement is helping Bihar uproot corruption and inefficiency, a trademark of the earlier 'managed' procurement


Samir Sachdeva | March 1, 2012

The Bollywood movie Gangaajal shows tendering in Bihar to be a process of aiding and abetting corruption — where the bidder with right amount of bribe, threat and political muscle is entrusted with public work. It hasn’t been very long since the process in real life stopped being an inspiration for and an imitation of art. Manipulation of bids after submission, looting of tender boxes, cartelisation and murder are now fast disappearing — instead, tender submission and awarding is slowly but surely becoming an open, transparent and peaceful process. The state has adopted electronic tendering or e-tendering. By eliminating the human interface as much as possible, the process has left the awarding of public contracts less ‘managed’ than before.

Introduced in late 2009 in three departments — water resources, roads construction and building construction — e-tendering has made the bidding process highly competitive, resulting in savings of 15-20 percent in every tender and attracting companies with higher deliverability.

Currently, out of 44 departments of the state government, nine use the tender management system (e-tendering. In the 18 months since it has been in existence, 2,900 tenders with the aggregate value exceeding '10,000 crore have been filed digitally. According to the state officials, every tender with a value of more than '25 lakh has been floated through the e-procurement portal www.eproc.bihar.gov.in. Additionally, electronic filing has saved the government much a lot of time. The entire process, which used to take three to seven months before is completed now within a month.

Prior to 2009, awarding a government contract was not an easy task. “It was almost a law and order issue,” says Arvind Kumar Kanth, executive engineer and nodal officer, e-tendering, building construction department. The only way to ensure fair and transparent process was to deploy police contingents around the government complex where bid submission had to happen.

But one must understand the manual process had lacunae that could be exploited for such a situation to arise. The executive engineer (EE) of a district had to prepare the tender document and send it for the approval to superintendent engineer who then forwarded it to the chief engineer. Only after the long chain of approval, the tender document or the bill of quantity (BoQ) was put on sale.

Seven or ten days after, the bid submission was organised within a period of not more than a couple of hours. After technical assessments of bid submitted, financial bids were assessed by the executive engineer. The official then prepared a comparative statement and sent it for approvals of the senior officers. After the approval was granted, the EE awarded the contract to the contractor with the lowest bid.

Now, because the physical tender document and the bids passed through a hierarchial chain, it was easy for contractors to approach officers for undue favours. The passing of the documents in the hard copy also meant that there was a possibility of the BoQ being destroyed and the looting of the tender boxes, manipulation of bid proposals (by the government officials) through the opening of quotes before the time for submission had elapsed. Some contractors with muscle also threatened the competition out of submitting a bid. The human interface led to the development of cartels in the contractors and a nexus between cartels and officers.

In contrast, the new system, developed by Bangalore-based Antares Systems, in association with Keonics Ltd., has taken away the opportunity of officers and/or contractors to mess with the tender process by removing most of the human interface of the ‘managed’ system. Now, the executive engineer prepares the tender document (the bill of quantity, BoQ) and gets it approved from the upper hierarchy, which includes superintendent engineer and chief engineer. However, it all occurs online in an automated fashion.

The approved BoQ is then uploaded on the website. It can now be viewed by contractor in Bihar or any other part of the world.

Now, the contractor has to just log in to read or download the document. Using digital certificates, they can upload their proposals, made as per the standard template provided by the department, on to the portal. Once, the bid proposal is submitted, the tender management application leaves  no scope for anyone, either the private party or the government officials, to change the submitted documents in any manner because built-in higher level of user access and authentication mechanism prevents any such interference.

“Each department and registered contractors have been given a user ID and password, which has to be punched in along with use of digital signatures. Once the tender application, including the quotation, is submitted by the contractor the system doesn’t allow any further changes,” says Sridhar Reddy, consultant, BEST Ltd, the agency facilitating the implementation of the e-tendering project in Bihar.

After the submission, the system itself generates a comparative statement and publishes the list of all parties — non-eligible, eligible and the most eligible (the lowest bidder) — on the scheduled day and time of the bid-opening. Now since the process is online, the executive engineer need not send the comparative statement to his seniors for their approvals. So, the approval happens at his level, which saves a lot of time.

The only bit in this process that remains to be automated is the submission of the payment of BoQ and the earnest money deposit (an advance fee, usually 2 percent of the estimated cost of the project, which is reimbursed to all the non-qualified bidders. However, the state cabinet recently approved an e-payment facility that will make this process paperless too.

Comparing the manual and electronic tendering systems, a senior government official associated with implementation of the project says (under the condition of anonymity), “An individual contractor was winning most of the tenders of water resources department for past many years. He used to win contracts on prices of his own choice, because other competitors could not participate out of his fear. However, after the implementation of tender management software or the e-tendering system the Mafioso-bidder has not won even a single contract.”

Sharing his views on the change, Pratyaya Amrit, secretary of the road transport department, says, “Previously, the tenders were managed. The mischievous elements within and outside government tried their best to limit the number of participants”.

“We rolled out e-tendering in October 2009. We were determined to make it completely paperless and we did. Now, a person sitting in New York can apply for a tender in Saharsa,” avers Amrit.

The participant doesn’t need to be in a particular district, in the state or even in the country. Multinational companies allowed can now participate provided the project requires such global capability and the guidelines invite their participation.

Collusion among the contractors themselves and between them and the government officer (usually the executive engineer in the case of water resources department, an official points out) responsible for receiving and opening the bids posed a major challenge in the implementation.

Mohammed Sohail, the nodal officer of the project at the water resources department explains, “Let us assume that there are three contractors who have come up to participate in the tendering. Quite often, the most powerful contractor among the three coerces or cajoles the other two to withdraw their financial bids so that he gets the contract. Now, colluding with the officer-in-charge of the tendering, the contractor would increase his earlier made quotation by 5-10 percent of the estimated project cost. This was a huge cost to the government.”

Now because of the increased competition between the participants, the lowest bid is at least 15 percent below the estimated cost of the project. Aggregating the previous loss and the present gain, one could observe savings of nearly 20-30 percent to the government.

Overcoming the issue of geographical distance, the department is now getting more competent agencies which deliver quality work on time. Initially, there would be two to three contractors or companies for a tender. “Now, the number has increased — we got 32 participants for a single tender,” says Amrit.

“We are seeing increased participation of companies from outside Bihar, indeed from north India. For the first time, a number of companies from Hyderabad, Bangalore and Chennai participated, won and are now working on the contracts in Bihar,” says Sohail.

Moreover, e-tendering application has made it almost impossible for anyone, including the senior government functionaries to intervene or manipulate. Once the quotations have been uploaded with digital signatures on to the portal, no one, except the administrator, can access anything.

A log generation built into the system tracks every log in and log off on to the portal, either by the users or the administrators. “Now, even if the chief minister of state wants to intervene, the application offers no scope. The system reports details of the user logged in, the duration of his/her visit, the IP address of the machine from which user logged in and the changes which were made by the user,” Sohail says.

Giving details of the total value of contracts processed through e-tendering, he informs, “We floated the first tender of the department on September 1, 2009. Between September 1, 2009 and December 10, 2011, tenders worth of '2,465.86 crore have been awarded.”  The water resources department is the biggest user of e-tendering system and accounts for one-fourth of the total tenders processed online.

In the building construction department, the officials had to make special arrangements on the day of bid submission. The contractors with muscle used to threaten smaller competitors. They had little hesitation in engaging in violence.

“When the bids were submitted in the districts, the venue had to be the district control room, which is heavily manned by police personnel. If the place was not available for some reasons, and the bid submission had to be done in the division (department’s) office, the department used to call for huge contingents of police to ensure plural and peaceful bid submission,” Kanth says.

With e-tendering the threat of violence has been eliminated.

“So far, we haven’t received any complaints from anyone regarding the process,” he adds.

It has brought unprecedented transparency to the awarding of tenders in the state. Previously, a lot of contractors used to complain that they hadn’t received the BoQ or that that they had not seen the advertisements in the news papers.

“At times, the officials with vested interests published the advertisement inviting tenders in the state editions of the national dailies instead of getting it printed in a local paper to favour certain contractor and prevent others from participation,” Kanth says.

“Now we give a compact advertisement in a daily which says for further details please log onto our portal. It has saved a lot of money which went into publishing full pager ads and almost regular corrigendum,” the officer adds.

Transparency and openness of the procedure has helped bring down the litigation and complaints from contractors. According to the departments which use the e-tendering process, the age of the ‘managed’ tendering can be ended with a click.



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