Already reeling under the extreme depreciation of rupee vis-à-vis dollar and slower GDP growth, the IT industry is facing another set of challenge: unfavourable payment terms and lower margins in e-governance projects, resulting in serious cash flow problems. A solution to this could be the model request for proposal (RFP), which will soon be available on the finance ministry website.

The model RFP for e-governance projects were released three years back by the department of electronics and information technology (DeitY). However, different states have their own approaches. In most cases, the RFP is usually designed in a way which puts unlimited accountability on the implementing agency. Payments, even in those projects which require upfront capital expenditure on hardware and software, are made over a long period of time, causing a cash flow problem for the private companies.

This theme was discussed by a panel of experts at ‘sensitization workshop on model RFPs’ organised by MAIT, in association with the DeitY and Accenture, here on Wednesday.

Speaking at the workshop, Rajendra Kumar, joint secretary, DeitY, said that in the past the government agencies didn’t have a uniform approach towards IT procurement. The fact that several e-governance projects (the tender documents) have been vendor driven has been corroborated by industry experts. To resolve the same, “the DeitY came up with model RFPs, along with guidance notes and toolkits. The department has also imparted training to states”, Kumar said.

The adoption of the model RFPs, however, has been rather slow, said Kumar. He said if states wish so, his department could vet their RFP documents and provide its recommendations. He said that the department is in talks with the finance ministry to upload the model RFPs on latter’s website.

Jivesh Nandan, principal secretary, IT, Uttar Pradesh, said that though the model RFP approach deserves appreciation, the RFP suggested by DeitY should have provisions for state-specific changes.

He cited the e-District project, which has not been implemented in half of the state, because no one from the industry has shown interest in the implementation. He said the deadlines for closing tenders have been extended six times. Terms including project go-live and payment terms need to be clearly defined, he said.

He said that once something is suggested from DeitY, the changes proposed by the state IT department has to be strongly justified, which is not that simple. He urged the DeitY to mention specifically where all changes can be done by the states in the standard documents.    

Vivek Attray, additional secretary, IT, Haryana said the lack of clarity in RFPs is due to the indifference shown by the head of departments towards the project documents. The documents are made by inexperienced consultants. If secretaries and other senior officials start paying attention to the RFP and rectify before its release, a lot of issues around it will be resolved.

CT Bhadran, head, government and defence business, HCL Infosystems, and chairman, system integration, MAIT, said that the compliance to model RFPs will be the first step towards resolving the PPP challenges. He, along with other industry experts at the workshop, urged government to have a pre-bid meeting with vendors before finalizing the RFP.