Everywhere in India the procurement processes in the government follow the general financial rules and guidelines of the central vigilance commission. Except, it seems, in Arunachal Pradesh. Be it road or building construction or a technology project, the contracts are awarded either on nomination basis or through manipulated tendering process. In some cases, tendering is just a formality; the contract is awarded first, paper work is done later.

The state doesn’t come under the income tax laws applicable in the mainland. The government functionaries—politicians and bureaucrats—do not file income tax returns. Moreover, investigations into corruption related matters are usually avoided and prosecution is rare. According to a senior official with the state vigilance department, there are only three cases of disproportionate assets against government officials. “Normally the investigations are avoided,” the senior official with the state vigilance department said.

Here is an example of the blatant disregard for norms in awarding of public contracts. In Pasighat, a town some 300 km away from the state capital Itanagar, a public health centre-cum-residential quarter was constructed even before the announcement of tender in local newspapers. When the department of water resources development, the nodal agency for construction, released the press tender notice on July 30 (it was eventually carried by newspapers on August 11), more than 90 percent of the building had already been constructed.

The estimated cost of the contract was Rs 87.91 lakh—funded under the special plan allocation (SPA) for the year 2012-13. “The case is being investigated by the department,” the senior official with the state vigilance department told Governance Now on the condition of anonymity. “It is a norm here that the projects are awarded and the tendering is done later.”

Awarding e-governance projects is another dodgy area. Consider the two contracts awarded by the state IT department in 2008. The contracts for state wide area network (SWAN) and state data centre (SDC) to tune of Rs 70 crore (approximately) were awarded on a direct nomination basis to Keonics, a Bangalore based society registered under the Karnataka government. The two projects are part of department of electronics and information technology’s (DeitY) Rs 45,000-crore national e-governance plan (NeGP), which aims to make service delivery citizen-centric and bring transparency in governance.

After receiving the contract, Keonics sub-contracted the SWAN work to HCL Comnet, which could not complete it. “The state IT department kept DeitY, Government of India in dark till they awarded the project,” said an official with DeitY. “They (state IT department officials) kept telling us that they are still in process of finalising the request for proposal (RFP).” An official chronology document of the project accessed by Governance Now confirms DeitY’s claim.
The implementation guidelines, as provided by DeitY, were quite clear. In the case of SWAN, the project has to be either given to the national informatics centre (NIC), a body under the DeitY, or the department had to implement it in public-private partnership following a fair tendering process.
The decision for awarding contracts on nomination basis was taken at the level of the chief minister, said an IT department official. The director and secretary of the department, who did most of the paper work for the two contracts, are no more with the IT department. In 2011, the vendor stopped work on the SWAN project due to some issues related to power back up, but by that time the government had already released to the vendor Rs 9 crore that was received from DeitY.
When a project is ready for implementation, DeitY releases between 20 and 40 percent of the total project outlay to the concerned department in the state. This is called the mobilisation fund. Surprisingly, DeitY took notice of the anomalies only in the middle of 2011 even though, according to state officials, a few DeitY officials from Delhi visited the project facility in Itanagara a couple of times.
In case of the SDC project, the contract was revoked in 2011 after DeitY’s objection and the payment was also recovered. But in the case of SWAN, the state has not been able to recover the payment.
Sources told Governance Now that attempts are being made to manipulate the contract awarding process in two other projects, namely,  NeGP’s e-district and commercial taxes computerisation. In the e-district project certain clauses have been added in the request for proposal (RFP) document for the selection of a system integrator. One clause includes that the ‘system integrator (the private agency) should have experience of implementing e-district in the northeast’. There is only one company which has piloted an e-district in all of northeast!
This conditionality, which was not part of the initial version of the RFP, was added after receiving inputs (in the form of note sheet) from the office of the parliamentary secretary to the state IT department, said a source.  The RFP has not yet been finalized though. The project is worth Rs 40 crore.
In the other project (computerisation of commercial taxes) the tendering process is taking place for the second time. During the first tendering, three organisations participated. However, only Ricoh, qualified for the technical bid. Convergent and Trans Virtual failed. In the new RFP, a clause has been added under pre-qualification para 10 that states that the companies disqualified in the initial tendering are not eligible. Even then the two disqualified companies applied for the second time. The project is worth approximately Rs 5 crore.
Then there is a long list of projects that were given to vendors on a nomination basis. One such example is the project worth Rs 2 crore of the food and civil supplies department—‘Arun ePDS’—that’s been awarded on a nomination basis. The project has to be implemented in eight out of 17 districts. The department has sought Rs 60 crore for state wide implementation, but the centre has sanctioned just Rs 13 crore.
By deciding to award contracts worth over Rs 50 lakh through electronic tendering, the state government may partially curb the menace of nominated contracts, but it still doesn’t stop officials from manipulating tender document to favour some vendors.

1-minute capsule

Sate wide area network

• State data centre
• Arun ePDS
• Deployment of e-Office at governor’s office
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Ambiguous tendering

• Computerisation of commercial taxes
• e-district