Posted: Sat, Apr 7 2007. 12:01 AM IST
Govt begins switch to e-procurement
Starting 1 April, all govt departments have mandated electronic procurement; suppliers get until 30 June
K.P. Narayana Kumar and Monica Gupta
The Union government has finally embraced e-procurement. Starting 1 April, all government departments have quietly started procuring electronically for transactions above Rs25 lakh. The government has decided to manually accept tenders until 30 June to allow suppliers a grace period to shift to an electronic platform. The move, designed to usher in transparency, accountability and reduction in transaction costs, is part of the national e-governance programme and is being coordinated at the level of the cabinet secretary. E-procurement has been made mandatory for purchases made by the departments through the director general (supplies and disposal), under the commerce ministry. In addition to this, electronic procurement of works and services has also been made mandatory. "The measure is also a follow-up on a directive issued (two years ago) by the Central Vigilance Commission asking all ministries to switch to an electronic procurement regime for greater transparency," said one government official, who didn't want his name to be mentioned. Larger ministries, such as defence, railways, petroleum, telecom and food, which make sufficiently large procurements annually, are developing and customizing their own platforms for e-procurement. The railways, for instance, had initiated a pilot project a year ago for the Northern Railways. "It is such a fundamental change in rules, which will transform the way the game is played," said Ranjit Shastri, an investment advisor to Electronictender.com, a software company. "It will impact in so many ways-corruption, the way the vendors transact business. The only caution is that if electronic tendering is not handled well, it will be worse than manual tendering." A finance ministry official noted that e-procurement has also been tried out at the state level by some states such as Andhra Pradesh. "It has the advantage of lowering the tender costs and ensuring that payments conforms to the approved bid," he said. Another significant gain of moving towards e-procurement will be that it will also limit the influence of "tender mafia", in highway and railway tenders for instance. "There are many places in India where the mafia prevents contractors from submitting the tender. If they have the option of using an online facility, contractors can fill up the forms from anywhere without attracting attention," a government official, who has worked in a similar e-tendering project earlier, said. "The move is welcome, but the government has to ensure that safety checks are in place. The vendors also have to be briefed about the security systems that are in place," said an executive with a leading infrastructure consultancy firm, who didn't want to be named. The government also plans to set up an "IT Exchange" to enable various departments link up with vendors.