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PHOTO CREDITS: Oxford College of Procurement and Supply

Transparency in Public Procurement by E-procurement

Transparency in Public Procurement by E-procurement

Due to the growing need for enhancing transparency in public procurement as well as to ensure accountability and fairness and to promote competition in the bidding process, the Government of India, as well as the State Governments have taken several initiatives like e-publishing, e-procurement, Government e-marketplace etc. in the realm of public procurement.  This article delves into the e-procurement process and its possible benefits and setbacks.

Multiple incidents of possible fraud, corruption, bid-rigging and collusion between procuring entities and bidders, being reported on a regular basis and  The Government of India’s recognition of the vital role that public procurement plays in the socio-economic development of the country led to the adoption of several efforts to enhance transparency in public procurement. One such initiative taken by the Government has been the introduction of an end- to- end e-procurement system.

The e-procurement system is a web-based process that enables the procuring entities to manage their procurement process online. It creates a specialized network of bidders on the internet, enabling the procuring entities to place a request for proposals, post tender documents, exchange, specifications and receive bids and approve quotations, thereby streamlining the tendering process.  

Facilities provided E-procurment include:

  • Online registration of procurement entities and vendors.
  • Publication of tenders (including the Notice Inviting Tender) online by procuring entities.
  • Modification of tender documents by publishing corrigenda and pre-bid meeting decisions.
  • Submission of online bids by bidders.
  • The opening of online bids by authorized officials.
  • Publication of technical and financial bid evaluation.
  • Official notification of the selected bidder.

E-procurement – Pros

  • Publication of tenders on an online portal enables it to achieve wide publicity, as compared to offline tendering modes. Moreover, the bidders can access the tender details on a 24/7 basis.  The Tender search option has also made easier by way of filters.
  • E-procurement improves participation as it makes it easier for bidders to participate in the procurement. The bidders have to merely scan and upload the required documents, after which the system generated an acknowledgment for submission of online tender. Earlier, the bidders had to submit documents by post. This has increased the number of bids for online tenders, as it is widely publicized.
  • E-procurement has also improved the transparency in the public process as the bidders can see the bids submitted by other bidders through the only portal. This provides a level playing field for all bidders. Hence, the scope for discrimination among the bidders has been tremendously reduced.
  • E-procurement enables cost saving to the exchequer by increasing operational efficiency.

E-Procurement – Cons

Despite there being several benefits for E-procurement, the following challenges still remain to be addressed:

  • End-to-end E-procurement, though promoted for its effective utilization has not yet been made mandatory above a certain threshold value. Procuring entities still resort to mediums like E-publishing which entails the publishing of all tender inquiries, corrigenda, and award of contracts on the portal but the invitation of the bid is still conducted offline.  Here, the bidders are not required to enroll on the Portal as the bidders are to submit their bids on a paper-based format. Furthermore, even under e-procurement, not all activities pertaining to procurement are captured by e-procurement process.
  • The implementation of E-procurement lacks support from key stakeholders due to fear of loss of power, fear of exposure of errors in the procurement process and lack of expertise.
  • The lack of enabling environment, with regard to the IT infrastructure as well as low IT literacy rate of the general public at large is also a major challenge as far as implementation off E-procurement is considered. Obtaining digital signatures for the tendering process and other requirements stipulated for registration of vendors and other technical complexities stand as obstacles in the way of effective implementation of E-tendering process.
  • The many advantages that an E-procurement system envisages, is contingent upon the establishment of a secure and effective application software.  E-procurement systems can also be manipulated, making it worse than the traditional manual process if the loopholes in the system are not addressed properly:

(i) The functional substitute for the traditional ‘sealed envelope’, the ‘encrypted bid’ making the bid ‘unreadable’ until it is decrypted during the Public-TOE, would vitiate the entire process if the bid encryption is not done in a proper manner.

(ii) As opposed to the traditional method of opening sealed bids in public, in the presence of participating bidders E-procurement resorts to an Online Bid opening, wherein the authorized the tender opening officers of the procuring entity to open the bid in the online presence of bidders, along with other procedures such as digitally countersigning of the bids online. However, in some cases, bids are merely opened online without the simultaneous online presence of bidders, and then subsequently put up for display. Some systems lack online countersigning of the opened bids by the TOE –officers. This affects the transparency in the procurement process, giving rise to the possibility of bid-data tampering process.

(iii) Some systems lack the technology to encrypt the financial and technical bid parts separately as done traditionally, to ensure the confidentiality of each bid-part. It has been noticed that in some systems, the technical bid is not encrypted at all.

(iv) Few systems lack the functionality of digital signing of electronic records to ensure authenticity. Whereas some systems do not use digital signatures at all, few have limited signing provisions.  This gives an opportunity for the bidders to tamper the electronic document.

(v) The rudimentary security features in few systems are also an issue when it comes to the effective implementation of an E-procurement system. Such systems with weak functionalities cover up their issues by obtaining certification for security tests like CERT, which are tests which do not certify the security requirements required for the intricacies of e-procurement.  

Thus, Effective implementation of E-procurement also requires a system that would enable security and confidentiality of financial data. Lack of such a system would promote corruption. The recent E-tender scam in Madhya Pradesh stands as proof to the corruption that may be involved in E-tender if affirmative steps are not taken ensure the security of the system. This scam involved large-scale manipulation of the online procurement platform of the Madhya Pradesh government to allegedly favor a select few private companies.

Conclusion

E-procurement, though envisaged by the Government to bring in transparency, still lacks standardization and a vigilant monitoring mechanism to check corruption. The need of the hour is to take further steps to ensure that the E-procurement process is carried out in a transparent and effective manner with adequate due-diligence.

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