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Nasscom e-Governance Study

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Nasscom has recently published a study of procurement practices in the e-Governance sector. The original study is hosted in www.egovreach.in

Nasscom has recently published a study of procurement practices in the e-Governance sector. The original study is hosted in www.egovreach.in

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  • 1. A NASSCOM Study eGovernance & IT Services Procurement Issues, Challenges, Recommendations
  • 2. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study2 Copyright ©2010 The material in this publication is copyrighted. No part of this can be reproduced either on paper or electronic media without permission in writing from NASSCOM. Request for permission to reproduce any part of the report may be sent to NASSCOM. International Youth Centre, Teen Murti Marg, Chanakyapuri New Delhi – 110 021, India Tel: +91 11 2301 0199 Fax: +91 11 2301 5452 Email: egovreach@nasscom.in Designed by CREATIVE INC Tel: +91 11 4163 4301 Email: contact@creative-inc.net Disclaimer Theinformationcontainedhereinhasbeenobtainedfromsourcesbelievedtobereliable.Theinformation contained in sections of the report reflects content that was derived from both public and confidential information collected and received during the conduct of a study by NASSCOM. Readers should note that NASSCOM has not independently verified all of the assumptions stated in the report. Each reader of this report should conduct their own independent evaluation of the information provided herein. NASSCOM disclaims all warranties as to the accuracy, completeness or adequacy of such information. NASSCOM shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.
  • 3. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study3 The rise of India as a global IT hub is well-chronicled. Coupled with this global footprint, we are now witnessing a strong thrust within the country to partner with the government in enhancing governance and to enable inclusive growth. eGovernance initiatives at the centre, state, districts as well as the block, village level are creating the channel for the government to build citizen-centric services, enable delivery of government rural schemes, provide access to information and enhance its overall governance and service delivery. The eGovernance initiative in India is now entering its next phase of ICT-led governance reforms and public private partnership is an important enabler for realising the vision of transformed, citizen-centric governance. NASSCOM is building a close partnership with the government to achieve this vision. There is also a fundamental shift in the way the government is procuring IT and eGovernance services with a clear focus on outcomes and service delivery. The relationship between the government and industryismovingfromavendor-buyertowardsamorestrategicpartnership.Toenablethispartnership, it is imperative that the process of procurement is aligned, transparent and accountable for both the industry and government. NASSCOM through an extensive research and interview process has put together a detailed report ‘eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study’. The study identified key issues and challenges, faced during the various phases of an eGovernance project lifecycle. From conceptualisation through bid process, contracting to execution and Post Go-Live phases. The report has also studied the best practices in India and overseas. The recommendations of the report outline the key steps that need to be enabled for an effective public procurement process, for IT services, in the country. With support from the government, NASSCOM will take these findings and recommendations across central and state departments and initiate a process to address the current challenges and build a procurement process, that will help the country realise its eGovernance vision through partnership with the IT industry. I would specially like to thank the officials at the Department of Information Technology, Ministry of Communications and Information Technology and all the state IT secretaries and department officers, NeGP mission leaders, who proactively participated in this study, and shared candid feedback and suggestions. I hope this report will lay the foundation for a deeper dialogue between the government and the IT industry partners, in improving the way, IT services and eGovernance projects are procured and executed. Som Mittal President Foreword
  • 4. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study4 This study was conducted and report was developed by NASSCOM, with support and guidance from several members from the state, central governments, consultancy organisations, and IT industry. We would like to thank various people for their valuable contributions without which this report would not have been possible. First, we would like to thank all officers of the central, state governments and their departments and agencies who have helped us successfully conduct the study and provide very valuable government perspective. We would like to specially thank Shri S R Rao, Mr J Satyanarayana, for helping us frame the scope of study and its methodology. Special thanks are due to TAGUP team chaired by Mr Nandan Nilekani. We would like to thank the Canara Bank IT team, and Mr B Shandilya. We would also like to thank our executive council for their valuable counsel and guidance. Special thanks are due to Ashank Desai, Ganesh Natarajan, Krishna Kumar, Ravi Venkatesan, who have guided the study and report development from concept to closure. We would like to acknowledge the valuable inputs from Srinivasan Ramakrishnan Ex-DG of CDAC, Prakash Kumar and Joan McCalla of CISCO, IDFC, NISG and PwC teams. We would also like to acknowledge the valuable feedback provided by several government and IT industry participants on this study and its findings, during the five regional consultations workshops conducted by the Department of IT, in partnership with NASSCOM, during September to November 2010, at Chandigarh, Chennai, Kolkata, Mumbai, Lucknow. A special acknowledgement to the NASSCOM eGovernance team, Pratap Reddy and Anirban Mukerji, for their efforts and contribution towards this report. Som Mittal President Acknowledgements
  • 5. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study5 We would like to thank the following organisations and their teams for participating in this study and providing invaluable inputs on issues, challenges and also helping in drawing up the recommendations. Government Department of Information Technology, Government of India and its units, NeGD, UIDAI, Planning Commission, Ministry of Home Affairs, Department of Industrial Promotion and Policy Government of Andhra Pradesh, ELCOT, Gujarat Informatics, Government of Karnataka, Government of Tamil Nadu, Government of West Bengal Consultants Ernst & Young, IDFC, IL&FS, NISG, PwC IT Industry 3i Infotech, ABM Knowledgeware, CISCO, CMS Computers, COMAT Technologies, HCL Infosystems, HCL Technologies, Humanitics, Infosys, L&T Infotech, Mastek, Microsoft, Mindtree, MobMe, NIIT Technologies, Payada Technologies, Radiant, Ram Informatics, TCS, UTL, Wipro, Zensar, Zylog Systems
  • 6. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study6 Executive Summary
  • 7. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study7 In the past few years, eGovernance has gained considerable momentum in India, with many high impact projects being implemented in both Government to Citizen (G2C) and Government to Business (G2B) domains, across central ministries and state departments. NeGP Mission Mode Projects, and several strategic eGovernance initiatives in states, executed in partnership with the IT industry, have helped redefine the government service delivery to rural, urban citizens and businesses, by making several services online and 24/7. MCA21, UIDAI, Customs and Central Excise, Integrated Citizen Services like MP Online, Karnataka One, CSCs, NREGA, eProcurement, HRMS, SWANs and SDC are just a small sample of eGovernance initiatives, executed successfully with the support and partnership of the industry. From the earlier focus on hardware-centric procurement, most projects are now moving to defining servicesandoutcomes.MostprojectDPRs,RFPsandservicesagreements,contractsaredemonstrating a fundamental shift in the way the government is procuring IT and IT services. Hardware and even application development are now being considered more as building blocks towards an end outcome rather than as key requirements. The relationship between the government, the buyer and industry, the service provider, is moving towards a more strategic outsourcing relationship over a 5-7 years term. This has been the direction for some of the larger Mission Mode NeGP projects both in centre and states and eGovernance infrastructure projects like SWAN, SDC. An objective analysis of the entire eGovernance landscape shows that, several projects and their execution are faced with a lot of challenges. Several projects have failed, and have been shelved because of flaws at different stages: their conceptualisation, scope definition, vendor selection and poor execution due to the shortcomings both on the government and the implementing vendor’s side. Issues related to public procurement of IT projects (eGovernance projects) are a cause of concern for both buyers (i.e. government departments) and potential bidders. NASSCOM through an extensive research and interview process has put together a detailed report ‘eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study’. The study initiated by NASSCOM, in consultation with the Department of IT, is broadly targeted to identify key issues and challenges, faced during the various stages of an eGovernance project lifecycle. From conceptualisation through bid process, contracting to execution and Post Go-Live phases. The report has also studied the best practices in India and overseas. The recommendations of the report outline the key steps that need to be enabled for an effective public procurement process, for IT services, in the country. To understand the issues related to public procurement of eGovernance projects, and obtain best practices and recommendations, the following methodology was adopted. 1) Discussions with a cross-section of organisations engaged in the eGovernance domain. The cross-section included to name a few: a) Established large System Integrators (SIs) who have been implementing many eGovernance projects like HCL Infosystems, TCS, Wipro b) Established SME’s like ABM Knowledgeware, CMS, COMAT Technologies, UTL c) Large and small organisations that have become active in the eGovernance domain like HCL Technologies, L&T Infotech, Mindtree, MobMe, Payada Technologies d) Global OEM organisations like CISCO, Microsoft Executive Summary
  • 8. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study8 e) Consultancy organisations like Ernst & Young, IDFC, IL&FS, NISG and PriceWaterhouseCoopers 2) Studying a few landmark projects that have been outsourced in centre and states, to understand the various issues, best practices regarding implementation a) Elicit feedback of the government officers of the IT department and line departments at both HoDandmidandjuniorofficersdrivingeGovernanceprojects.Thecross-sectionincludedseveral states, central ministries, state nodal agencies, NeGP mission leaders b) Speak to implementing service providers to identify issues and best practices from contract, Go-Live and Post Go-Live phases 3) Studying the World Bank guidelines regarding public procurement 4) Studying the best practices and policies and model documents of PPP projects in the infrastructure sector 5) Studying the IT procurement practices of the Government of Canada, Singapore 6) Understanding the IT outsourcing strategy and best practices of a public sector bank Based on our research and interactions with a wide cross-section of state and central government officers, NASSCOM team obtained some insightful feedback. Government Perspective Key highlights of feedback from government officers is as follows: Internal eGovernance capacity • Government needs to develop overall capacity of the government employees in managing IT and eGovernance projects - Bolster capacity within the government by training, recruiting staff - Establish a specialist service for handling eGovernance projects & IT function • Government officers do not have deep understanding of technology solutions and their implementation and hence, are constrained in devising and monitoring service level agreements and contract management of IT projects Government feedback to industry • Industry project teams should build eGovernance and functional/domain skills • Delivery resources assigned to eGovernance projects is not at par with resources being assigned to their global customers • The eGovernance sector is not a priority for a majority of industry members • Industry members should refrain from submitting low, unviable commercial bids, as it not only impacts the vendor’s quality of delivery, but often leads to the termination and litigation, impacting the government’s plans and service delivery to citizens • “Industryshouldchangeitsfocusfromproduct orientation tocitizen servicedeliveryin eGovernance projects. The industry is still oriented towards the supply of goods and services and the service orientation which is the core of all eGovernance services is lacking” – a state IT secretary
  • 9. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study9 Industry issues & challenges • A wide cross-section of the industry respondents, provided a total of 296 issues which were distilled to 170 unique issues related to the procurement of eGovernance and IT services • These issues can be grouped into 19 categories of issues • Maximum issues & challenges are witnessed in - Project execution - Project conceptualisation & Scope of Work (SoW) - Contract, Terms and Conditions (T&C) • Lack of continuity of project champion is a challenge across most projects - Sign-off’s given by a government officer regarding a project, are not accepted by the successor. Many times the successor likes to re-evaluate/review the certification of work, and even SoW & Contract • Delays in deliverables from the government • Delays in giving timely sign-offs to vendors both by the department and third-party audit - Department PMU not empowered to take appropriate decisions, in the interest of project implementation. This issue was highlighted even by the government respondents • Project bids incorporate many non-IT items as well, which increase the project cost manifold. This leads to an increase in pre-qualification turnover criteria, impacting the opportunity of small and medium players, and also risk overload by all vendors • Projects incorporate requirements like lease rental, diesel for running of gensets - Cost estimation is a guesswork, both on the extent of grid power outages, and cost of diesel over a five year tenure. Indexing such input costs to a base price and factoring escalation is missing • No counter guarantees, built into the SLAs, for default by the government and government agencies • Pre-qualification norms is a challenge for both incumbent SME and large, SME organisations entering the eGovernance domain • Some contracts have unlimited liability terms with no caps linked to contract value and payments to date • Most PPP projects are first-of-a-kind project and it is difficult to anticipate transaction volumes. Further, they are dependent on a number of upstream activities like computerisation of back-end departments - Given the risks in these projects, there should be some risk mitigation measures, counter guarantees to reduce the investment risk of the bidders - PPP projects not designed in a manner to enable re-negotiation in both cases of windfall gains or losses to vendor. This point was also reiterated by the government respondents Key recommendations from the study • Model RFPs, contracts, MSA for different category of projects
  • 10. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study10 - Themodeldocumentswerecommend,arepreparedbyajointgovernment-consultants-industry team (including representatives from the banking sector, IDRBT) - Review by a joint government-consultants-industry panel including DIT, Department of Expenditure - Customise these for state projects, and drive uniformity - Contracts should incorporate ‘Conditions of Precedent’ and obligations of the government departments and agencies - SLAs and events of default to be defined for both vendor and government departments and agencies - Incorporate the best practices of infrastructure concessionaire agreements and model documentspublishedbythePlanningCommissionfortheinfrastructuresector,intoeGovernance PPP projects - Toolkits for PPP, BOOT projects and business model options to guide departments • Similar to pre-bid meetings, standardise on suppliers debriefing, post project award • Project governance structure - Publish a model for different category of projects - Government project team resourcing & skills profile across lifecycle stages - Consult enterprise CIOs, industry and banking PSUs in finalising this • Dispute resolution & arbitration guidelines - Panel of retired officers from the government and academia, knowledgeable with IT projects execution - Evaluate alternative dispute resolution mechanism on the lines of procurement Ombudsman of Canada • Centralised digital repository of all information assets of bids, projects – on a secure government network - RFPs, pre-bid queries, bid amendments, contracts, MSAs - Project reviews, audit reports, impact assessment reports - Vendor defaults/force majeure situations Industry actionables • eGovernance functional/domain skills for delivery teams • Sensitisation of industry leadership on failed projects due to unviable bids, vendor defaults, project termination, litigation and their impact on the government - Help drive rigor into bid review process of their sales teams • NASSCOM to build a repository of - Success stories, case studies in eGovernance - Learnings from failed projects The study report and its findings and recommendations, we hope will initiate a deeper dialogue between the government and industry, to address the current challenges and help the country realise its eGovernance vision, through partnership with the IT industry.
  • 11. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study11 Table of Contents Foreword 3 Acknowledgements 4 Executive Summary 6 Introduction 12 Guiding Principles for Public Procurement 17 eGovernance Projects – Government Perspective 47 Industry Perspective 68 Study of Global Public Procurement Practices – Canada/Singapore 80 Study of IT Management in a PSU Bank 90 Summary, Recommendations 94 Annexures 97
  • 12. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study12 Introduction
  • 13. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study13 In the past few years, eGovernance has gained considerable momentum in India, with many high impact projects being implemented in both Government to Citizen (G2C) and Government to Business (G2B) domains, across central ministries and state departments. NeGP Mission Mode Projects, and several strategic eGovernance initiatives in states, executed in partnership with the IT industry, have helped redefine the government service delivery to rural, urban citizens and businesses, by making several services online and 24/7. MCA21, UIDAI, Customs and Central Excise, Integrated Citizen Services like MP Online, Karnataka One, CSCs, NREGA, eProcurement, HRMS, SWANs and SDC are just a small sample of eGovernance initiatives, executed successfully with the support and partnership of the industry. From the earlier focus on hardware-centric procurement, most projects are now moving to defining servicesandoutcomes.MostprojectDPRs,RFPsandservicesagreements,contractsaredemonstrating a fundamental shift in the way the government is procuring IT and IT services. Hardware and even application development are now being considered more as building blocks towards an end outcome rather than as key requirements. The relationship between the government, the buyer and industry, the service provider, is moving towards a more strategic outsourcing relationship over a 5-7 years term. This has been the direction for some of the larger Mission Mode NeGP projects both in centre and states and eGovernance infrastructure projects like SWAN, SDC, etc. 1.1 Various modes of contracting for IT services Dependinguponthesizeandnatureofprojectsindifferentministriesanddepartments,thegovernment has been adopting different modes of contracting for IT services. 1.1.1 Outright procurement of IT goods and services The government department issues a RFP with requirements and timelines for delivery of the goods and services and makes payments for the same based on delivery milestones. Commonly these requirements are simple in nature like the development of a software solution, supply of hardware. Most RFP’s have a clause related to maintenance of the software application or IT equipment which is paid for separately. 1.1.2 Turnkey contracts The government department identifies a complex project with a set of services, and prepares a RFP for all components required for the delivery of these services, to the government department. The components would include application solution development, supply, installation of hardware and system integration. Guarantee of performance as per SLA; and Operation & Maintenance (O&M) of the solution, infrastructure for a specified period of time is often part of the scope. Such turnkey projects may encompass a comprehensive scope of work including components of data entry of legacy data, training for government officers, implementation support comprising staffaugmentation of operators. In some cases, provisioning the facilities including civil work, supply of furniture, back-up power through generators, may also be included in the scope of work. Mostly turnkey contracts may be milestone-based payments or on a deferred payment (quarterly guarantee) mode, subject to the turnkey operator meeting the prescribed SLA’s for both installation and operation of the IT systems and solution. Introduction
  • 14. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study14 The term of such comprehensive turnkey contracts normally range from 3-7 years and post completion, the vendor transfers the operations to the government or a designated government agency or to an alternate vendor selected by the government. 1.1.3 Public Private Partnerships (PPPs) PPPs are projects involving investments by the private sector partner with its associated risks and rewards based on volume and type of services delivered. The government in such case, contracts for delivery of services over an agreed project tenure. Well known examples of such projects are those like eSeva, eProcurement in Andhra Pradesh, Bangalore One in Karnataka, MP Online, the recently commenced Passport Seva Project for Ministry of External Affairs. In the case of projects like eSeva, Bangalore One, the vendor is mandated to create both the physical citizen service centre and the IT infrastructure and receives fee based on the services delivered to the citizens, though subject to stringent service level agreements. The time period for operations of such PPP projects are normally 5-7 years and the vendor would mostly transfer the assets and project operations to the government or another identified vendor. PPP projects may be Build Own Operate Transfer (BOOT) or Build Own Operate (BOO). 1.2 Issues in eGovernance project implementation An objective analysis of the entire eGovernance landscape shows that, several projects and their execution are faced with a lot of challenges. Several projects have failed, and have been shelved because of flaws at different stages: their conceptualisation, scope definition, vendor selection and poor execution due to the shortcomings both on the government and the executing vendor’s side. Issues related to public procurement of IT projects (eGovernance projects) are a cause of concern for both buyers (i.e. government departments) and potential bidders. Lack of capacity in several government departments to conceptualise, design, execute and monitor projects has been a big constraint. The conceptualisation of the project including technology choices, business model choices, SLAs need to be thought through differently for each category of project and articulated in the RFP. In many cases like the, SWAN, SDC and eDistrict projects, DIT has been playing a supportive role by appointing consultants both at the central and state level for preparing RFP’s, assisting in bid evaluation and also providing for third-party audits. However, there continues to exist significant challenges during the implementation of these projects. Private sector bidding for eGovernance projects also face many issues like improperly drafted scope of work, requirements and terms and conditions, SLAs which could lead to potentially heavy liabilities and penalties during implementation. The ecosystem of organisations focused on eGovernance implementation consists of diferent types of organisations with very large global & national System Integrators (SIs) to smaller local organisations. Often there is seen a mismatch in the project scope and sizing, and bidder eligibility criteria. The issues range from over specking, thereby denying a level playing field for small & medium players and even for large players who are new entrants into eGovernance. In some projects, the eligibility criteria may be diluted, thereby impacting successful execution and leading to termination, re-tendering or scrapping of the project. 1.3 Role of National Informatics Centre (NIC) NIC has played a pioneering role in the computerisation of several departments both at the state and central level. Several flagship eGovernance initiatives in Land Records, Transport, and Agriculture
  • 15. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study15 amongst others have been successfully implemented by the NIC across the country. Historically, the NIC has been the promoter of computerisation, thus becoming internal EDP department of the central government departments and state governments. However, over time, nature and type of eGovernance service delivery and mandated service levels and business models, have undergone significant changes. Currently, all projects are awarded to the NIC on a nomination basis, without a competitive bid process and also without the associated terms and conditions, service level agreements, contracts that are applied when goods and services are procured from or outsourced to private sector entities. NIC plays a technical advisory role in some projects being executed by the private sector. When projects are handed over to the NIC, the departments have had the comfort of avoiding a complex RFP process, bid and project management. However, for eGovernance projects outsourced to the private sector, the government departments need to undertake the exercise of project conceptualisation and scoping, bid, project management, governance structures, SLAs monitoring, third-party audit and so on. Internal capacity and resources to support this exercise has been a barrier in many eGovernance initiatives. 1.4 Existing public procurement guidelines There exists comprehensive guidelines regarding public procurement issued by 1) Department of Expenditure of Ministry of Finance, has issued a Manual of Policies and Procedures for Employment of Consultants, for Works Contracts & Purchase of Goods and General Financial Rules 2005 2) Most states have a financial code and procurement guidelines, mostly for public works contracts 3) Ministry of Finance has issued very comprehensive guidelines, forms, policy documents for PPP projects in infrastructure sector 4) Karnataka has legislated a Karnataka Transparency in Public Procurement Act and rules 5) Central Vigilance Commission has issued various circulars and guidelines regarding public procurement procedures A comprehensive review of all existing guidelines, and identifying their best practices would help customise and/or incorporate relevant guidelines, policies in procuring/outsourcing eGovernance Projects too. 1.5 Objectives of the NASSCOM study The study initiated by NASSCOM, is broadly targeted to identify key issues and challenges, faced during the various stages of an eGovernance project lifecycle. From conceptualisation through bid process, contracting to execution and Post Go-Live phases. 1. Project conceptualisation and development including associated processes of a. Pre-qualification norms for bidders b. Payment model/Business model c. Requirements definition and Scope of Work (SoW) d. Contract (terms and conditions document, services agreement) including associated processes of i. Dispute resolution process
  • 16. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study16 2. Bidding phase process including associated processes of a. Tender publication b. Process of pre-bid meetings and issue of pre- bid clarifications c. Tender submission process d. Tender evaluation process e. Awarding of contract to selected bidder 3. Project execution including associated processes of a. Third-party audit 4. Post implementation 5. Specific issues related to a. PPP projects 6. Unfair procurement practices and vendor defaults 1.6 Methodology for study of public procurement of eGovernance projects To understand the issues related to public procurement of eGovernance projects, and obtain best practices and recommendation, the following methodology has been adopted. 1) Discussions with a cross-section of organisations engaged in the eGovernance domain. The cross-section included to name a few: a) EstablishedlargeSIswhohavebeenimplementingmanyeGovernanceprojectslikeHCLInfosystems, TCS, Wipro b) Established SMEs like ABM Knowledgeware, CMS, COMAT Technologies, UTL c) Large and small organisations that have now become active in the eGovernance domain like HCL Technologies, L&T Infotech, Mindtree, MobMe, Payada Technologies d) Global OEM organisations like CISCO, Microsoft e) Consultancy organizations like Ernst and Young, IDFC, IL&FS, NISG and PriceWaterhouseCoopers 2) Studying a few landmark projects that have been outsourced in centre and states, to understand the various issues, best practices regarding implementation a) Elicit feedback of government officers of the IT department and line departments at both HoD and mid and junior officers driving eGovernance projects. The cross-section included several states, central ministries, state nodal agencies, NeGP mission leaders b) Speak to implementing service providers to identify issues and best practices from contract, Go-Live and Post Go-Live phases 3) Studying the World Bank guidelines regarding public procurement 4) Studying the best practices and policies and model documents of PPP projects in the infrastructure sector 5) Studying the IT procurement practices of the Government of Canada, Singapore 6) Understanding the IT outsourcing strategy and best practices of a public sector bank
  • 17. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study17 Guiding Principles for Public Procurement
  • 18. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study18 In a study focused on eGovernance and IT services procurement in the government, we considered it was important to review and summarise the existing public procurement guidelines, and delineate their applicability to IT services domain. The following guidelines were reviewed through documents available in the public domain, coupled with discussions with key stakeholders: • General Financial Rules 2005 (GFR) • Central Vigilance Commission (CVC) Guidelines • Procurement Guidelines of IBRD, IDA - ForprojectsfinancedbyaloanfromtheInternationalBankforReconstructionandDevelopment (IBRD) or a credit or grant from the International Development Association (IDA) 2.1 General Financial Rules 2005 Introduction The General Financial Rules (GFR) 2005 of the Department of Expenditure, Ministry of Finance were evolved after an extensive review of four-decade old GFR 1963. The review was necessitated by changes in system of procurement, developments in information technology and alternative service delivery systems including the outsourcing of services. GFR 2005 is a compendium of rules and guidelines for the expenditure of Government of India and includes a complete chapter on rules, for procurement of goods and services. Execution of works The Chapter 5 of the GFR lays down rules for the execution of works, where ‘works’ broadly refers to constructions and alterations, repairs to existing works or structures. For most works above a certain value, it recommends execution of the work through a public works organisation. Rule 124 – ‘Administrative Control’, highlights the assumption of full responsibility for construction, maintenance and upkeep, and provision of funds for execution of these functions. Although the rule is explicitly defined in the context of construction works, it has a pertinent point for eGovernance projects, namely: • The need for ongoing maintenance and support of IT systems and solutions and provision of funds beyond the initial phase of an eGovernance project, IT solutions/services procurement • Several eGovernance initiatives have been constrained by being primarily focused on the ‘construction’ or development phase and its funding. Several eGovernance projects are initiated through one-time funding under a central government programme, or an external aid agency, and states or departments have not been able to sustain the funding, needed for ongoing maintenance, enhancements. An equal focus on ‘maintenance, upkeep’ when a new eGovernance initiative is conceptualised, will ensure investment in information technology solutions, services continues to serve government objectives, in the long-term • In the context of IT solutions and eGovernance projects, ‘maintenance, upkeep’ indicates ongoing support, solution and features enhancements, upgrades of hardware, software, and provisioning for their funding, on a year-on-year basis Guiding Principles for Public Procurement
  • 19. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study19 The GFR Rule 129 in Chapter 5 on works provides the following directive regarding the execution of works: No works shall be commenced or liability incurred in connection with it unless 1. Administrative approval needs to be obtained from appropriate authority 2. Sanction to incur expenditure to be obtained from competent authority 3. A properly detailed design has been sanctioned 4. Funds to cover the charge during the year have been provided by competent authority This rule also has applicability in some eGovernance initiatives in states, that get launched in a hurry, and get shelved due to non-availability of necessary approvals, budgetary sanctions or inadequate funding. Rule 134 provides important guideline on review of projects as following: “After a project costing INR 10 crore or above is approved, the Administrative Ministry or Department will set up a Review Committee consisting of a representative each from the Administrative Ministry, Finance (Internal Finance Wing) and the Executing Agency to review the progress of the work. The Review Committee shall have the powers to accept variation within 10 per cent of the approved estimates”. While the NeGP Mission Mode Projects and large state eGovernance initiatives may have had clearly defined Review Committees, several eGovernance initiatives have suffered due to the absence of an empowered committee to review. Most review committees, have also not had the empowerment or probably the flexibility to approve variations in cost estimates, approved during the bid phase. Several eGovernance initiatives are first-of-its-kind projects, and it is usually not possible to determine the entire scope of work and solution features, and real constraints in delivering these services across the entire state or country, spanning so many locations with their unique challenges. A Review Committee empowered to accept a “10 per cent variation in approved estimates”, when a project so demands it, will go a long way in successful implementation of eGovernance projects. Learnings Chapter 5 mainly concerns itself with construction works and additionally mandates as per Rule 126 that construction works above a certain value should be executed through a public works organisation. Despite the emphasis of the chapter on construction works, the following learnings can be applied for the implementation of IT projects by government departments during the project conceptualisation phase. 1. Due process in working out estimates, schedule of quantities, procedure and approvals from competent authority 2. Equal focus on ongoing maintenance and upkeep and their funding, by the project implementing department/agency 3. ReviewCommitteeforprojectsaboveacertainthreshold,withnecessaryempowermenttosanction variations in cost estimates upto 10 per cent 4. Given that a ‘Public Works Organisation’ is not applicable in the context of eGovernance, IT services projects, the government both at the states and centre could evaluate the role of the Department of IT, or its IT nodal agency, as an enabling nodal department to guide all other departments.
  • 20. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study20 Procurement of goods The following rules regarding the procurement of goods and services is prescribed in Part 1 of Chapter 6 of the GFR 1) Rule 137 lays down fundamental principles of public buying as following – Every authority delegated with the financial powers of procuring goods in public interest shall have the responsibility and accountability to bring efficiency, economy, transparency in matters relating to public procurement and for fair and equitable treatment of suppliers and promotion of competition in public procurement. The procedure to be followed in making public procurement must conform to the following yardsticks: a) The specifications in terms of quality, type, etc., as also quantity of goods to be procured, should be clearly spelt out keeping in view the specific needs of the procuring organisations. The specifications so worked out should meet the basic needs of the organisation, without includingsuperfluousandnon-essentialfeatures,whichmayresultinunwarrantedexpenditure. Care should also be taken to avoid purchasing quantities in excess of requirement to avoid inventory carrying costs b) Offers should be invited following a fair, transparent and reasonable procedure c) The procuring authority should be satisfied that the selected offer adequately meets the requirement in all respects d) The procuring authority should satisfy itself that the price of the selected offer is reasonable and consistent with the quality required e) At each stage of the procurement, the concerned procuring authority must place on record, in precise terms, the considerations which weighed with it while taking the procurement decision 2) Rule 140 delegates full powers to ministries and departments to make their own arrangement for the procurement of goods. However, if a ministry or department does not have the required expertise, it may project its indent to the Central Purchase Organisation 3) As per Rule 141, the Central Purchase Organisation (e.g. DGS&D) shall conclude rate contracts with the registered suppliers, for goods and items of standard types, which are identified as common user items and are needed on recurring basis by various central government ministries or departments. The Central Purchase Organisation will furnish and update all the relevant details of the rate contracts in its website. The ministries or departments shall follow those rate contracts to the maximum extent possible 4) Rule 142 lays down detailed guidelines for registration of suppliers which are as following: a) The Central Purchase Organisation (e.g. DGS&D) will prepare and maintain item-wise lists of eligible and capable suppliers. Such approved suppliers will be known as ‘Registered Suppliers’. All ministries or departments may utilise these lists as and when necessary. Such registered suppliers are prima facie eligible for consideration for procurement of goods through limited tender enquiry. They are also ordinarily exempted from furnishing bid security along with their bids. A head of department may also register suppliers of goods which are specifically required by that department or office b) Credentials, manufacturing capability, quality control systems, past performance, after-sales service, financial background, etc. of the supplier(s) should be carefully verified before registration
  • 21. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study21 c) The supplier(s) will be registered for a fixed period (between 1-3 years) depending on the nature of the goods. At the end of this period, the registered supplier(s) willing to continue with the registration are to apply afresh for renewal of registration. New supplier(s) may also be considered for registration at any time, provided they fulfil all the required conditions d) Performance and conduct of every registered supplier is to be watched by the concerned ministry or department. The registered supplier(s) are liable to be removed from the list of approved suppliers if they fail to abide by the terms and conditions of the registration or fail to supply the goods on time or supply substandard goods or make any false declaration to any government agency or for any ground which, in the opinion of the government, is not in public interest 5) Rule 145 & Rule 146 allow only goods below INR 1 lakh to be purchased without a tender 6) Rule147prescribesrulesfordirectpurchaseofgoodsunderratecontractfromsuppliers.Itmandates that the Central Procurement Organisation (e.g. DGS&D) should host specifications and prices on its website 7) Rule 149 mandates unless the price of goods is below INR 1 lakh or is being purchased under a rate contract, the department should follow a tendering process for goods procurement 8) Rule150prescribesdetailedguidelinesforopen‘Advertised’tenderenquiryforallgoodsprocurement above INR 25 lakh 9) Rule 151 prescribes limited tender enquiry for goods procurement below INR 25 lakh where the tender enquiry is limited to pre-registered suppliers as per Rule 142 10) Rule 152 prescribes a two bid system comprising a technical bid and a commercial bid for complex procurement. It states that commercial bids of only technically acceptable offers should be opened for further evaluation and ranking before awarding the contract 11) Rule 154 provides guidelines for single source procurement 12) Rule 155 prescribes the various section of a bidding document 13) Rule 157 provide guidelines for obtaining bid security from all bidders to safeguard against bidder withdrawing or altering the bid during the bid validity period. It prescribes that the bid security should be between 2-5 per cent of the value of goods to be procured and such bid security can be of forms like demand draft, fixed deposit receipt, bank guarantee, etc. 14) Rule 158 states the requirement of obtaining a performance security from bidders 15) Rule 160 states detailed guidelines (15 in number) on requirement of transparency, competition, fairness and elimination of arbitrariness in the procurement process. Some of the salient guidelines are: a) The text of the bidding document should be self-contained and comprehensive without any ambiguities. All essential information, which a bidder needs for sending responsive bid, should be clearly spelt out in the bidding document in simple language. The bidding document should contain, inter alia; i) The criteria for eligibility and qualifications to be met by the bidders such as minimum level of experience, past performance, technical capability, manufacturing facilities and financial position, etc. ii) The procedure as well as date, time and place for sending the bids
  • 22. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study22 iii) Date, time and place of opening of the bid iv) Terms of delivery; special terms affecting performance, if any b) Suitable provision should be kept in the bidding document to enable a bidder to question the bidding conditions, bidding process and/or rejection of its bid c) Suitable provision for settlement of disputes, if any, emanating from the resultant contract, should be kept in the bidding document d) The bidders should be given reasonable time to send their bids e) The bids should be opened in public and authorised representatives of the bidders should be permitted to attend the bid opening f) The specifications of the required goods should be clearly stated without any ambiguity so that the prospective bidders can send meaningful bids. In order to attract sufficient number of bidders, the specification should be broad based to the extent feasible. Efforts should also be made to use standard specifications which are widely known to the industry g) Pre-bid conference: In case of turn-key contract(s) or contract(s) of special nature for the procurement of sophisticated and costly equipment, a suitable provision is to be kept in the bidding documents for a pre-bid conference for clarifying issues and clearing doubts, if any, aboutthespecificationsandotheralliedtechnicaldetailsoftheplant,equipmentandmachinery projected in the bidding document. The date, time and place of pre-bid conference should be indicated in the bidding document. This date should be sufficiently ahead of the bid opening date h) Criteria for determining responsiveness of bids: Criteria as well as factors to be taken into account for evaluating the bids on a common platform and the criteria for awarding the contract to the responsive lowest bidder should be clearly indicated in the bidding documents i) Bids received should be evaluated in terms of the conditions already incorporated in the bidding documents; no new condition which was not incorporated in the bidding documents should be brought in for evaluation of the bids. Determination of a bid’s responsiveness should be based on the contents of the bid itself without recourse to extrinsic evidence j) Negotiation with bidders after bid opening must be severely discouraged. However, in exceptional circumstances where price negotiation against an ad-hoc procurement is necessary due to some unavoidable circumstances, the same may be resorted to only with the lowest evaluated responsive bidder k) In the rate contract system, where a number of organisations are brought on rate contract for the same item, negotiation as well as counter offering of rates are permitted with the bidders in view and for this purpose special permission has been given to the Directorate General of Supplies and Disposals (DGS&D) l) Contract should ordinarily be awarded to the lowest evaluated bidder whose bid has been found to be responsive and who is eligible and qualified to perform the contract satisfactorily as per the terms and conditions incorporated in the corresponding bidding document m) The name of the successful bidder awarded the contract should be mentioned in the ministries or departments notice board or bulletin or website
  • 23. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study23 16) Rule 161 prescribes the need for efficiency, economy and accountability in public procurement system. To achieve the same, it states that the following areas need to be addressed: a) To reduce delay, appropriate time frame for each stage of procurement should be prescribed by the ministry or department. Such a time frame will also make the concerned purchase officials more alert b) The ministries or departments should ensure the placement of contract within the original validity of the bids. Extension of bid validity must be discouraged and resorted to only in exceptional circumstances c) The Central Purchase Organisation, should bring into the rate contract system more and more common user items which are frequently needed in bulk by various central government departments Relevance to IT procurement by government departments The GFR is fairly elaborate regarding goods procurement by central government departments and endeavours to promote transparency in procurement. While the rate contracts of a Central Purchase Organisation is relevant for standard procurement and supply of goods, most eGovernance projects havecustomisedsolutions,servicestobeimplemented,includinginstallationandsupportrequirements which vary from project to project. GFR also recommends use of rate contracts method. While both DGS&D and state IT nodal agencies, have effectively used this method for procurement of IT hardware and COTS software, there are some challenges with respect to procurement of IT products. 1. IT products, particularly hardware see continuous upgradation and often downward decline in pricing 2. Many IT products have a high rate of obsolescence and version changes. Sometimes upgrades to products and new versions and releases may be unique to one or few vendors. Hence, a rate contract administration may need to specially factor constant revision 3. There may be a variation in features and prices between similar categories of products from different manufacturers. Most hardware and even COTS software like operating systems, databases are usually configurations unique to a vendor, with specific features and enhancements. Hence, a standardised rate contract for a similar category of IT product from different vendors is a challenge 4. DGS&D rate contracts don’t incorporate the concept of a committed volume of procurement which usually determines volume pricing 5. Most eGovernance and IT services projects do not procure ‘Goods’ in isolation, and hence, a rate contract with a Central Purchasing Organisation, or a central IT nodal agency in the state, has limited applicability 6. The GFR also states that a minimum of three weeks should be given for bid submission, and four weeks for global bids. For a complex IT procurement tender, this time period may be extended to six weeks, to ensure that all eligible bidders can participate Procurement of services The Part II of Chapter 6 provides guidelines on the procurement of services which as per Rule 163 relate to procurement of consultancy services. Rule 164 states that Part II provides the fundamental principles
  • 24. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study24 regarding the engagement of consultants, and ministries can issue detailed instructions which should not contravene the basic rules of the Part II of Chapter 6. The various guidelines are as following: 1) Rule 165 states that consultants should be engaged only for high quality work for which the department does not have expertise 2) Rule 166 states that the departments should prepare in simple and concise language the requirement, objectives and the scope of the assignment. The eligibility and pre-qualification criteria to be met by the consultants should also be clearly identified at this stage 3) AsperRule168,forconsultancyassignmentsbelowINR25lakh,thedepartmentscanfloatrequests for expressions of interest to a list of organisations gathered on the basis of formal or informal enquiries with other departments, industry associations, however, for value of above INR 25 lakh, the EOI should be advertised in one national daily and the department’s website 4) As per Rule 169, the evaluation of responses to the EOI should enable the shortlisting of a minimum of three consultancy organisations 5) Rules 170 and 171 state the components of the terms of reference and the request for proposal respectively 6) Rule 172 states that RFP should compulsorily ask for separate technical and financial responses with both these responses being sealed separately 7) Rule 174 states that technical bids should be analysed and evaluated by a Consultancy Evaluation Committee (CEC) constituted by the ministry or department. The CEC shall record in detail the reasons for acceptance or rejection of the technical proposals analysed and evaluated by it 8) Rule 175 states that the ministry or department shall open the financial bids of only those bidders who have been declared technically qualified by the CEC as per Rule 174 mentioned above for further analysis or evaluation and ranking and selecting the successful bidder for placement of the consultancy contract 9) Rule 176 states that in case of single source procurement, justification should be recorded and approval should be obtained from competent authority prior to resorting to single source selection 10) Rule177mandatesthatthedepartmentshouldbeinvolvedthroughoutintheconductofconsultancy, preferably by taking a task force approach and continuously monitoring the performance of the consultant(s) so that the output of the consultancy is in line with the department’s objectives Outsourcing of services A sub-section of Part II of Chapter 6 of the GFR deals with the outsourcing of services. Rule 178 states that services may be outsourced in the interest of economy and efficiency. The directives regarding the outsourcing of services are not as comprehensive as those for goods and consultancy services. Comments on procurement of services to eGovernance services The section of procurement of services is not as comprehensive as the section for procurement of goods. However, it provides a broad framework for procurement of consultancy services. eGovernance projects where the entire conceptualisation of services, service delivery framework is determined during the consultancy phase, may need a clear set of guidelines to be spelt out.
  • 25. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study25 Contract management Chapter 8 of GFR provides directives on management of contracts. The general principles for entering into contracts have been given in Rule 204, and some of these salient principles are: 1. The terms of contract must be precise, definite and without any ambiguities. The terms should not involve an uncertain or indefinite liability, except in the case of a cost plus contract or where there is a price variation clause in the contract 2. Standard forms of contracts should be adopted wherever possible, with such modifications as are considered necessary in respect of individual contracts. The modifications should be carried out only after obtaining financial and legal advice 3. In cases where standard forms of contracts are not used, legal and financial advice should be taken in drafting the clauses in the contract 4. In respect of contracts for works with estimated value of INR 10 lakh or above or for purchase of above INR 10 lakh, a contract document should be executed, with all necessary clauses to make it a self-contained contract. If however, these are preceded by invitation to tender, accompanied by General Conditions of Contract (GCC) and Special Conditions of Contract (SCC), with full details of scope and specifications, a simple one page contract can be entered into by attaching copies of the GCC and SCC, and details of scope and specifications, Offer of the Tenderer and Letter of Acceptance 5. Contract document should be invariably executed in cases of turnkey works or agreements for maintenance of equipment, provision of services, etc. 6. No work of any kind should be commenced without proper execution of an agreement as given in the foregoing provisions 7. Contract document, where necessary, should be executed within 21 days of the issue of letter of acceptance. Non-fulfillment of this condition of executing a contract by the contractor or supplier would constitute sufficient ground for annulment of the award and forfeiture of Earnest Money Deposit 8. Rule 204 also provides a framework for price escalation clause, which should be allowed only for long-term contracts that extend beyond 18 months. Where a price variation clause is provided, the price agreed upon should specify the base level viz., the month and year to which the price is linked 9. Contracts should include provision for payment of all applicable taxes by the contractor or supplier 10. The terms of a contract, including the scope and specification once entered into, should not be materiallyvaried.Wherevermaterialvariationinanyofthetermsorconditionsinacontractbecomes unavoidable, the financial and other effects involved should be examined and recorded and specific approval of the authority competent to approve the revised financial and other commitments obtained, before varying the conditions. All such changes should be in the form of an amendment to the contract duly signed by all parties to the contract 11. All contracts shall contain a provision for recovery of liquidated damages for defaults on the part of the contractor
  • 26. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study26 12. A warrantyclauseshouldbeincorporatedineverycontract,requiringthesupplierto,withoutcharge, repair or rectify defective goods or to replace such goods with similar goods free from defect. Any goods repaired or replaced by the supplier shall be delivered at the buyers premise without costs to the buyer 13. All contracts for supply of goods should reserve the right of the government to reject goods which do not conform to the specifications 14. As per Rule 205, regarding the management of contracts, the following directives are provided: (1) Implementation of the contract should be strictly monitored and notices issued promptly whenever a breach of provisions occurs (2) Proper procedure for safe custody and monitoring of bank guarantees or other instruments should be laid down. Monitoring should include a monthly review of all bank guarantees or other instruments expiring after three months, along with a review of the progress of supply or work. Extensions of bank guarantees or other instruments, where warranted, should be sought immediately (3) Wherever disputes arise during implementation of a contract, legal advice should be sought before initiating action to refer the dispute to conciliation and/or arbitration as provided in the contract or to file a suit where the contract does not include an arbitration clause. The draft of theplaintforarbitrationshouldbegotvettedbyobtaininglegalandfinancialadvice.Documents to be filed in the matter of resolution of dispute, if any, should be carefully scrutinised before filing to safeguard government interest Comments on section on contract management Chapter8ofGFRdealingwithmanagementofcontractsisfairlycomprehensiveandoutlinesthevarious best practices of contract management. Adherence to these directives will lead to the improvement in contract management in eGovernance projects too. Adoption of standard contracts with necessary modifications, in individual contracts is a key directive, that can be considered for adoption in eGovernance projects. A central initiative to develop standard contracts for different categories of eGovernance projects, could contribute to cutting down time and effort in bid phase, for both the buyer and seller. Standard contracts and their adoption by both central and state government departments, as base templates with necessary modifications, additions for specific projects will surely cut down bid development and bid response phases. Price escalation indexed to a base price, in long-term contracts, is another important directive in GFR, that could be evaluated, in long-term eGovernance services outsourcing projects. These projects span a tenure of 5-7 years, and have several factors that are subject to cost escalations, that cannot be predicted during bid/contracting stage. Central Vigilance Commission (CVC) CVC was set up by the government in 1964 to advise and guide the central government agencies in the field of vigilance. CVC is conceived to be the apex vigilance institution, free of control from any executive authority, monitoring all vigilance activity under the central government and advising various authorities in the central government organisations in planning, executing, reviewing and reforming their vigilance work.
  • 27. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study27 Consequent upon promulgation of an ordinance by the President, the Central Vigilance Commission has been made a multi-member commission with ‘statutory status’ with effect from August 25, 1998. The CVC Bill was passed by both the houses of the Parliament in 2003, and CVC functions under an act of the Parliament. Additionally vide resolution of Government of India on ‘Public Interest Disclosure and Protection of Informer’ dated April 2004, the Government of India has authorised the Central Vigilance Commission as the ‘Designated Agency’ to receive written complaints for disclosure on any allegation of corruption or misuse of office and recommend appropriate action. Summary of recommendations of the CVC relating to public procurement The CVC has studied public procurement practices in detail and over the past 12 years, has issued circulars to improve these practices. A study of the various circulars issued by the CVC shows both attention to detail, attempt to plug loopholes and improve upon its past directives, in tune with new developments. CVC has issued several circulars on various aspects of public procurement, including eTendering, which can be reviewed from their website – http://cvc.nic.in/proc_works.htm. Some of the relevant directives are as follows: 1. The CVC has issued a detailed Circular, 12-02-1-CTE-6, on framing of pre-qualification criteria. Some relevant excerpts – the purpose of any selection procedure is to attract the participation of reputed and capable organisations with proper track records. The PQ conditions should be exhaustive, yet specific. The factors that may be kept in view while framing the PQ criteria includes the scope and nature of work, experience of organisations in the same field and financial soundness of organisations. 2. Organisations may suitably modify these guidelines for specialised jobs/works, if considered necessary. However, it should be ensured that the PQ criteria will allow fair competition 3. Mandates that the pre-qualification criteria, performance criteria and evaluation criteria be incorporated in the bid documents in clear and unambiguous terms as these criteria are very important to evaluate bids in a transparent manner 4. Whenever required the departments/organisations should follow two-bid system, i.e. technical bid and price bid. The price bids should be opened only of those vendors, who were technically qualified 5. Mandates that evaluation criteria both for pre-qualification and bid evaluation should be explicit and should not be post facto decided after the opening of the tenders 6. The department should go for techno commercial evaluation to ensure that bidders are technically qualified prior to the opening of the technical bids 7. Mandates that due process of tendering should be followed, commercial bids of only those organisations that meet the eligibility criteria and qualify in technical evaluation should be opened 8. Tenders should not mention brand name or even reference multinational brands 9. No negotiation with L1 bidder on price, it also clarifies that there can’t be any negotiation with the L2, L3 or any other bidder
  • 28. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study28 10. Mandates publishing of tender awards in the website of the organisation and also other details like estimated date of completion, progress of the work 11. Prohibits consultants from undertaking downstream work and for bidders for downstream work to provide consultancy services 12. Mandates time bound finalisation of tenders 13. Discusses the practice of short-term tenders where newspaper advertisements are not published, however, CVC mandates publishing short-term tender on the departmental website 14. Widest possible publicity should be given to tender documents including the uploading of the tender document on the website of the organisation 15. Payments to organisations implementing projects as far as possible, should be made through ePayment. Prescribes that by July 2004, 50 per cent of payment should be through ePayment mode 16. Clarifies that works can’t be automatically awarded to public sector organisations on a nomination, without tendering 17. Discusses the practice of PSU’s obtaining work (construction works) without tender and thereafter sub-contracting 100 per cent of the work. The circular prescribes practices for transparency in the process of sub-contracting of work by PSU and such open tenders to be invited for selection of sub-contractors as far as possible 18. Regarding splitting of work, CVC states that in case the quantity for supply exceeds the capacity of the L1 tenderer, the balance can be distributed to other suppliers 19. Observes practice of adding unnecessary and miscellaneous components in case of procurement of turnkey contracts (specifically for networking). Advices departments to take an independent third party view about the scope of turnkey projects so that the tendency to include unrelated products as part of the turnkey project is avoided 20. In case of presence of clauses in tender documents such as ‘Tender Inviting Authority can reject tender applications without assigning any reason’, such clauses should not promote arbitrary behaviour, and clear logical reasons for rejecting any tender application should be provided 21. Commenting on a complaint on procuring textiles and clothing, raises a specific issue of submission of tender samples, inspite of detailed specifications for items, and samples being rejected on subjective basis. The guideline advises government departments to consider the procurement of items on the basis of detailed specifications, and if required, provide for submission of an advance sample by successful bidder. This guideline is also relevant in the context of tender samples for IT equipment and hardware. 22. Provides operational guidelines on a. Measures to help organisations against counterfeit and refurbished IT products and counterfeit software b. Mitigate problems of vendors submitting forged/false bank guarantees, by adopting a best practice recommended by Canara Bank c. Giving of mobilisation advance to suppliers
  • 29. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study29 23. eTendering a. Directs organisations to follow a fair and transparent process to select the application service provider that will provide eTendering services b. Prescribing guidelines for security considerations of eProcurement systems 24. Provides detailed instructions for the implementation of integrity pacts in organisations, selection of independent external monitors, and standard operating procedures for integrity pacts 25. The CVC also circulates the summary of observations of the Chief Technical Examiners’ inspection of various tenders in central government and central government organisations. This summary provides details of deviations by organisations, regarding various aspects of tendering like pre-qualification criteria, contract terms, giving of mobilisation advance, preparing specifications, etc. 26. Provides directions and checklists to chief vigilance officers in departments to audit tenders floated by the organisation 27. Directs chief vigilance officers to review time taken for payment of bills by the organisation 28. Guidance on good practices such as members of tender evaluation committees should not have personal interest in the bidders 29. Expresses concern on the practice of an agent bidding on behalf of manufacturer, and the manufacturer also making a direct offer in the same tender. Prohibits this practice and directs that either the Indian agent on behalf of a foreign principal or the foreign principal directly could bid in a tender, but not both 30. Reverse auctions should be conducted in a fair and transparent manner 31. Recommends that mobilisation advance for works be considered only for select works and advance should be interest bearing 32. For projectsabove5crorevalue,theCVCrecommendstheappointmentofconsultants.Further,such consultants should be appointed after a due process and approval regarding their appointment
  • 30. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study30 Summary of various guidelines issues by the CVC from latest to oldest A detailed overview of specific CVC circulars is given below for easy reference No Office Order No. File No. Date of Issue Subject Details of the Circular 1 01/01/10 005/ CRD/012 Jan 20, 2010 Negotiation with L1 Clarifies that guidelines on no negotiation with L1 also implies that there cannot be negotiation with L2, L3 or L4 on pricing. Further clarifies Circular 3/3/2007 2 29/9/09 009/ VGL/002 Sep 17, 2009 Implementation of eTendering solutions Prescribes guidelines for security considerations for procurement of eProcurement system by the department 3 13/6/09 009/ VGL/030 Nov 8, 2009 Intensive examination of CTE – Steps for early finalisation Gives details of issues which have been pointed out by the Chief Technical Examiner’s office of CVC and for which response from the department is awaited 4 17/7/09 005/ VGL/4 Jul 14, 2009 Posting of details on award of tenders/ contracts on websites Reiterates guideline to publish details of tender award on the departmental website 5 10/5/09 008/ CRD/013 May 18, 2009 Adoption of integrity pact – Standard operating procedure Provides details of standard operating procedure regarding the implementation of integrity pacts in organisations 6 1/1/09 009/ VGL/002 Jan 13, 2009 Implementation of eTendering solutions Directs organisations to follow a fair and transparent tendering process to select the application service provider that will provide eTendering services 7 31/11/08 008/ VGL/083 Jun 11, 2008 Time bound processing of procurement Observes that at times the processing of tenders is inordinately delayed which may result in time and cost overruns and also invite criticism from the trade sector. Therefore, directs departments to finalise tenders, and contracts are awarded in a time bound manner within original validity of the tender, without seeking further extension of validity 8 24/8/08 007/ VGL/033 May 8, 2008 Adoption of integrity pact in major government procurement Provides guidelines related to the implementation of integrity pact in organisations 9 22/7/08 008/ CRD/008 Jul 24, 2008 Referring cases of procurement to the commission Cautions departments from referring cases of a general nature having elements of managerial decision making and concerning a particular procurement 10 18/5/08 008/ VGL/001 May 19, 2008 Adoption of integrity pact in major government procurement Selection and appointment of independent external monitors for the purpose of monitoring of integrity pacts
  • 31. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study31 No Office Order No. File No. Date of Issue Subject Details of the Circular 11 9/2/2008 008/ VGL/016 Feb 18, 2008 Workshop/ seminar regarding IT procurement Organise seminars/workshops and lecture classes at frequent intervals to keep the officials particularly those dealing with IT procurement activities educated and updated regarding the procurement procedures, CVC guidelines. Raises concern on a number of bank officials lacking basic skills in computer operations and knowledge of the banking software. Tendency on the part of senior officers to disclose their password to junior officials/staff for operating the system on their behalf, citing reasons, including work pressure and ignorance is criticised. Therefore, imparting of proper training to such officers and staff at various levels particularly those working in the branches is advised 12 7/2/2008 007/ CRD/008 Feb 15, 2008 Measures to curb the menace of counterfeit and refurbished IT products Provides directions on how organisations can avoid buying counterfeit and refurbished IT products and pirated software 13 1/1/2008 02-07- 01-CTE- 30 Dec 31, 2007 Acceptance of bank guarantees Provides guidelines to mitigate the problem of forged bank guarantees issued by vendors and buyers 14 43/12/07 007/ VGL/033 Dec 28, 2007 Adoption of integrity pact in major government procurement activities Simplifies forwarding of names for the panel of independent external monitors 15 41/12/07 007/ VGL/033 Apr 12, 2007 Adoption of integrity pact in major government procurement activities Prescribes adoption of Integrity pact, a vigilance tool promoted by Transparency International. The pact envisages an agreement between prospective vendors and the buyer committing both parties not to exercise any corrupt influence on any aspect of the contract. The integrity pact also envisages a panel of independent external monitors approved for the organisation that will review compliance to the integrity pact 16 NA NA NA Common irregularities/ lapses observed in stores/ purchase contracts Detailed report from the chief technical examiners of the CEC. Looks at flaws in all aspects of tendering from live field examples in government departments like preparation of specifications, pre qualification criteria, submission of EMD, etc. and prescribes changes required to mitigate these issues
  • 32. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study32 No Office Order No. File No. Date of Issue Subject Details of the Circular 17 23/7/07 005/ CRD/19 Jul 5, 2007 Transparency in works/purchase/ consultancy contracts awarded on nomination basis (Office Order No 23-7-07) Faults the thinking among departments that works can be automatically awarded to public sector units on a nomination basis without need for tendering. States that awarding of works to PSU’s on nomination basis should be an exception justified only during natural calamities and emergencies as declared by GOI and where procurement is possible from a single source only 18 14/4/07 98/ VGL/25 NA Use of products with standard specifications As far as possible, items with standard specifications should be prescribed in bid documents as procurement of non-standard products can lead to cost increase 19 10/4/2007 4CC-1- CTE-2 Oct 4, 2007 Mobilisation advance Gives additional directions related to mobilisation advance to contractors. Approval for such advance should be taken at the highest level of the organisation 20 4/3/2007 005/ CRD/12 Mar 3, 2007 Tendering process – Negotiations with L1 States that post tender negotiations even with L1 can be a source of corruption and this should happen in only certain exceptional situations. Convincing reasons must be recorded by the authority recommending the negotiation. In case, the quantity required is more than what L1 can supply, splitting of quantities should be done in a fair and equitable manner. The departments should also examine if guidelines regarding splitting of quantities can be disclosed in the tender 21 37/10/06 005/ CRD/012 Oct 3, 2006 Tendering process – Negotiations with L1 With respect to clarifications received from organisations regarding no negotiation with even the L1 bidder, the commission states that its guidelines were framed with a view to ensuring fair and transparent purchase procedure in the organisations. The guidelines are quite clear and it is for the organisations to take appropriate decision, keeping these guidelines in view. In case, they want to take action in deviation or modification of the guidelines, to suit their requirements, it is for them to do so by recording the reasons and obtaining the approval of the competent authority for the same. However, in no case, should there be any compromise to transparency, equity or fair treatment to all the participants in a tender
  • 33. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study33 No Office Order No. File No. Date of Issue Subject Details of the Circular 22 31/09/06 005/ VGL/004 Jan 9, 2006 Posting of details on award of tenders/ contracts on websites/ bulletins Reiterates previous circulars on regular posting of tender awards on website. Further such tender awards should comprise atleast 75 per cent of the total work tendered by the department. Additionally this information shall be available to the general public and shall not be restricted through passwords or only available to registered suppliers, etc. 23 15/05/06 005/ CRD/19 Sep 5, 2006 Transparency in contracts awarded on nomination basis CVC feels the need to bring greater transparency and accountability in awarding of contracts without tendering to PSU’s by other PSU’s or Government of India. In the circumstances, of awarding of contract on nomination basis to a PSU, commission recommends that (i) all works awarded on nomination basis should be brought to the notice of the board of the respective PSUs for scrutiny and vetting post facto, (ii) the reports relating to such awards will be submitted to the board every quarter, (iii) the audit committee may be required to check at least 10 per cent of such cases 24 21/05/06 006/ VGL/29 Jan 5, 2006 Examination of public procurement contracts by CVOs Direction to CVOs with enclosed checklist to audit the tenders floated by their department 25 71/12/05 005/ VGL/66 Sep 12, 2005 Undertaking by members of tender committee The members of the tender committee should give an undertaking that none of them has any personal interest in the organisations/agencies participating in the tender process. Any member having interest in any organisations should refrain from participating in the tender committee 26 NA 98/ VGL/25 Oct 11, 2005 Intensive examination of works by CTEs organisation CVO’s of departments will include all procurement activity in their quarterly progress report including service, consultancy contract, medicine supply, civil works, etc.
  • 34. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study34 No Office Order No. File No. Date of Issue Subject Details of the Circular 27 68/10/05 005/ CRD/12 Oct 25, 2006 Tendering Process negotiation with L1 Summarises the conference proceedings on procurement issues. Summary as following: 1) There should not be any negotiations. Negotiations if at all shall be an exception and only in the case of proprietary items or in the case of items with limited source of supply. 2) Negotiations shall be held with L1 only 3) Negotiations can be recommended in exceptional circumstances only after due application of mind and recording valid, logical reasons justifying negotiations 4) Further, it was observed that at times the competent authority takes unduly long time to exercise the power of accepting the tender or negotiate or re- tender. Accordingly, the model time frame for according such approval to completion of the entire process of award of tenders should not exceed one month from the date of submission of recommendations. In case, the file has to be approved at the next higher level, a maximum of 15 days may be added for clearance at each level. The overall time frame should be within the validity period of the tender/contract. 5) In case of L1 backing out there should be re-tendering as per extant instructions 28 57/09/05 005/ VGL/4 Sep 20, 2005 Details on awarding of tender Directs organisations for complying with directives regarding publishing of tender awards and states that this is a continuous process 29 46/07/05 005/ VGL/4 Jul 28, 2005 Details on awarding of tenders, contracts publishing Clarifies earlier directive regarding the publishing details of tender awards and says that the value of tender awards to be published should be so set that atleast 60 per cent of the tender awards are published on the website 30 NA 2EE-1- CTE-3(Pt) May 16, 2005 Issues pertaining to negotiations with L1 Expresses a view that negotiation with L1 can also lead to corruption and cites examples of World Bank directive regarding banning negotiation with L1. Invites responses in this regard from organisations 31 NA 2EE-1- CTE-3 Apr 12, 2005 Issues pertaining to negotiations with L1 Invites responses from organisation regarding negotiations with L1 bidder 32 11/3/2005 005/ ORD/1 Oct 3, 2005 Delays in payments to contractors CVOs will review the time taken for payment of bills by organisations 33 13/3/05 005/ VGL/4 Mar 16, 2005 Details on awarding of tenders/ contracts The departmental website should provide details of all works above a predetermined value, procured by the organisation with the following details a) actual date of start of work; b) actual date of completion; c) reasons for delays if any
  • 35. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study35 No Office Order No. File No. Date of Issue Subject Details of the Circular 34 18/3/05 000/ VGL/161 Mar 24, 2005 Banning of business dealing with organisations Commission states that banning of business is an administrative matter to be decided by the management of the organisation and the Central Vigilance Commission does not give its advice in such matters 35 15/3/05 OFF-1- CTE-1(Pt) V Mar 24, 2005 Notice inviting tenders In case of clauses such as tender inviting authority can reject tender applications without assigning any reason, such clauses should not promote arbitrary behaviour, however, clear logical reasons for rejecting any tender application should be provided 36 NA 98/DSP/3 Dec 24, 2004 Participation of consultants in tender Prohibits consultants from undertaking downstream work and for bidders for downstream work to provide consultancy services 37 72/12/04 004/ ORD/9 Dec 10, 2004 Transparency in tendering system – Guidelines regarding Due process of tendering should be followed, commercial bids of only those organisations that meet the eligibility criteria and qualify in technical evaluation should be opened 38 69/11/04 004/ ORD/8 Nov 3, 2004 Turnkey contracts for networking of computer systems Observes practice of adding unnecessary and miscellaneous components in case of procurement of turnkey contracts for networking. Advices departments to take assistance of third parties to determine requirements properly 39 68/10/04 98/ ORD/1 Oct 20, 2004 Leveraging technology – ePayment and eReceipt Reiterates CVC guideline of April 6, 2004 for moving over to ePayment mechanism 40 47/7/04 98/ ORD/1 Jul 13, 2004 Commission’s directives on the use of website in public tenders Webpage comprising all circulars related to uploading of tender documents on the department website 41 43/7/04 98/ ORD/1 Jul 2, 2004 Improving vigilance administration Issues numerous clarifications regarding the hosting of tender documents on websites of department. Clarifies on issues like huge size of tender document, issues related to security of websites, limited tenders. For limited tenders to empanelled vendors, CVC clarifies that the exercise for empanelment of vendors should be atleast undertaken every year. Clarifies that procurement of proprietary goods from original equipment manufacturers/suppliers need not be published on the departmental website 42 NA 4CC-1- CTE-2 Jun 8, 2004 Mobilisation advance Prescribes a due process for giving mobilisation advance including providing such details in RFP, obtaining equivalent amount bank guarantee and deducting the same over the course of the project
  • 36. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study36 No Office Order No. File No. Date of Issue Subject Details of the Circular 43 NA 05-04-1- CTE-8 Jun 8, 2004 Receipt and opening of tenders In case the tender documents can’t be submitted in a tender box and need to be submitted by hand to officials, the names of atleast two officials should be displayed prominently in the department 44 25/4/04 12-02- 6-CTE- SPI(1)2 Apr 21, 2004 Consideration of Indian agents Expresses concern about the practice of Indian agents bidding on behalf of manufacturers in one tender and in a similar tender representing some other organisations and the foreign organisations bidding directly in the second tender. Prohibits this practice 45 20/4/04 98/ ORD/1 Apr 6, 2004 Cutting delays by ePayments and eReceipt by government organisations Payments to organisations implementing projects as far as possible should be made through ePayment. Prescribes that by July 2004 50 per cent of the payment should be through ePayment mode 46 10/2/2004 98/ ORD/1 Feb 11, 2004 Increasing transparency (tender process) Discusses the practice of short-term tenders where newspaper advertisements are not published, however, CVC mandates publishing short-term tender on the departmental website 47 9/2/2004 98/ ORD/1 Feb 9, 2004 Increasing transparency (sale) Reiterated that organisations that have websites should publish tender documents on their websites 48 NA 98/ ORD/1 Dec 18, 2003 Improving Vigilance administration: increasing transparency in procurement/ sale, etc. Widest possible publicity should be given to tender documents including uploading of the tender document on the website of the organisation 49 NA 06-03- 02-CTE- 34 Oct 20, 2003 Back-to-back tie-up by PSUs Discusses the practice of PSU’s obtaining work without tender and thereafter sub-contracting 100 per cent of the work. The circular prescribes practices for transparency in the process of sub-contracting of work by PSU and such sub-contracted work also shall be tendered 50 NA 2EE-1- CTE-3 Oct 15, 2003 Tender sample clause Tenders call for submission of sample inspite of detailed specifications for items and samples are rejected on subjective basis. The guideline forbids rejection of tenders on the basis of defective samples 51 46/9/03 98/ ORD/1 Sep 11, 2003 eProcurement/ reverse auction Reverse auctions should be conducted in a fair and transparent manner
  • 37. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study37 No Office Order No. File No. Date of Issue Subject Details of the Circular 52 44/9/03 98/ ORD/1 Sep 4, 2003 Irregularities in the awarding of contracts The circular mandates that the pre-qualification criteria, performance criteria and evaluation criteria are incorporated in the bid documents in clear and unambiguous terms as these criteria are very important to evaluate bids in a transparent manner. Whenever required the departments/organisations should follow two-bid system, i.e. technical bid and price bid. The price bids should be opened only of those vendors who were technically qualified 53 33/7/03 98/ ORD/1 Jul 9, 2003 Short-comings in bid documents Mandates that evaluation criteria both for pre-qualification and bid evaluation should be explicit and should not be post facto decided after the opening of the tenders 54 NA 98/ ORD/1 May 5, 2003 Purchase of computers by government departments/ organisations Tenders should not mention brand name or reference to as multinational brands 55 NA 12-02- 6-CTE- SPI(1)2 Jan 7, 2003 Consideration of Indian agents An Indian agent of a foreign supplier can’t represent two organisations in the same tender. He/she should exclusively represent only one organisation in the tender 56 NA 98/ ORD/1 Aug 3, 2001 Improving vigilance administration – Tenders (H1) In case of sale of government goods, negotiation if at all, should be held with H1 bidder only 57 NA 98/ ORD/1 Aug 24, 2000 Improving vigilance administration – Tenders In case L1 withdraws bid the project should be re-tendered, department should go for techno commercial evaluation to ensure that bidders are technically qualified prior to the opening of the technical bids 58 NA 3(v)/99/9 Oct 1, 1999 Applicability of CVC’s instruction No 8(1)(h)/98(1) dated 18/11/98 on post-tender negotiations to projects of the World Bank & other international funding agencies While CVC guidelines will not be applicable specifically to projects funded by the World Bank, the department for other matters shall be bound by CVC guidelines 59 NA 8(1) (h)/98(1) Nov 18 1998 Improving vigilance administration (L1) Suggests implementation of good practices for a clean work environment. Bans post tender negotiation except with L1 60 NA UU/ POL/19 Oct 8, 1997 Grant of interest free mobilisation advance Recommends that mobilisation advance should not be given interest-free, but an interest component should be attached to such advance
  • 38. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study38 No Office Order No. File No. Date of Issue Subject Details of the Circular 61 NA 98/ ORD/1 Mar 15, 1999 Improving vigilance administration – Tenders States that preference may be given to PSUs for procurement, however, PSUs should not be covered for other private undertakings. In case the quantity for supply exceeds the capacity of the L1 tenderer to supply, the balance can be distributed to other suppliers 62 NA OFF1 CTE 1 Nov 25, 2002 Appointment of consultants For projects above 5 crore value, the CVC recommends the appointment of consultants. Further, such consultants should be appointed after a due process and approval regarding their appointment 63 NA 3L – IRC 1 Jan 10, 1983 Appointment of consultants The circular specifies that PSUs should recruit consultants in a structured manner 64 NA 12-02-1- CTE-6 Dec 17, 2002 Pre-qualification criteria (PQ) Detailed circular on framing of pre-qualification criteria – Extract and Summary ‘While framing the pre-qualification criteria, the end purpose of doing so should be kept in view’. The purpose of any selection procedure is to attract the participation of reputed and capable organisations with proper track records. The PQ conditions should be exhaustive, yet specific 65 12-02-1- CTE-6 May 7, 2004 Pre-qualification criteria (PQ). Organisations may suitably modify these guidelines for specialised jobs/works, if considered necessary. However, it should be ensured that the PQ criteria are exhaustive, yet specific and there is fair competition. It should also be ensured that the PQ criteria is clearly stipulated in unambiguous terms in the bid documents The complete version of the circulars may be reviewed at: http://cvc.nic.in/proc_works.htm While most of these CVC circulars are issued in the context of procurement of works and goods, several of the directives from CVC are relevant for IT procurement and eGovernance projects too. We recommend that a comprehensive review of all CVC guidelines be undertaken, and their applicability in the context of eGovernance projects, and information technology procurement, summarised in a guidance document from the Department of IT. Guidelines for procurement under IBRD loans or IDA credits Given that some information technology projects are funded by external donor/funding agencies, we thought it was necessary to review their procurement guidelines and recommendations. IBRD refers to International Bank for Reconstruction and Development (IBRD) and IDA refers to International Development Association (IDA) The guidelines can be reviewed at: http://siteresources.worldbank.org/INTPROCUREMENT/Resources/ProcGuid-10-06-ev1.doc.
  • 39. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study39 The Asian Development Bank (ADB) guidelines are available at: http://www.adb.org/documents/guidelines/procurement/default.asp Note – Wherever specific sections of guidelines are referred, they refer to the relevant sections and guidelines in the World Bank Document – ‘Guidelines Procurement under IBRD Loans and IDA Credits’. The ADB procurement guidelines are completely identical to the World Bank procurement guidelines. Summary of guidelines relevant to public procurement of IT services by government departments in India are as follows: 1. All goods and services including selection of the concessionaire for BOO/BOT/BOOT projects to be procured through international competitive bidding procedures with preference for domestically manufactured goods and where appropriate for domestic contractors 2. Section1.14oftheguidestatesthatitisthebank’spolicythatborrowersaswellasbidders,suppliers, and contractors and their sub-contractors under bank financed contracts, observe the highest standard of ethics during the procurement and execution of such contracts. In pursuance of this policy, the World Bank has specifically defined terms such as ‘corrupt practice’, ‘fraudulent practice’, ‘collusive practice’, ‘coercive practice’. In case the borrower or bidders or contractors commit any of the above breaches, the bank has defined penalties which include cancellation of bids, cancelling portion of loan, blacklisting such organisations that engage in corrupt practices or undertaking any combination of the above measures 3. In order to verify that corrupt practices have not been followed, the bank has inserted the following clause: “Will have the right to require that a provision be included in bidding documents and in contracts financed by a bank loan, a provision be included requiring bidders, suppliers and contractors to permit the bank to inspect their accounts and records and other documents relating to the bid submission and contract performance and to have them audited by auditors appointed by the bank”. 4. Procurement Plan: As a part of the preparation of the project, the borrower shall prepare a procurement plan acceptable to the bank setting forth: (a) the particular contracts for the goods, works, and/or services required to carry out the project during the initial period of at least 18 months; (b) the proposed methods for procurement of such contracts that are permitted under theloanagreement,(Note–Inmostcases,ICBorotherprocurementmethodswithduejustification) and (c) the related bank review procedures. The borrower needs to update the procurement plan annually or as needed throughout the duration of the project. The borrower will implement the procurement plan as has been approved by the bank. 5. SelectionofConsultants:Iftheprojectincludestheselectionofconsultingservices,theprocurement plan should also include the methods for selection of consulting services in accordance with the Guidelines: Selection and Employment of Consultants by World Bank Borrowers 6. The bidding documents shall clearly state the type of contract to be entered into and contain the proposed contract provisions 7. The bank is flexible regarding the quantum of work to be tendered under a single tender or for splitting a work and tendering parts of the work separately to attract interest of both small and large organisations. However, all bids and combinations of bids need to be received by the same
  • 40. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study40 deadline and opened and evaluated simultaneously, so as to determine the bid or combination of bids offering the lowest evaluated cost to the borrower 8. Two-stageBidding: In the case of turnkey contracts or contracts for large complex facilities or works of a special nature or complex information and communication technology, the World Bank desires a two-stage bidding procedure. As per the process suggested by the World Bank, at the first stage, unpriced technical proposals on the basis of a conceptual design or performance specifications will be invited, subject to technical as well as commercial clarifications and adjustments, to be followed by amended bidding documents and the submission of final technical proposals and priced bids in the second stage 9. WidePublicity: The bank desires timely notification of bidding opportunities to enable competitive bidding. All tenders for which the borrower has obtained a World Bank loan, the bank desires a detailed general procurement notice to be published in the UN Development Business online (UNDB online) and in the development gateway’s dgMarket. The tender will further be advertised in one nationally circulated newspaper in the borrowers country or in the official gazette, or in an electronic portal with free access 10. The tender shall be advertised such that there is sufficient time to enable prospective bidders to obtain pre-qualification or bidding documents and prepare and submit their responses 11. Pre-qualification of Bidders: Under Sections 2.9 and 2.10, the bank desires pre-qualification for large or complex works or where detailed bids are required. Pre-qualification also ensures that invitations to bid are extended only to those who have adequate capabilities and resources. Pre-qualification needs to be based entirely upon the capability and resources of prospective bidders to perform the particular contract satisfactorily, taking into account their (a) experience and past performance on similar contracts, (b) capabilities with respect to personnel, equipment, and construction or manufacturing facilities, and (c) financial position. In Section 2.10, the bank specifies certain guidelines regarding the practice of pre-qualification namely: a. The invitation to pre-qualify for bidding shall be advertised and the scope of the contract and a clear statement of the requirements for qualification shall be sent to those who responded to the invitation b. All such applicants who meet the specified criteria shall be allowed to bid c. Borrowers shall inform all applicants of the results of pre-qualification d. As soon as pre-qualification is completed, the bidding documents shall be made available to the qualified prospective bidders e. For pre-qualification for groups of contracts to be awarded over a period of time, a limit for the number or total value of awards to any one bidder may be made on the basis of the bidder’s resources f. The list of pre-qualified organisations in such instances shall be updated periodically g. Verification of the information provided in the submission for pre-qualification shall be confirmed at the time of awarding of the contract, and awarding may be denied to a bidder that is judged to no longer have the capability or resources to successfully perform the contract 12. Bidding Documents: Regarding the bidding documents, the bank has the following guidelines: a. The bidding documents shall furnish all information necessary for a prospective bidder to prepare a bid for the goods and works to be provided, the detail and complexity of these
  • 41. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study41 documents may vary with the size and nature of the proposed bid package and contract. The bid documents should generally include: i. Invitation to bid ii. Instructions to bidders iii. Form of bid iv. Form of contract v. Conditions of contract, both general and special vi. Specifications and drawings; relevant technical data vii. List of goods or bill of quantities viii. Delivery time or schedule of completion ix. Necessary appendices, such as formats for various securities. b. The basis for bid evaluation and selection of the lowest evaluated bid shall be clearly outlined in the instructions to bidders c. If a fee is charged for the bidding documents, it shall be reasonable and reflect only the cost of their printing and delivery to prospective bidders, and shall not be so high as to discourage qualified bidders d. The borrower may use an electronic system to distribute bidding documents, provided that the bank is satisfied with the adequacy of such systems. If bidding documents are distributed electronically, the electronic system shall be secure to avoid modifications to the bidding documents e. Borrowers shall use the appropriate Standard Bidding Documents (SBDs) issued by the bank with minimum changes, acceptable to the bank, as necessary to address project-specific conditions 13. Validity of Bids and Bid Security: The bank guidelines states that bidders shall be required to submit bids valid for a period specified in the bidding documents which shall be sufficient to enable the borrower to complete the comparison and evaluation of bids, review the recommendation of award with the bank and obtain all the necessary approvals so that the contract can be awarded within that period. Borrowers have the option of requiring a bid security 14. Clarity of Bidding Documents: The guidelines required that: a. The scope of work including tests, standards, and methods to judge the conformity of the work shall be mentioned as clearly as possible b. The bidding documents shall specify any factors, in addition to price, which will be taken into account in evaluating bids, and how such factors will be quantified or otherwise evaluated c. All prospective bidders shall be provided the same information, and shall be assured of equal opportunities to obtain additional information on a timely basis d. Pre-bidConference:Forworksorcomplexsupplycontracts,apre-bidconferencemaybearranged whereby potential bidders may meet with the borrower representatives to seek clarifications (in person or online). Minutes of the conference shall be provided to all prospective bidders with a copy to the bank (in hard copy or sent electronically) e. Any additional information, clarification, correction of errors, or modifications of bidding documents shall be sent to each recipient of the original bidding documents in sufficient
  • 42. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study42 time before the deadline for receipt of bids to enable bidders to take appropriate actions. If necessary, the deadline shall be extended 15. Standards: The guidelines require that the standards and technical specifications quoted in the bidding documents shall promote the broadest possible competition, while assuring the critical performance. The borrower shall specify internationally accepted standards such as those issued by the International Standards Organisation 16. Use of Brand Names: Specifications shall be based on relevant characteristics and/or performance requirements and references to brand names, catalogue numbers, or similar classifications shall be avoided. If it is necessary to quote a brand name or catalogue number of a particular manufacturer, the words ‘or equivalent’ will be used 17. Price Adjustment: In most cases, the bidding documents shall state bid prices that will be fixed. In exceptional cases where delivery stretching beyond 18 months, the price adjustments will be made to reflect any changes (upwards or downwards) in major cost components. Preferably these price adjustments will be based on prescribed formula (or formulae) 18. Terms and Conditions of the Contract: The contract documents shall clearly define the scope of work to be performed, the goods to be supplied, the rights and obligations of the borrower and of the supplier or contractor, and methodology of the supervision and administration of the contract. In addition to the general conditions of the contract, any special conditions particular to the specific goods or works to be procured and the location of the project shall be included. The conditions of the contract shall provide a balanced allocation of risks and liabilities 19. Performance Security: Bidding documents for works shall require security in an amount sufficient to protect the borrower in case of breach of contract by the contractor 20. Liquidated Damages and Bonus Clauses: Provisions for liquidated damages in an appropriate amount shall be included in the conditions of contract when deficiencies of the performance of vendor occurs and results in a burden to the buyer. The guidelines also allow for a provision for a bonus to be paid to suppliers or contractors for completion of works ahead of the times specified in the contract when such earlier completion or delivery would be of benefit to the borrower 21. Force Majeure: The conditions of contract shall stipulate that failure on the part of the parties to perform their obligations under the contract will not be considered a default if such failure is the result of an event of force majeure as defined in the conditions of the contract 22. Applicable Law and Settlement of Disputes: The conditions of contract shall include provisions dealingwiththeapplicablelawandtheforumforthesettlementofdisputes.Thebankrecommends international commercial arbitration in contracts for the procurement of goods and works. The dispute settlement provision shall also include mechanisms such as dispute review boards or adjudicators, which are designed to permit a speedier dispute settlement 23. Time for Preparation of Bids: The time allowed for the preparation and submission of bids shall be determined with due consideration of the magnitude and complexity of the contract. Generally, not less than six weeks from the date of the invitation to bid or the date of availability of bidding documents. Where large works or complex items of equipment are involved, this period shall generally be not less than 12 weeks 24. UseofeProcurement:Borrowers may also use electronic systems permitting bidders to submit bids by electronic means, provided the bank is satisfied with the adequacy of the system, including, inter
  • 43. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study43 alia, that the system is secure, maintains the confidentiality and authenticity of bids submitted, uses an electronic signature system or equivalent to keep bidders bound to their bids, and only allows bids to be opened with due simultaneous electronic authorisation of the bidder and the borrower. In this case, bidders shall continue to have the option to submit their bids in hard copy 25. Bid Opening Procedures: The time for the bid opening shall be the same as for the deadline for receipt of bids or promptly thereafter, and shall be announced, together with the place for bid opening, in the invitation to bid. The borrower shall open all bids at the stipulated time and place. Bids shall be opened in public; bidders or their representatives shall be allowed to be present (in person or online, when electronic bidding is used). The name of the bidder and total amount of each bid, and of any alternative bids if they have been requested or permitted, shall be read aloud (and posted online when electronic bidding is used) and recorded when opened and a copy of this record shall be promptly sent to the bank and to all bidders who submitted bids in time. Bids received after the time stipulated, as well as those not opened and read out at bid opening, shall not be considered 26. Clarifications or Alterations of Bids: Bidders in a vast majority of cases shall not be requested or permitted to alter their bids after the deadline for receipt of bids. The borrower shall ask bidders for clarification needed to evaluate their bids but shall not ask or permit bidders to change the substance or price of their bids after the bid opening. Requests for clarification and the bidders’ responses shall be made in writing, in hard copy or by an electronic system satisfactory to the bank. The only exception to this will be in case only a single bid is received 27. Confidentiality: After the public opening of bids, the bid evaluation process shall not be disclosed to bidders or other persons not officially concerned with this process until the publication of contract award 28. Process of Examination of Bids: The borrower shall ascertain whether the bids meet the eligibility requirements, have been properly signed, are accompanied by the required securities or required declarations, are substantially responsive to the bidding documents, and are otherwise generally in order. If a bid is not substantially responsive, that is, it contains material deviations from or reservations to the terms, conditions, and specifications in the bidding documents, it shall not be considered further. The bidder shall not be permitted to correct or withdraw material deviations or reservations once bids have been opened 29. Evaluation and Comparison of Bids: a. The purpose of bid evaluation is to determine the cost to the borrower of each bid in a manner thatpermitsacomparisononthebasisoftheirevaluatedcost,thebidwiththelowestevaluated cost, but not necessarily the lowest submitted price, shall be selected for awarding b. Bidding documents shall also specify the relevant factors in addition to price to be considered in bid evaluation and the manner in which they will be applied for the purpose of determining the lowest evaluated bid. The factors other than price to be used for determining the lowest evaluated bid shall, to the extent practicable, be expressed in monetary terms, or given a relative weight in the evaluation provisions in the bidding documents c. Under works and turnkey contracts, contractors are responsible for all duties, taxes, and other levies, and bidders shall take these factors into account in preparing their bids. The evaluation and comparison of bids shall be on this basis. Bid evaluation for works shall be strictly in monetary terms
  • 44. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study44 d. The borrower shall prepare a detailed report on the evaluation and comparison of bids setting forth the specific reasons on which the recommendation is based for the award of the contract 30. ExtensionofValidityofBids: Borrowers shall complete evaluation of bids and awarding of contract within the initial period of bid validity so that extensions are not necessary. An extension of bid validity, if justified by exceptional circumstances, shall be requested in writing from all bidders before the expiration date. Whenever an extension of bid validity period is requested, bidders shall not be requested or be permitted to change the quoted (base) price or other conditions of their bid. Bidders shall have the right to refuse to grant such an extension. If the bidding documents require a bid security, bidders may exercise their right to refuse to grant such an extension without forfeiting their bid security, but those who are willing to extend the validity of their bid shall be required to provide a suitable extension of bid security 31. Awarding of Contract: The borrower shall award the contract, within the period of the validity of bids, to the bidder who meets the appropriate standards of capability and resources and whose bid has been determined (i) to be substantially responsive to the bidding documents and (ii) to offer the lowest evaluated cost. A bidder shall not be required, as a condition of award, to undertake responsibilities for work not stipulated in the bidding documents or otherwise to modify the bid as originally submitted 32. PublicationoftheAwardingofContract: Within two weeks of receiving the bank’s ‘no objection’ to the recommendation of contract award, the borrower shall publish in UNDB online and in dgMarket the results identifying the bid and lot numbers and the following information: (a) name of each bidder who submitted a bid; (b) bid prices as read out at bid opening; (c) name and evaluated prices of each bid that was evaluated; (d) name of bidders whose bids were rejected and the reasons for their rejection; and (e) name of the winning bidder, and the price it offered, as well as the duration and summary scope of the contract awarded 33. Rejection of All Bids: a. Bidding documents usually provide that borrowers may reject all bids. Rejection of all bids is justified when there is lack of effective competition, or bids are not substantially responsive or when bid prices are substantially higher than the existing budget. Lack of competition shall not be determined solely on the basis of the number of bidders. Even when only one bid is submitted, the bidding process may be considered valid, if the bid was satisfactorily advertised and prices are reasonable in comparison to market values. Borrowers may, after the bank’s prior approval, reject all bids. If all bids are rejected, the borrower shall review the causes justifying the rejection and consider making revisions to the conditions of contract, design and specifications, scope of the contract, or a combination of these, before inviting new bids b. If the rejection of all bids is due to lack of competition, wider advertising shall be considered. If the rejection is due to most or all of the bids being non-responsive, new bids may be invited from the initially pre-qualified organisations, or with the agreement of the bank from only those that submitted bids in the first instance c. All bids shall not be rejected and new bids invited on the same bidding and contract documents solely for the purpose of obtaining lower prices. If the lowest evaluated responsive bid exceeds the borrower’s pre-bid cost estimates by a substantial margin, the borrower shall investigate causes for the excessive cost and consider requesting new bids as described in
  • 45. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study45 the previous paragraphs. Alternatively, the borrower may negotiate with the lowest evaluated bidder to try to obtain a satisfactory contract through a reduction in the scope and/or a reallocation of risk and responsibility which can be reflected in a reduction of the contract price. However, substantial reduction in the scope or modification to the contract documents may require re-bidding d. The bank’s prior approval shall be obtained before rejecting all bids, soliciting new bids, or entering into negotiations with the lowest evaluated bidder 34. Debriefing: In the publication of Contract Award, the borrower shall specify that any bidder who wishes to ascertain the grounds, on which its bid was not selected, should request an explanation from the borrower. The borrower shall promptly provide an explanation of why such bid was not selected, either in writing and/or in a debriefing meeting, at the option of the borrower. The requesting bidder shall bear all the costs of attending such a debriefing 35. Exceptions to International Competitive Bidding: In select cases, due to specific circumstances, the bank allows alternative to ICB like Limited International bidding, National Competitive bidding, obtaining quotations from a minimum of three contractors, single source procurement, etc. However, reasons for deviation from ICB needs to be well-justified and restricted to specific situations 36. Domestic Price Preference: The bank guidelines allow a price preference of 7.5 per cent to domestic contractors in bidding for projects. However, the bidding documents shall clearly indicate the preference and the method that will be followed in the evaluation and comparison of bids to give effect to such preference 37. BankReview:TheWorldBankguidelinesstipulateathoroughreviewoftheborrower’sprocurement procedures, documents, bid evaluations, award recommendations, and contracts to ensure that the procurement process has been carried out in accordance with the agreed procedures. The procurement plan approved by the bank specifies the extent to which these review procedures shall apply in respect of the different categories of goods and works to be financed, in whole or in part, from the bank loan Comments and Conclusion The World Bank has specified a robust framework for public procurement. Currently in India, for major eGovernance projects, especially those under NeGP, a large majority of the guidelines of the World Bank procurement are followed. In fact, the bidding terms and conditions of several major projects have adopted the bidding terms and conditions of the World Bank projects. Further, CVC in their guidelines on public procurement have incorporated these guidelines. The guidelines which eGovernance projects may be often at variance with the World Bank guidelines are as follows: 1. Time given to bidders to submit bids are around four weeks as compared to a recommendation of 6-12 weeks by the World Bank 2. Sufficient opportunity is not given to bidders to interact with the department in understanding the project and obtaining clarifications 3. Many of the bank guidelines are advisory in nature like preparing an exhaustive ‘Scope of Work’ and this aspect has been a challenge in several eGovernance projects, specifically citizen services projects
  • 46. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study46 4. The World Bank guidelines regarding publishing details of awarding of the contract 5. Opportunity of debrief for bidders to understand reasons for rejection of bids The World Bank also through its procurement guidelines initiated the practice of no price negotiation even with the L1 bidder and the same has been accepted by the CVC also. Further, it gives extensive guidelines on scenario where all bids could be rejected and next steps to be undertaken in case of such a scenario. In summary, we believe that several guidelines, directives of GFR, CVC, World Bank procurement are relevant and applicable for eGovernance, IT services projects. Department of IT (DIT) may consider reviewing all of them and evaluate their applicability in the context of eGovernance, IT services procurement. A guidance document from DIT, to all ministries and states and also vendors, with relevant rules and guidelines and clarifying their applicability in IT services procurement, and scenarios of non-compliance and best practices, will contribute to leveraging the existing good practices in public procurement.
  • 47. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study47 eGovernance Projects Government Perspective
  • 48. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study48 The NASSCOM Study consulted with a large cross-section of government officers, from both central and state governments. Officers consulted included Department of IT, Government of India, state governments, including IT secretaries and department heads, state IT nodal agencies, central NeGP mission leaders, eGovernance project staff in different departments. The feedback provided by the respondents has been grouped under the various stages, related to procurement and execution of IT services projects. This chapter not only elaborates on government perspective on IT procurement, but overall issues and challenges in conceptualising and executing eGovernance projects. This feedback has to be addressed in a holistic way, to help successful implementation of all eGovernance projects. 3.1 Overarching enablers to eGovernance projects TheoverarchingenablersarethoseenablingfactorsthatwouldimprovetheprocurementofeGovernance projects in the quality of implementation and also help expedite more eGovernance projects being conceptualised and executed. 3.3.1 Need for capacity development of capacity within the department 3.3.1.1 Internal capacity for conceptualisation and implementation Officers and staff in government departments have in-depth knowledge about their own functioning, services to be rendered to citizens and other stakeholders, and understand the power of information technology in improving service delivery. However, knowledge and skills in information technology, and skills to conceptualise an eGovernance project and manage execution of IT services, is not yet broad based both in centre and states. There was consistent feedback from all quarters in the government, that capacity should be developed internally, to help conceptualise, execute and manage eGovernance projects and have necessary skills to plan and manage IT solutions, services and their vendors. It was agreed that government officers feel constrained in evaluating technology choices and solutions, including key elements of solution architecture and security. The departmental staff need to be trained on specific issues of framing and monitoring of service level agreements and contract management. The internal capacity within the department will be all the more important at the time of completion of projects by the vendor and either takeover of the project by the government department or handing over the project to another vendor. Two methodologies of developing of capacities within the government have been suggested by both ex and current IT secretaries. They are: 1) Establishment of a separate empowered organisational unit within the executing department for the execution of the eGovernance project. The budget for the eGovernance project would be transferred to this organisation. Further, such an organisation would have a dedicated staff and be empowered to hire staff from the private sector to supplement its resources and skill sets 2) Establishment of a specialised service within the government that would have the necessary skill sets for conceptualising an eGovernance project and thereafter managing the eGovernance projects in the states eGovernance Projects – Government Perspective
  • 49. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study49 View was also expressed that conventionally the IT department of the state is not seen as a coveted posting, as compared to core departments like home, finance; hence, officers selected to work in the IT department, and lead key eGovernance initiatives. 3.3.1.2 Feedback from AP Government that has implemented capacity building schemes 1) The AP IT Department was one of the pioneer state governments to commence a capacity building scheme of CIOs in the government departments. Under the CIO scheme, an officer (Joint Director/ JointCommissioner)inthedepartment,wouldbetrainedoneGovernanceandIT.Theobjectiveofthe CIO scheme was for the departmental officer to be made aware of the challenges in implementation of eGovernance programmes and to develop an ability to create business process re-engineering plans for his/her department. The objective was not to train the departmental officer on hands-on skills in programming and databases 2) The CIO programme given that it is a unique initiative may be considered a success given that about 180 officers have been trained under the programme. However, the limitations of the programme have been a) Very few of the 183 officers trained under the programme are focused on IT projects in their departments. Most of them have been transferred to line functions/core department functions. A small minority also works in the Centre for Good Governance, where their training is utilised, however, the core objective of the CIO programme was that officers would work in the departments and develop, manage eGovernance programmes b) It was envisaged that officers at a reporting level to the the Head of the Department like Joint Commissioners, Joint Directors, would get trained under the CIO programme. However, several officers trained under the programme have been mid and junior officers who were not empowered to lead eGovernance initiatives in their departments c) Officers trained under the CIO programme tried to get deep into core technology skills, rather than build skills in managing eGovernance projects d) The AP IT department realises there is a need for junior officers to be imparted more technical training 3.3.1.3 Supplementing of capacity from other government departments Government departments like the Public Works and Engineering Department have considerable expertise in public procurement and contracting and similarly officers of the Finance Department have knowledge of the financial code and rules. Feedback was given that there is need for co-opting officers from these functions, to guideline departments and support & review eGovernance tenders and contracts. 3.3.1.4 Capacity for use of eGovernance projects InadditiontotheabovecapacityfordevelopingeGovernanceprojects,thereisaneedtocreateacapacity within the government staff at various levels, for use of eGovernance systems. Practice of senior and mid-level officers delegating the use of eGovernance applications, including workflow applications, to support staff, including data entry operators and sharing of passwords, digital certificates was raised as a concern. Hence it was agreed that the government staff at various levels from Heads of Departments to clerical staff, needed appropriate awareness building and training.
  • 50. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study50 3.1.2 Replication of best practices across states Best practices in developing tenders, business processes need to be replicated across states and across government departments. A step in this direction could be for DIT to document the various eGovernance projects being implemented in the country. The template to be filled regarding eGovernance projects could be very simple and not more than two pages. The template should comprise the following aspects: i) Project Name ii) Scope of the Project iii) Intended Benefits iv) Implementation Strategy/Process of the Project v) Technology Platform & Solution vi) Lessons Learnt This would enable departments that want to computerise their operations to learn from projects that have been implemented elsewhere. Additionally for the same domain like computerisation of the Police department or Panchayati Raj, different states may have adopted different approaches and a repository of this nature, would enable other government departments to learn from the different approaches.Toillustrate,APPolicehasimplementedpolicecomputerisationproject‘eCops’inamodular manner. Karnataka has implemented a comprehensive integrated ERP application. Similarly MP Online in Madhya Pradesh, and Bangalore/Karnataka One are both integrated citizen services initiatives, with different solution architectures, service delivery and business models. Both approaches have had an impact and have pros and cons, and any new state which wants to embark on police computerisation or integrated citizen services, should have an opportunity to do a quick study of both these models. This helps them take a considered viewpoint on their implementation strategy and there would be no need to re-invent the wheel. It was unanimously agreed that a forum should be developed for cross learning and dissemination of experiences of implementation of eGovernance programmes. 3.1.3 Repository of eGovernance solutions Requirements for government departments are similar in many ways. In some cases, departments undertake the same functions and solutions that can be replicated with very little modifications, for example Road Transport or Registration or Treasury Department solutions can be replicated in other states. Additionally, some departments or states may have some specific requirements and these solutions may need minor changes for deployment. Many eGovernance solutions may need similar components like user registration, user authentication, payment solutions. Thus several state government respondents suggested that a repository of various eGovernance solutions can be created and this repository could contain both the full fledged solutions and also particular modules, which could be plugged into department specific solutions. Re-use of application solutions will lead to faster deployment of eGovernance solutions in the country. 3.1.4 Repository of RFP’s DIT could take a lead in building a central repository of RFP’s for various types of eGovernance projects. A best practice that can be replicated is the initiative of the Secretariat for infrastructure, Planning
  • 51. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study51 Commission in building a library of bid documents. Their website http://infrastructure.gov.in/ hosts not only Model Concession Agreements (MCA), model bid documents for PPP projects in different infrastructure sectors, but also a library of bid documents of several infrastructure projects. Ministry of Finance’s www.pppinindia.com also is another good example of a central repository on PPP projects in infrastructure sector. 3.1.5 Empanelment of suppliers While currently there exist rate contracts for goods at both DGS&D, and state IT nodal agencies, there is no similar empanelment of various types of vendors who can execute different types of eGovernance projects or application development. For small projects, below a certain threshold, and developing eGovernance solutions, it was felt that empanelment of service providers may help expedite the process of selecting a vendor. APDRP project has experimented with a new practice of central empanelment of suppliers, enabling utilities in states do a limited bid process. 3.1.6 Use of eProcurement platform Use of eProcurement platform should be encouraged to improve the process of bid submission and bid evaluation. 3.1.7 Articulating a long-term vision There is a need for government departments to articulate a long-term vision relating to the implementation of eGovernance projects and individual projects should be in line with the overall departmental vision. 3.1.8 Procedural issues in procurement Government officers are constrained due to the legal and procedural framework related to procurement of IT systems. For e.g. Karnataka has enacted a law related to public procurement — Karnataka Transparency in Public Procurement and this law treats procurement of goods like personal computers and procurement of complex eGovernance projects in the same manner. Adherence to KTPP Act for procurement of low value regular use goods, imposes considerable delay in the supply of the item. Another Project Director of a NeGP project expressed the view that RTI and audit objections may be delaying the implementation of eGovernance projects. 3.1.9 Decentralised approach to project development In some states, there is a move to centralise procurement of IT solutions through a nodal agency and not by the line department. While this approach has the benefits of having a dedicated agency with necessary skills, it is believed that this has lead to lack of ownership from the line department, in execution of projects. Further, it is also believed that nodal agencies may not have in-depth understanding of the department’s requirements and eGovernance objectives. 3.2 Project conceptualisation and development 3.2.1 Difficulty in initiating eGovernance projects There is an inherent difficulty in initiating eGovernance projects especially if they are first-of-a-kind project. The difficulties range from preparation of DPR, developing of technology model, bidding process, selection process, etc.
  • 52. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study52 3.2.2 Constraints in the selection of consultants An important constraint for government departments in initiating eGovernance projects is that they need to first prepare and float a RFP for selection of the consultant, that will support them in the conceptualisation of the eGovernance programme. Many government departments do not have necessary resources or experience of preparing the RFP or Terms of Reference (ToR), for selection of the consultant. Feedback was given that some guidelines need to be evolved, to resolve this chicken-and-egg situation that delays several eGovernance initiaves. 3.2.3 Need for incorporating best practices relating to security in eGovernance projects Best practices related to data security, network security, etc. need to be incorporated in eGovernance projects. This aspect related to security needs for eGovernance projects was highlighted by two senior government officers handling the implementation of eGovernance projects. The level of understanding of threat perception in the implementation of eGovernance programmes, across the government is very low and government officers and operations staff, need to be educated about the security aspects. Only if government officers understand the various issues related to security of information systems would they be able to specify the necessary conditions in the RFP document. 3.2.4 Use of shared infrastructure Government departments when conceptualising eGovernance projects should leverage shared infrastructure like Data Centre, SWANs, Citizen Service Centres created by other departments, as this will reduce cost and time of project and also improve deliverables to citizens. 3.2.5 Interoperability/Data standards eGovernance applications should be as far as possible designed according to open standards, common data standards and be interoperable with other government systems. 3.2.6 Data sharing/Synergy across departments Government departments should look at using data created by a downstream department to enhance the services of their department or create new services that can benefit the citizens. For e.g., the Registration Department and the Land Records Department can be integrated through sharing of data. Registration of a property should trigger a mutation of property, similarly in case, Police challans a vehicle, such an incident should be recorded in the vehicle record maintained by the RTO. This point was highlighted in the context of eGovernance initiatives even in the same state, being conceptualised and executed in a silo, leading to several challenges in the procurement and successful execution 3.2.7 Automation without re-engineering In many projects, it is seen that there is a tendency among government departments to computerise processes as they exist in the current manual form. Computerisation efforts may allow optimisation of these processes and thus allow efficiencies that can be brought through re-engineering of processes. However, in many cases re-engineering of processes prior to embarking on computerisation, is not given due importance.
  • 53. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study53 3.2.8 Financial modelling Financial models, risk assessment of eGovernance projects, even for turnkey and BOOT projects are not carried as comprehensively as they are done, for any infrastructure project. 3.2.9 Policy changes Prior to the initiation of any eGovernance project, the government should identify the various policy changes required for the successful implementation of the project. 3.2.10 Diligence, effort in tender preparation eGovernanceprojects,duetothecomplexitybothindefiningthebusinessprocessestobecomputerised and selection of technology need to be resourced with the right skills in the department. Additionally at this point, most eGovernance projects are first-of-a-kind and there are no existing models. Given these factors, preparation of eGovernance DPRs and RFPs is a time consuming exercise and departments should provide resources and manpower for the effort required. 3.2.11 Need for stakeholder consultation In many eGovernance projects, in addition to the government department/agency undertaking the procurement process, there are other departments which may be key decisionmakers. In such cases the process of stakeholder consultation is either not undertaken or the stakeholder consultation process is merely a formality and the feedback of the stakeholders is not given due weightage. This is true of Integrated citizen services projects, where the project may be tendered by a nodal department like IT, but the stakeholders are electricity and water utilities, municipal corporation, and other government departments. 3.2.12 Need for as–is study prior to project implementation It was also felt that prior to embarking on projects many times, ‘as-is’ of the current process is not documented. For example, in case of a project for computerisation of caste certificates, probably there may be no effort to ascertain the time taken to issue a caste certificate in the current manual system, the issues in the current system, and other soft parameters like difficulty to citizens based on their socio-economic status, adherence to process, etc. Thus, if the process of issue of caste certificates is computerised, post computerisation it will be difficult to compare the computerised system with the old manual system. Similarly, in case of computerisation of many department systems, in the manual system, there is multiple entry of the same data leading to inefficiency. Once processes are computerised, the need for multiple entry of the same data is obviated leading to efficiency, minimising of mistakes and faster processing time. However, if processes and issues in the manual system are not captured and documented, there is no way of conducting impact assessment and demonstrating the benfits of the computerised system. Line department officers who participated in the study, felt there was need for a comprehensive documentation of ‘as-is’ processes and their inefficiencies. 3.2.13 Different measurement parameters of government departments Government departments do not consider cost of service delivery and thereby they are not incentivised for reducing this cost of service delivery. Further, government departments do not have any incentives to improve the delivery of services to citizens or businesses and thus do not look at solutions that can both improve delivery of service or reduce cost of service delivery. This was considered to be an important constraint in initiating eGovernance projects.
  • 54. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study54 3.2.14 Awareness of similar projects with similar end objectives Many times government departments initiated projects that may be similar to a project initiated by another department thus leading to one of the two projects being made redundant, for e.g. state-wide HRMS system may be initiated which may render a departmental HRMS solution redundant. 3.2.15 Solutions should be easy to use Software solutions designed for the government should adopt the existing functionality, as much as possible and should not be more difficult than the manual system. For instance, government officers are comfortable scrutinising paper files and making notes and passing orders on paper files. Any solution which enforced scanning of all documents, reviewing documents online, was felt to increase time for scrutinising files, leading to delayed response times. eGovernance projects, which initiated such sudden transitions in the way government officers and staff functioned, were considered to be counter productive to adoption of IT. 3.2.16 eGovernance solutions should have realistic objectives Many times eGovernance solutions are conceptualised which even at the time of conceptualisation seem likely to fail. Some examples have been workflow and file monitoring solutions, which do not factor various authorisation and approval workflows, spanning different departments, all of which may not participate in this project. Another example could be solutions that require broadband connectivity and continuous power supply at the remote government offices, and users being online with no offline processing capability. eGovernance solutions that incorporate the current practices of working of government, with necessary improvements and recognised infrastructural constraints, have had a greater chance of success. 3.2.17 Need for project champions at the highest level Implementation of any eGovernance solution has many teething problems and roadblocks, and there needs to be a champion for the solution at the highest level of the government. The project champion will not only accelerate the implementation of the solution but also understand the difficulties in implementation and provide decision making support to the vendor to make mid course correction. 3.2.18 eGovernance projects should not be merely procurement exercise Many times eGovernance projects involve merely procurement of IT hardware and COTS software licenses without the completion of the underlying EGovernance solution that will utilise this IT equipment. Government departments also for the purpose of utilising their financial budget make advance purchase of IT equipment and COTS software. Given that there is always a trend in both cost reduction of IT systems along with enhanced performance and features, government stakeholders felt that such IT systems should be procured in time, after the eGovernance solution has been tested and signed off for deployment. 3.2.19 Realistic SLA’s and penalties for SLA’s SLA’s for eGovernance projects should be relevant and achievable and further meeting the SLA conditions should be under the control of the vendor. It was agreed that often a vendor may not be able to meet the SLAs, due to dependencies on the government department and other participating government agencies.
  • 55. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study55 Views were expressed that framing SLA’s and its associated penalties has a tradeoff. Stringent SLAs will have to factor increased costs for the project execution and in case there are weak SLAs implementation suffers. Another reason why framing SLA’s was considered difficult was that most IT projects are first-of-a-kind projects, hence, there was an issue in defining the SLA’s which neither the government department or consultant can define comprehensively at the project conceptualisation stage. A central body like DIT could help in framing a standard set of SLA’s for different types of projects, factoring best practices of successful projects and learnings of failed projects. 3.2.20 User acceptance testing The RFP should contain clear guidelines on User Acceptance Testing (UAT) and that the government departments should conduct the UAT in a timely manner. UAT and its sign-offs was considered a big improvement area for eGovernance projects. 3.3 Payment model/Business model Decision on payment model and evaluating various options – milestone-based, quarterly guaranteed revenue, PPP (BOO, BOOT) should be well thought out and due justification should be given for choice. Probably a framework needs to be evolved on specific types of projects that should be paid for through a full cost bidding and specific projects where the vendor should obtain payment through delivery of services and a transaction fee. It was felt that choice of payment and business model is an area that departments need guidance on. 3.4 Scope of work 3.4.1 Definition of scope of work Services to be delivered in any eGovernance project needs to be defined very comprehensively so that it is possible for both the implementing department and vendor to understand the expected deliverables. Given that government departments may not be clear about requirements and outcomes, they tend to make the scope of work open ended. 3.4.2 Specifications of IT equipment Specifications should be prepared in a manner that only essential features regarding any equipment should be mentioned. Additionally, in case preparation of specifications in a rigid manner leads to a limited choice, the department should examine if the specifications can be slightly so as to enable wider participation of vendors leading to better price discovery. However, it was felt that in many cases it is difficult to specify specifications that are generic in nature and fair to all vendors. This is because many times it is difficult to establish equivalence between products even at a processor, operating system or database level. Further, it was also agreed that generic features and specifying product XXX or equivalent leads to difficulties in testing and certification and acceptance sign-offs. 3.4.3 Certifications It was felt that there does not exist good understanding regarding certifications in the government department. ISO, CMMi, different security certifications, are mandated without fully evaluating their relevanceforaparticularprojectonhand.Itwasbelievedthatseveralvendorswithnecessarycredentials, may not be meeting the minimum eligibility criteria, due to CMMi Level 5 requirement. It was broadly
  • 56. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study56 agreed, that there needs to be a thorough review of different types of certifications, their relevance for different categories and size of projects, and guidance issued by Department of IT. 3.4.4 Specifying manpower skill sets for the project 3.4.4.1 Specifying skill set for the project It is very difficult for a RFP to comprehensively specify the skill sets of manpower required for a project. It is often seen that at the bid submission stage, the vendor submits good CV’s but later replaces with different profiles. At the same time it, was agreed that it was not practical to demand all resources by name during bid phase and interview all resources as a part of the bid evaluation process. Hence, it was felt that the RFP should specify that an agreed percentage (about 60 per cent) of profiles submitted, should join the project and only swapping of resources to the extent of the balance percentage should be permitted. 3.4.5 Current practice of turnkey projects The current practice of tendering of eGovernance projects is that projects are conceptualised as turnkey and have a comprehensive scope and high value, thus SME’s do not meet the eligibility criteria. Additionally, even if they are selected, they may find it difficult to implement the project. However, it is seen that in many cases while the project may be of INR 300-500 crore value, components of the project may include supply of desktops, providing data entry staff, scanning and digitisation of a large volume of documents. Tasks such as these are neither high technology nor specialised in nature. The solution to this issue could be to study the scope of work of the project, identify the various sub components in it. An approach can be adopted to select a turnkey project vendor, but have parts of a project requirements executed by other smaller vendors who are specialists in that area, either through a direct bid process or through sub-contracting. The drawback of this approach is that the government department will need to supervise many vendors and their deliverables, instead of one prime vendor. However, it was felt that this approach has to be evaluated and adopted with appropriate risk mitigation measures like a project management consultant supporting the department. Several government officers felt a design, architecture, development of a complex eGovernance solution, compared with data entry, digitisation require different kinds of organisational profiles and skill sets. Currently, it was felt that all aspects of an eGovernance project is being combined into a single bid schedule, and one large turnkey vendor is being preferred and there was a need to revisit this approach. 3.4.6 Framework for change requests It is apparent that any RFP can’t cover all eventualities that arise at the time of project implementation; hence, all RFP’s should contain a robust framework for evaluation of enhancements requested by the department and change requests raised by the vendor. Another factor to be appreciated is that given many IT projects at this time, are first-of-a-kind IT projects, government departments can give feedback on the solution after seeing the working model. There is an issue of scope creep in government projects. Itisapparentthatitisnotpossibleforthegovernmentdepartmenttoenvisageanendstateinitiallyand eitherprocesseswillchangeorsomenewrequirementscomeupduringthesoftwaredevelopmentphase. In some cases, change requests of the vendor are ignored and the vendor is asked to accommodate the changes as part of the original price. This makes it even more imperative to have a robust framework for change requests.
  • 57. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study57 This could be in the shape of: i) Man-month rate in the bid evaluation: The man-month rate should be asked for and evaluated as a part of the initial bid ii) Framework for evaluation of the change requests This could be in the form of project committee and a defined, approval process that can evaluate the change requests submitted by the vendor iii) RFPs need to have allowance for X percentage of change factored. X will vary from project to project. For first time solutions the X per cent change needs to be kept high. Industry should incorporate in their commercials that X per cent of change from original scope will be asked for and they should implement changes/enhancements to this extent, with no request for additional payment 3.4.7 Framework for system software (COTS software) The RFP should contain a clear definition for COTS software, licensing model, and upgrades and its associated pricing in the commercial bid of the vendor. This is important as COTS software pricing and licensing terms is considered a grey area by government officers. Some COTS Software is priced on user basis, some on server and some others on processor basis. In some cases, the bid requests software with upgrades and in some cases it does not. Some vendor’s price includes version upgrades and in some cases it does not. It was also felt that an eGovernance solution, initially conceptualised to run as a departmental application and later enhanced to run as a web-based online solution has several implications for COTS software licenses procured by the department. The department may not have factored for incremental investments in COTS software, needed to support such a decision. It was also felt that lack of clear knowledge on COTS software and their licensing terms creates several challenges after the initial project term is over. It is believed that the initial project bid may not have mandated version upgrades, and at the end of the 3 or 5-year term of the project, when the vendor hands over assets, the department may be left with obsolete, out-of-support versions. This may require the department to do version upgrades, and the department may not have budgeted for the same. Hence, it was requested that the department of IT at the centre and states should give clear guidance and ongoing updates on COTs software to ensure smooth implementation of eGovernance solutions. 3.4.8 Security audits The requirement of security audits by a third-party auditor should be incorporated in all eGovernance projects. 3.5 Contract (Terms and conditions document) 1) The contract with the vendor should be comprehensive and should be a self-contained complete document. Thus, the deliverables of the vendor as mentioned in the RFP and vendor’s bid documents, should be incorporated in the contract 2) The contract should have comprehensive clauses for premature exit 3) Many vendors have expressed concerns about clause related to unlimited liability, however, given that some eGovernance projects deal with the management of sensitive government data, in all cases it may not be possible to limit the liability of the vendors. However, it was agreed that there needs to be a thorough review of liability terms and guidance on the norms for different category of projects should be published in consultation between the government and the industry.
  • 58. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study58 Infrastructure and public works contracts have some clearly defined liability terms and usually never specify unlimited liability. 3.5.1 Limitation of liability in Kerala eProc Tender/Passport Seva If we examine the limitation of liability clause in two tenders, we observe that the interest of the bidders has been protected and liability has been limited for the executing vendor. However, there is a need for review of liability terms to ensure future RFPs follow norms acceptable to both Industry and the government. Kerala eProc RFP Passport Seva RFP Comments Clause 6.3 Limitation of Liability Clause 6.3 Limitation of Liability a) There shall be no limitation of liability in case of any damages for bodily injury (including death) and damage to real property and tangible personal property a) Notwithstanding any other term, there shall be no limitation of liability in case of any damages for bodily injury (including death) and damage to real property and tangible personal property and willful fraud Almost similar b) This agreement does not grant or create any rights, benefits, claims, obligations or causes of action in, to or on behalf of any person or entity (including any third party) other than between the respective parties to this agreement, as the case may be c) Neither this agreement nor the SLA grants or creates any rights, benefits, claims, obligations or causes of action in, to or on behalf of any person or entity (including any third party) other than between the respective parties to this agreement or the SLA, as the case may be Almost similar c) Any claim or series of claims arising out or in connection with this agreement shall be time barred and invalid if legal proceedings are not commenced by the relevant party against the other party within a period of 18 months from the date when the cause of action first arose or within such longer period as may be permitted by applicable law without the possibility of contractual waiver or limitation d) Any claim or series of claims arising out or in connection with this agreement or the SLA shall be time barred and invalid if legal proceedings are not commenced by the relevant party against the other party within such period as may be permitted by applicable law without the possibility of contractual waiver or limitation Almost similar d) The Project Director, Kerala eGP Project shall be entitled to claim the remedy of specific performance under this agreement or the SLAs e) The Project Director, MEA shall be entitled to claim the remedy of specific performance under this agreement or the SLA Almost similar e) Except for damages mentioned in Article 6.3 (a), the partner’s aggregate liability under this agreement in respect of any or all claims arising under this agreement shall not exceed the aggregate amount received by the partner b) In all other cases not covered by ‘a’ above, the total financial liability of the service provider shall be limited to the value of the contract, arrived at as the sum of Capital Expenditure (CapEx) incurred by the service provider till the relevant date on which such liability is to be calculated and Operational Expenditure (OpEx) for a year, the CapEx being determined on the basis of the original purchase value of all the assets being considered for CapEx calculation less depreciation and OpEx being determined in accordance with the market rate, prevailing as on the relevant date, for all service elements being considered for OpEx calculation. SP will provide the list of CapEx and OpEx items with their respective costs when asked by MEA for the same and MEA will have the right to get that list verified by any third-party agency (ies) before accepting it The liability amount in case of Passport Seva has a higher limit
  • 59. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study59 4) It was felt that there was excessive documentation regarding the formal contract between the government department and the vendor. Most of the time, the officers administering the contract either do not go through the contract in detail or find it difficult to understand all the aspects of the contract 5) Model contracts could be prepared for different types of scenarios and government departments should be free to modify the contract documents based on their requirements. This is in contrast to the World Bank Standard Bid Documents which are difficult to modify. 3.6 Pre-qualification The department heads are mostly guided in deciding the pre-qualification based on their past experience. Some officers have had a good experience with large SIs and some with small SIs and these perceptions sometimes guide framing of the pre-qualification criteria. Given that most IT projects are different, it is difficult to standardise eligibility criteria but it should be ensured that CVC guidelines are followed to ensure fairness. Another view expressed was that turnover for organisations participating in eGovernance projects should be about X times the value of the project being tendered. This X varies widely and it was agreed that a standard norm should be adopted. Turnover of 10 times the project value, was considered by some officers as the right criterion. 3.7 Tender evaluation 3.7.1 Low commercial bids by vendors This is an important pain point for most government officers that were met regarding the study. Many times it is seen that there is a considerable difference in rates of the winning L1 bidder and other bidders. This needs to be investigated thoroughly across a cross-section of projects. In case the winning bidder has quoted an unviable commercial bid, either as an entry strategy or due to improper due diligence and cost estimations, it will have a negative impact during execution, sometimes leading to contract termination and litigation. Further, the vendor may be inflexible on even simple requests of government departments that may enhance the solution or service delivery. Further, the vendor may cross-subsidise a low bid with high change requests or compromise on the deliverables. A mechanismsuggestedbysomeofficersistodeterminethebasecostingforeveryprojectandestablisha floor price. 3.7.2 Quality-cum-cost basis evaluation Tender evaluation practice for eGovernance tenders specifically that have a software solution development component should be through a quality-cum-cost basis methodology. This would result in vendors with better quality solutions being selected. There have also been contrary opinions to the practice of selection through QCBS as some government officers feel that QCBS selection lends itself to subjectivity. Another government officer expressed the view that only consultancy tenders should be evaluated through the QCBS methodology. For other projects, a high technical score should be kept for qualifying bidders and thereafter selection should be on the basis of least cost. There seems to be no clarity and consensus among government officers, and there is a need for a thorough review of evaluation methodologies and norms arrived at, for different categories of projects.
  • 60. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study60 3.8 Third-party audits The RFP should have clarity regarding the type of body that would conduct the Third-Party Audit (TPA). While large NeGP and eGovernance projects have TPA process and selection well-defined, most eGovernance projects treat TPA in a very ad-hoc manner. 3.9 Project execution 3.9.1 Need for empowered PMU All government advisors consulted during the study, highlighted the need for an empowered PMU with decision making authority. To mitigate issues of vendors during project execution including acceptance sign-offs and delayed payment, departments need to establish an empowered PMU which could handle the project execution in a dedicated manner. The PMU may be empowered to function as a special purpose project entity or society, with clear decision making authority on behalf of the department. The PMU should have dedicated government staff for project implementation and empowered to supplement its resources by recruiting skilled staff from the private sector. The PMU should be headed by a senior government officer with a fixed tenure, ideally for the entire duration of the implementation of eGovernance project but of atleast three years to ensure successful implementation of the project. Further, there is a need to empower project directors to take routine day-to-day decisions regarding the implementation of projects and vendor management. 3.9.2 Need for review of the project by senior government officials eGovernance projects need to be reviewed at the highest levels of the government. This is essential because eGovernance projects are many times, first-of-a-kind project. Issues and challenges and new requirements will crop up during execution. Further, eGovernance projects will need cooperation of other departments, and review at highest levels of the government can ensure that this cooperation is forthcoming. 3.9.3 Sign-off’s given by predecessor government officer not respected by the successor In some cases sign-off’s are not respected and in case the officer giving the sign-off moves to another position, his/her successor may want to revisit and re-evaluate the entire project. However, it needs to be mentioned that in some cases, this re-evaluation may also be constructive in nature. 3.9.4 Evaluation of eGovernance projects It was articulated that success of eGovernance projects should be measured against whether they achieved the goals of the department and citizen expectations, and while meeting time and cost budgets are important, meeting the needs of the department, is more important. 3.9.5 Service level agreements and penalties for not meeting SLA’s During the preparation of tender, it should be understood that tight SLA’s and levying of stringent penalties for not meeting SLA’s is not always an option for ensuring performance of vendors. Levying of excessive penalties may be a disincentive to the vendor and may lead to their exit from the project. In such a case, it was felt that the government departments are more impacted as their entire project timelines suffer and may need recourse to re-bid or sometime litigation. Hence, some officers felt that
  • 61. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study61 eGovernance projects need to provide for some flexibility to the departments in applying SLA’s and penalties on the vendor, to factor unforeseen challenges in the field. 3.9.6 Dependency on other government departments Many eGovernance projects are dependent on other departments (not the parent department conceptualising the project) and many times it is difficult to get these departments to execute their responsibilities for the success of the project. Participating government departments do not sign support SLAs or may not honour them, impacting the overall project schedules and success. It was pointed out that infrastructure projects, have well-defined support agreements by all participating agencies and their obligations, and ‘Conditions of Precedents’ and events of default. 3.9.7 Implementation of pan departmental projects Many projects like Bangalore One, eSeva, eBiz projects envisage delivery of integrated services of multiple departments. There are many complexities in the execution of such projects which are as follows: i) The associated departments may not be inclined to offer services through such a common platform ii) The associated departments may not be willing to modify their existing processes to support such integrated initiatives iii) In case legacy IT systems exist in operation in these departments, then there is the added layer of complexity of either integrating the legacy system or replacing the legacy system iv) There is inordinate delay in reviewing the deliverables of the vendor and providing sign-offs for ‘as-is’ and ‘to-be’ documents, in projects spanning multiple departments and states 3.9.8 Support from DIT A PMU head of a NeGP mission mode project, felt that the Department of IT should play a more proactive role and facilitate inter-departmental cooperation required for the implementation of a NeGP project. DIT in view of its nodal role in NeGP and its projects, can facilitate more frequent reviews of such projects at the highest levels of the government, at the level of the Cabinet Secretary or the Prime Minister. Such periodic reviews ensure timely execution, and various departments meeting its deadlines and obligations. 3.9.9 Difficulty in execution of geographically dispersed eGovernance projects There is a huge difficulty in the execution of geographically dispersed eGovernance projects, especially if the objective of the project is to deliver citizen services. The issues are exacerbated due to the absence of skilled man power to maintain the IT equipment installed for project operations. 3.9.10 Power supply outages The absence of regular supply of electric power is a huge issue for the implementation of any eGovernance project. It creates numerous issues of having to invest in back-up power and maintenance of the back-up power devices. In the remote areas of the state, sometimes there is no availability of electricity for a continuous period of 1-2 days and this impacts the implementation of eGovernance projects and vendor performance and penalties.
  • 62. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study62 3.10 Post implementation 3.10.1 Difficulty in handover of project Government officers expressed concern about the issue of transfer of an eGovernance project to the department, after Go-Live or completion of the project term of the vendor. Some of the issues related to transfer of projects were: 1) Issue of capacity of government officers to understand what assets (hard and soft) that needed to be transitioned, to the government department 2) Devising a framework for transitioning the project operations to another vendor. This bid process is more unique, and has few precedents to fall back upon. Whether the successor vendor would be able to manage and enhance the application solution developed by the predecessor vendor is an issue. Source code and documentation management practices in eGovernance projects was considered to be weak. 3.10.2 Learnings from AP Government regarding project transfer Handover of a project from one vendor to another due to completion of the project term of the first vendor requires a long planning cycle. In case of handover of project from one vendor to another, the following should be adhered to: 1) Athird-partyauditorshouldbehiredtocheckthequalityofequipment,software,softwarelicenses, documentation that is being handed over from one vendor to another 2) The pre-qualification norms for the selection of vendors should be stringent, given that an existing live project with lakhs of transactions per day is being handed over, and there is a greater risk of service delivery to citizens 3) There should be a defined handover period from the incumbent vendor to the new vendor, with necessary overlap 4) In the specific case of the Hyderabad eSeva, the new vendor was given a moratorium of six months from adhering to SLA’s to enable them to take over and stabilise operations 5) Regarding the software application, for the Hyderabad eSeva project, the vendor was given a choice to use the existing application or develop a new application. As of now, the vendor is using the existing application solution, and obtaining support from the previous vendor’s development partner. It was however agreed, that this is not always a preferred or feasible option, and transition should ensure that current applications can be supported and enhanced by the new vendor 3.11 PPP projects 1) It was felt regarding PPP projects in general (not related to IT projects per se) the basis on which a PPP project is framed is not clearly communicated, and whether other alternatives were considered that, would have led to more participation and better price discovery 2) PPP projects may have political risks attached, which may hamper implementation of the project 3) As a part of the project conceptualisation phase, the government should conceptualise a business model with potential revenues and estimated costs. This will enable the government to incorporate in the PPP contracts clauses on ‘Windfall profits’ and the need to share/limit such windfall profits of
  • 63. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study63 the vendors. Similarly, there should exist clauses that compensate the vendor in case the revenues are far less than that anticipated. It was agreed that PPP projects are not committing the base transaction volumes and growth projections, and hence, there may be over or under estimation, impacting the right price discovery per transaction and also risk assessment by vendors 4) PPP projects should have a mechanism for price revision of transaction fee, to factor inflationary adjustments indexed to an agreed base 5) The following checklist was suggested to enable a government department to evaluate if a project should be undertaken on PPP mode. a) Size of the project relative to the size of the department. Thus, both the size of the project and capacity of the department to execute projects should be looked at concurrently. In some departments like execution of even projects of the size of INR 1,000 crore may be within the capacity of the department, but in some departments even projects of INR 50 crore size may be considered as large b) The time period needed for stabilising operations of the project. In case such time period is longer, then it is advisable to go for PPP projects c) Any service that has a steady revenue stream, that can be monitored through robust quality of service principles d) PPP projects are also advisable when the project is citizen facing and a high degree of service orientation is required. government departments are good at administering and they can monitor the private vendor in delivering good quality service. It was agreed that it is difficult for a government department to be service citizens and adhere to service levels in a 24/7 or 12/7 online mode e) In case there is a need for deployment of large work force for project implementation and operations, then PPP mode is a more preferable option f) PPP is also advisable when funds are a constraint g) PPP is also advisable when the project demands high upfront technology investments h) Some areas that are related to the core areas of governance can’t be done in a PPP fashion for e.g. Defence, Police, Treasuries i) Political atmosphere needs to be considered when conceptualising PPP projects as PPP is sometimes equated with privatisation and has associated challenges j) Availability of resources/internal capacity of the department also needs to be considered while considering executing projects on a PPP basis k) It is necessary to accurately determine the financial model while undertaking design of PPP projects. Capex, fixed OpEx, variable OpEx based on number of services, transaction volumes, need to be estimated during the conceptualisation phase l) Based on the above, a framework/toolkit should be developed for different types of projects like: i) IT infrastructure ii) eGovernance service delivery 3.11.1 Best Practices of implementation of PPP projects in the infrastructure sector As per consultation with infrastructure advisory organsations and our review of few infrastructure PPP projects, the consultant for PPP projects in the infrastructure sector, the following best practices were abstracted.
  • 64. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study64 3.11.1.1 Project conceptualisation and development The project conceptualisation and development is extremely detailed for infrastructure projects. The department recruits specialist technical consultants to prepare a detailed project report (DPR) for the project. The DPR provides complete details on each aspect of the project, for instance for a tollway project it would cover capital cost, estimated revenues, current traffic & toll, composition of traffic, traffic growth projections and estimated toll revenues. 3.11.1.2 Payment model/Business model Given the huge capital cost of infrastructure projects, part of the investment of all these projects are financed by institutional lenders. All payments including bonus and termination payments are directly credited into an ESCROW account, designated by the lenders. This is believed to secure the lenders to a PPP project, there by mitigating risk and cost of financing to a PPP project. Regarding business model and protecting the concessionaire from losses or mitigating circumstance of windfall gains, for tollway projects, the projections of traffic growth is now agreed between both parties. If traffic falls below projected growth, they extend the concession term and reduce the term if the converse happens. Inherent reward built for higher growth in traffic, toll collection. 3.11.1.3 Bidding terms and conditions/Bidding process Most infrastructure projects, particularly PPP projects follow a two-stage process of first calling for a request for qualification and thereafter issuing the request for proposal to only the shortlisted bidders. Thisisbecause,bidresponsetoainfrastructureRFPrequiressubstantialeffortandresourceinvestment on the part of the bidders, and it is best that this effort, is made by few qualified bidders. Additionally, it was agreed that a pre-qualification process, should lead to shortlisting of 5-6 credible serious bidders. 3.11.1.4 Contract (Terms and conditions document) 1) The concession agreement of an infrastructure PPP project, is not one-sided with obligations and liabilities loaded only against the concessionaire. For instance, the NHAI concession agreement clearly lists down NHAI’s obligations and NHAI events of default a) A clear ‘No Breach of Obligations’ clause is specified in favour of the concessionaire. A relevant excerpt from NHAI’s model concessionaire agreement is given below: i) ‘The concessionaire shall not be considered to be in breach of its obligations under this agreement nor shall it incur or suffer any liability if and to the extent, performance of any of its obligations under this agreement is affected by or on an account of any of the following: NHAI event of default, concessionaire’s inability to remove accident debris due to non-completion of any police/insurance-related inquiry/survey’ b) Thisdeclarationofobligations,eventsofdefault,forthegovernmentcontractingagency,andan associated ‘No Breach of Obligations’ clause for the vendor, makes it contractually enforceable and considered a good practice in public private partnership. 2) Most vendor liabilities are covered by insurance cover 3) Bonus/Reduction: The concessionaire receives bonus for early completion of the project, and incur reduction in the annuity for delayed completion
  • 65. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study65 4) Forcemajeureeventsincludingpoliticaleventsarewell-defined.Terminationduetoa(forcemajeure) or other defined events, and termination payment terms are part of the concession agreement. A relevant excerpt from a NHAI concession agreement is given below: a) Termination due to force (majeure) event which is a political event, (after the commencement of commercial operations), NHAI shall pay to the concessionaire, termination payment equal to 75 per cent of the discounted value of future net cash flows 5) In the event of project termination, since the contract provides for a well-defined framework for exit management, it is believed that close to 90 per cent of the dues of the lender are protected. In the event of project termination, there is an agreed order for payouts which is: a) Statutory dues b) O&M payments c) Lender dues, interest, principal d) Revenue share e) Finally allowing the vendor to repatriate profits 3.11.1.5 Pre-qualification Most infrastructure projects follow the following norms regarding pre-qualification criteria: 1) Allows consortiums to participate usually in an appropriate mix of organisations with technical capability and financial strength 2) Different eligibility criteria for technical and financial a) Technical capacity/eligibility usually measured as projects completed in the last five years, billings received b) Financial capacity measured as networth, and net cash accruals in the last two years c) In PPP projects, eligibility criteria asks for both: i) Project development experience ii) Construction experience with higher weightage for project development experience 3) Regarding a vendor being overleveraged due to a high order book, and need for determining ‘Available Capacity’, in eligibility criteria, it was suggested that this is difficult to implement. Government cannot stop a bidder meeting eligibility criteria, from bidding, as it impacts ‘Level Playing Field’ and fair competition principles. However, lenders may play an important role in such due diligence of capacity of prospective bidders. Additionally, given the nature of projects, and investments needed, it is expected that the bidder is responsible and commercially prudent. Bid preparation/design, financial closure is so complex, and penalties are so high, that bidders who do not have the capacity, will usually not bid. 3.12 Consultant continuity The consultants to any project that is preparing the DPR and RFP should continue to be associated with the project till the Go-Live stage. It is believed that such continuity enables right guidance to department teams, in contract enforcement, SLA monitoring and dispute situations.
  • 66. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study66 3.13 Dispute resolution To enable dispute resolution for IT projects between the government and vendor, it was recommended that DITcansetupapanelofretiredgovernmentofficerswithknowledgeofITprojectsimplementation. This is specially required in PPP projects. In case of arbitration proceedings for project disputes, in most cases it was felt that the arbitrator did not have a good understanding of eGovernance Contracts, SLAs in information technology solutions and decisions are made administratively. Further the Government advocate is also not well aware of the technical aspects and is not able to represent the case adequately to the arbitrator. Thus in case of disputes, government departments and their consultants, should invest time in briefing the government lawyers on the technical aspects of the case. 3.14 Strategic control Most officers felt that the mechanism to retain strategic control of an eGovernance project is by enhancing capacity of the department, by twin measures of recruiting personnel with technology and project management background and by training of departmental officers. A dedicated skilled team to support the department, across various phases of an eGovernance project lifecycle, was considered a pre-requisite in appropriate project governance practices. This was also said to help the government retain ‘strategic control’, when eGovernance projects are outsourced. Another senior officer recommended a comprehensive measure of starting a specialist service ‘India eGovernance service’ on the same lines as other specialist service like the Indian forest service or engineering cadres in states. 3.15 Role of NIC Most state government respondents had feedback on the role of NIC. They communicated that NIC state units were not resourced to support government departments in implementation of eGovernance projects. Also when NIC is entrusted with the implementation of any eGovernance project, there is usually no commitment of timelines for delivery. NIC also does not provide any SLA’s regarding its deliverables. Additionally given that NIC is not part of the state government, it is not empowered to make project decisions. Concerns were expressed on an implementing agency, retaining source code of a department project like land records or road transport. 3.16 Vendor landscape/Capabilities Some officers believe that due to various issues in procurement and execution of eGovernance projects, the private industry does not have enough incentives to bid for and execute eGovernance projects. It is only recently that more organisations have started focusing on eGovernance projects. Thus, governments have a limited choice of vendors responding to most projects, and several organisations with required capabilities are not yet bidding for eGovernance projects. There was a broad agreement that industry teams executing eGovernance projects are not having adequate functional skills, and solutions are designed with a technical orientation, rather than a government user orientation and usability perspective. While there is now an increased landscape of vendors undertaking eGovernance projects, some vendors are yet to appreciate that executing on government contracts is very different from working on private sector, global contracts. Interaction with government departments and users at various
  • 67. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study67 levels is a high-touch process, mostly requiring multiple face-to-face meetings. Delivery resources in remote locations may be missing out on key user interactions, while freezing requirements and solution design. The industry has developed a lot of expertise in remote delivery, where global and enterprise sector customers are well-tuned to virtual meetings, telecons for requirements gathering, and web-based project monitoring, project review documents on email. In eGovernance domain in India, most departments do not have a project team or senior officers who are tuned to this mode of project execution and reviews. Hence, there was feedback that there is a mismatch in vendor’s expectations and preferred project execution methodology and government’s ways of functioning. Vendors continue to face challenges of several scheduled meetings for requirements gathering, project reviews and presentations being cancelled, which often may not be in the officer’s control too. Instances like assembly session, floods were cited for a department officer not giving due priority to an eGovernance project, while they do understand that a vendor had stringent SLAs and penalties on timely deliveries. This highlights an inherent limitation in timely execution of eGovernance projects, and associated SLAs of the vendor. There was also feedback given that IT vendors are more engaged with IT department and senior officers of departments and do not give due priority to actual end-users during requirements gathering, system design or acceptance testing. Hence, adoption of the eGovernance solution by mid and junior staff is sometimes impacted.
  • 68. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study68 Industry Perspective
  • 69. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study69 This NASSCOM study and report had its genesis, in several members, over the years, reaching out to NASSCOM, with specific issues in a government bid, contract terms, implementation challenges, payment delays. As several issues were being brought to NASSCOM team’s notice, it was decided to do a deep dive and consult a cross-section of large, medium, small industry members. Preliminary observation was that service providers aspiring to enter eGovernance domain, had a set of challenges very different from incumbent service providers. Incumbent small and medium service providers had a unique set of challenges, compared to incumbent large service providers. Small and start-up organisations, had their own unique set of challenges. The methodology of the study emanated from these preliminary observations. The study consulted a cross-section of industry members, including SIs, software/hardware OEMs. The organisations were categorised into large and SME, and incumbent and aspirants. The study was conducted by a combination of structured questionnaire and written responses, and face-to-face meetings, and telecons. Secondary research was also conducted by the NASSCOM team, by reviewing a representative sample of RFPs, pre-bid clarifications, service agreements, and ongoing and upcoming eGovernance projects. Consultancy organisations also contributed to the study, by providing their perspective on issues and challenges in different phases of an eGovernance project, and most importantly to recommendations. TheyhadalsoprovidedfeedbackonbothgovernmentandITserviceproviders.Thestudydidnotattempt to focus on issues and challenges faced by consultants, in consultancy bid processes or execution of consultancy assignments. 4.1 Organisations who participated and contributed to the study Category Organisations Large eGovernance incumbents & aspirants 3i Infotech, HCL Infosystems, HCL Technologies, Infosys, L&T Infotech, Mastek, Mindtree, NIIT Technologies, TCS, Wipro, Zensar (Infosys feedback specific to one NeGP Mission Mode Project) Small & medium – eGovernance incumbents & aspirants ABM Knowledgeware, CMS Computers, COMAT Technologies, Humanitics, MobMe, Payada Technologies, Radiant, Ram Informatics, UTL, Zylog Systems Global technology OEMs CISCO, Microsoft Consultancy E&Y, IDFC, IL&FS, NISG, PwC (IDFC for best practices in infrastructure sector PPP projects) 4.2 Summary of responses received from the organisations 1) The 28 organisations, raised a total of 296 issues, which were distilled to 170 unique issues related to procurement of eGovernance and IT services 2) These issues were grouped within 19 categories of issues like project conceptualisation, scope of work, project execution, etc. 3) Most issues pertained to the following three factors: a) Project execution issues b) Project conceptualisation and framing of SoW Industry Perspective
  • 70. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study70 c) Pre-qualification Criteria: However, this issue was of greater concern for incumbent SME and aspirant large organisations 4) For incumbent large organisations, an issue of great concern was the terms and conditions of the contract like unlimited liability, risk overload, counter guarantees, exit management 5) Pre-qualification criteria, including turnover limits, certifications like CMMi Level 5 were persistent challenges for SMEs 6) Sign-offs and payment delays was of concern to both large and SME organisations. 7) Overall it appeared that the procurement of IT services is guided by fair procedures (except for perception of unfair specking of pre-qualification criteria) 4.2.1 Table: Responses received from organisations S No. Issue OEM Incum bent large Aspirant large Incum bent SME Aspirant SME Con sultant Total No. of res- ponses for that issue Total No. of unique issues 1 Project execution 0 12 12 25 8 8 65 32 4 Pre-qualification 2 2 15 14 8 1 42 12 2 Project conceptualisation and development 1 2 14 12 8 4 41 26 3 Contract (terms and conditions) 0 20 12 3 1 3 39 24 5 Tender evaluation 1 8 11 3 2 25 16 6 Scope of work 2 4 7 6 4 0 23 15 7 Other issues (13 broad issues) 0 15 19 14 6 7 61 45 Total 6 63 90 77 35 25 296 170 The issues of concern are grouped in order of number of issues raised. 4.3 Project execution Issues raised in project execution are as follows: 1. Lack of timely payment despite fulfillment of the deliverables of the vendor. This usually is due to delay in acceptance of deliverables. In some cases, it may also be due to budgetary sanctions, funds transfer to the department 2. Lack of continuity of project champion leads to several delays and even shelving of the project 3. Delay in the delivery of obligations of the government. This not only leads to vendors not meeting SLAs and associated penalties, but also additional costs to the vendor a. The contract may have a service level for procurement and delivery of goods by a certain date. However, if the site is not ready/handed over, the equipment of the vendor will need to be stored in a warehouse, thereby leading to additional costs to the vendor 4. During project execution, many issues come up which may not have been covered in the RFP or contract. In such cases, the government department does not demonstrate the required flexibility, and the project monitoring unit of the government is not empowered to take appropriate decisions, in the interest of project implementation. For instance, additional power load or power connection for a site
  • 71. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study71 5. Sign-off’s given by a government officer are sometimes not accepted by the successor. Many times the successor would like to re-evaluate/review the certification of work and even SoW and contract. 6. Lack of a dedicated team within the government department for project monitoring, reviews, requirements gathering, acceptance testing a. Several factors like assembly session, election duties, Floods impact execution schedules due to non-availability of government officers 7. Scope creep and continuous feature enhancements and changes 8. Deliverables of the government are not monitored and their delays are not taken into account while imposing penalties on vendors 9. Deemed Acceptance: Most contracts have a clause that deliverables will be deemed to be accepted by the customer, in the event acceptance is not issued within a stipulated period from the date of installation/commissioning/submission of deliverables. This clause in a contract is never applied, and the vendor ends up having to obtain explicit acceptance leading to delayed payments. Interest on delayed payments clause is rarely enforced 10. Disputes between the Consortium Partners: Resolution is inclined to favour the prime bidder and rights of non-prime bidders are ignored 11. Involvement of a number of government agencies/departments in an integrated services project – their readiness and support to the project, is not contractually enforced 12. Political pressure, interference to accelerate project execution and Go-Live date, without factoring readiness of the line department and implementation schedules 13. Several eGovernance projects have detailed ‘As-Is’ and ‘To-Be’ processes defined and accepted. While application solutions are designed to the defined ‘To-Be’ processes, the department may not have implemented the necessary change management processes to support this 14. Many projects have dependence on upstream back-end computerisation, upgrades, but these factors are not enforced in implementations schedules 15. Project committees may not be empowered or sometimes not supportive of removing implementation roadblocks for the vendor 16. Substantial changes are requested even when comprehensive SRS, design have been reviewed and approved by the department 17. Programme management of projects with multiple vendors is a weak area, as the government may not have appointed a consultant or dedicated team to manage multiple vendors and monitor their deliverables and integration. For instance, projects where application solution and hardware, networkingoperationsareawardedtotwodifferentagencies. Challengesintheseprojectsaremore severe, when one of the agencies is a government agency, who may not have signed a contract or SLAs with the department. It is believed that the Canadian Government has very mature processes in multi-vendor project management 18. The department obligations regarding providing sites ready for installation are not contractually enforced. Installation and commissioning delays due to site readiness, beyond a stipulated period, do not have a ‘deemed to have been installed, commissioned’ clause. These impacts not only
  • 72. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study72 payments of vendors, but warranty and free support term on hardware and COTS software. A SI does not have the flexibility to extend warranty terms of global OEMs 19. Contract re-negotiations are forced mid-way, when it is perceived that the vendor is making ‘windfall profits’, even when the contract did not provide transaction volume guarantees and risk assurances. This is particularly the case with transaction fee-based, citizen services projects and risks are not balanced with potential rewards 4.4 Project conceptualisation 1. Projects incorporate many non-IT items as well, which increase the project cost manifold. This leads to an increase in the pre-qualification turnover norms, and also risk overload on vendors. The acceptance criteria/specifications for such non-IT services is not clearly defined. Security, house keeping, site civil works and interiors, in citizen service centres is one example. Given that an IT service provider, is the prime or single contractor, these non-IT components lead to wide variations in bid costings, and also quality of delivery. By incorporating such non-IT components in a IT services bid schedule, the government may not be engaging specialised vendors, and paying the right price a. This issue has been highlighted by both incumbent and aspirant large IT service providers b. Small and medium service providers consider this a big barrier-o-bid, as the size of the project increases many times, and the turnover criteria is set very high 2. H/W,COTSsoftwaredecidedforaneGovernancesolution,isnotprocureddirectlybythegovernment and supplied to the SI a. Select large incumbent organisations with preferred partnerships with OEMs, get an undue advantage when H/W, COTS software supply is clubbed into a turnkey project. This was considered to impact level playing field for new entrants and also SMEs b. This issue was highlighted by both large and medium aspirant organisations 3. Projects incorporate requirements like lease rental, diesel for running of gensets. Cost estimation is a guesswork, both on the extent of grid power outages, and cost of diesel over a five-year tenure. Indexing such input costs to a base price and factoring escalation is missing 4. The structuring of many projects, payment/business models, process of acceptance testing, termination clauses, increase the investment and risk for vendors. Due to these risk factors, even government controlled lending agencies and PSU banks are not keen to offer long-term debt and telescopic repayment terms, for eGovernance BOOT projects 5. In most IT infrastructure projects, power is a severe constraint in project implementation and operations. Sometimes the grid power outages could be even for days, while the back-up power is provisioned for a few hours. These contingencies are not factored into SLAs and penalties 6. Many projects have been executed as pilots in the past, however, the government raises replication projects without incorporating learnings and field challenges of these pilots, into new bids and contracts 7. There are multiple projects in a state that have similar service delivery objectives to the same constituents, and in BOOT mode, affecting business viability for one or all vendors. eSeva, APOnline, RAJiv in Andhra Pradesh were seen to be having overlapping initiatives
  • 73. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study73 8. There are many solutions that are replicable across state governments, departments. In such cases where one state or department has a successful implementation, the vendor and the government agency do not collaborate in replicating the solution, with necessary revenue or royalties sharing. While some attempts have been made in this regard, the common practice is that the government department claims ownership of all IPR and legally forbids the vendor to replicate the solution in other states/departments 9. Many projects across the states are almost identical. In such cases, a model RFP contract could be prepared at a Government of India level and the same RFP could be released in all the states. This has been a good practice, followed in the APDRP projects for the power sector. In SDC/SWAN projects, DIT has helped follow this practice to standardise the RFP process. However, bid evaluation process (QCBS, L1), contract terms and conditions, were varying from state-to-state 10. eGovernance projects are increasingly structured as turnkey, comprehensive outsourcing projects where one vendor or a consortium of vendors is given the responsibility for all tasks. This approach is convenient and helps the government deal with one prime vendor for all deliverables. However, it is seen to become an entry barrier for small and medium organisations and also new entrants. This approach is also restricting organisations who may be having only application development expertise and no capacity for large system integration, in entering the eGovernance domain 11. In projects that relate to large scale roll-out of hardware and COTs software, the OEM partner is not a part of a tripartite contract, to ensure timely support, warranties to government department and also the SI 12. In several government projects, the team assigned to the project by the department, may be associated with a IT project for the first time. Hence they may not be able to comprehensively define the requirements and solution feature set and design. This leads to continuous scope creep, change requests and delayed sign-offs 13. Projects are implemented as big bang approach rather than in a phased manner 4.5 Scope of work, specifications articulated in the RFP 1. There are many activities that only the government department can perform, but even many such responsibilities are given as scope of work of the vendor. Some examples could be obtaining space from another government agency, access to the database, application integration of another government agency 2. Equipment and COTS specifications are given in a manner, favouring certain vendors and are not relevant to a project which is turnkey services-based 3. In many cases, the government specifies the end-to-end turnkey services and service levels as well as specifies very detailed specifications of equipment. The operator is not given the freedom to determine the hardware, software platform selection and designed to achieve the end service goals 4. Given the overarching requirement of providing services to SLAs in BOOT projects, some specifications may be too detailed and redundant and escalating costs to government and investments by vendor a. The specifications are not defined generically allowing the SI to procure and deploy the equipment which best fits the requirement
  • 74. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study74 5. Service level agreements are not framed in a manner for activities/services over which the vendor has control. Specifying SLA of xx per cent uptime for bandwidth on the SWAN operator where such bandwidth is supplied by a telecom operator selected by the department has been a challenge in some SWAN projects. Tripartite contracts and SLAs are not followed 6. Incentives and bonuses to vendors for overachieving SLAs, timelines is usually not followed as a practice in eGovernance projects 7. Penalties are sometimes treated as a source of income to the government. This is a trend observed in projects procured by some state nodal agencies 8. The scope of warranty & maintenance is often nebulous and leading to potential disputes due to differing interpretations 9. Warranty extension clause contains details such as “Repaired or replaced materials shall be similarly guaranteed by the SELLER for a period of no less than 12 months from the date of replacement/ repair. Such extension of warranty can only be given for replaced material/hardware and this is also subject to the conditions put forth by the original equipment manufacturers 10. In case of many RFPs specifically SWAN, the scope of work also includes connectivity of remote offices, the number of which is not capped in some SWAN contracts 11. In some cases specifically in PPP projects, the government is reluctant to implement change management measures that can improve the project outcomes. This may also include not shutting down of alternative service delivery outlets 4.6 Payment model/business model 1. The payment terms in government projects discourage growing the ecosystem of service providers a. Payments in many cases are not milestone-based, and even when milestone-based, the payments are skewed towards the end (telescopic) b. The payment for the early milestones does not cover the complete cost of production leading to cash flow challenges for SMEs 2. Many projects increase the amount of investment by asking for heavy bank guarantees a. In IT infrastructure projects with deferred (QGR) payment model, the investment by the vendor in IT equipment, is not factored in security collateral 3. Escrow mechanism not being adopted in most projects 4.7 Pre-qualification Issues related to the framing of pre-qualification norms is an important issue for IT service providers specifically incumbent SME organisations and aspirant large organisations 1. Pre-qualification criteria not framed as per the work requirements, redundant pre-qualification criteria like CMMi level 5 for consultants or CMMi certification not relevant to a project like SWAN or SDC implementation a. Even small department level application development projects mandating CMMi level 5 b. A strategic mission mode project like UIDAI did not specify CMMi as a pre-qualification requirement, and UIDAI and also vendors believe that this has opened up the bid for more entrants
  • 75. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study75 2. Pre-qualification criteria drawn in a manner to restrict bidding to a select few 3. Pre-qualification criteria drawn up in a manner that favours large incumbent organisations 4. Pre-qualification criteria favours incumbents who have experience in government sector and discourages organisations that have relevant credentials in other sectors like banking, telecom in India, and now want to participate in eGovernance projects 5. Inconsistency in pre-qualification criteria across similar types of projects, or almost the same project across states. Additionally some projects pre-qualification criteria require net worth, in some profitability, in some case 3 or 5 years past revenues. Lack of standardised criteria tends to impact ‘Level playing field’ 6. For turnkey and outsourcing, BOOT projects while consortiums are allowed, cumulative turnover of all members is not considered. In several projects, the turnover, financial credentials are to be met by the prime bidder. This could be relaxed to allow small and medium bidders to become prime in certain projects 4.8 Contract document (terms and conditions/master service agreement) 1. Some contracts have terms like unlimited liability for vendors. Liabilities are not capped following the accepted norms. This increases risk assessment by vendors and ultimately costs to the government 2. Liquidated damages for delay are very high and not capped following the accepted norms 3. eGovernance contracts do not incorporate best practices from the World Bank standard bidding documents, tender documents of public sector organisations like Engineers India, ONGC, PSU banks 4. Termination for convenience by the customer even in projects where vendor has made investments is unfair and arbitrary. Exit management clauses do not provide adequate compensation clauses to the vendor 5. Rectification of Defects: Existing clauses of the nature “If the CONTRACTOR fails to rectify the defect even after the expiry of 15 days from the date, the defect was first reported, the CUSTOMER shall have the right to get the defect rectified by a third party without effecting the CONTRACTOR’S obligations for maintenance of the systems under this contract”. a. Vendor being given a more reasonable cure period and failure to rectify within the cure period leading to selection of an alternate vendor on mutually agreed prices based on fair market value is not followed 6. Several issues due to varying interpretations of IPR of a solution a. While all IPR generated during the engagement and for which the government has paid the vendor, should belong to the government, the IPR rights of assets used in the project, which belong to the vendor and have been developed by the vendor separately from the current engagement are also expected to be transferred to the government b. To ensure that the government interests are safeguarded, the vendor can be asked to grant a perpetual non-revocable user license to the government. Additionally, the source code of the said assets can be placed in escrow and certain defined events can trigger the release of the source code to the government
  • 76. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study76 7. Indemnity: Indemnity clauses are not well-defined in eGovernance projects. As several projects require country-wide roll-out, with vendor staff working on government premises, there is a need for well-defined indemnity clauses: a. Indemnity to vendors and liabilities for any injury/death that may be caused to vendor’s employee/sub-contractor, while rendering services on government’s premises or any premise identified by it, need to be defined 8. Warranty: While warranty terms are well-defined for COTS software, warranty terms for application software is ambiguous and subject to interpretations. While defects during the warranty period shall be rectified by the vendor, the vendor cannot not be liable for all defects or failure resulting from their reasonable reliance on government department instructions, specifications, design, inputs and material 9. In some eGovernance contracts, the client reserves the right to solicit vendor resources on termination. While transition obligation could be put on the vendor along with a detailed transition plan, resource solicitation is not a good practice since vendor resources may then be asked to join a competing organisation 10. Contract terms and conditions vary widely between similar projects 11. Exit management clauses for non-payment by government is not well-defined 12. Taxes are not treated as applicable and taken at actuals. In a long tenure project, this is risky and also unfair to vendors. Several ongoing SWAN projects have vendors faced with service tax escalating from 0 to more than 10 per cent 13. Right to termination for convenience is not mutual 14. Exit Management: If the project is terminated before schedule due to events attributable to the government, the vendor is not reimbursed for the effort spent on the project including services and non-services related procurement like hardware 15. Most favoured customer in the general conditions of the contract. Most favoured customer clauses are of the type “Prices charged by the SELLER for the preceding incidental services, shall not exceed the prevailing rates charged to other parties by the SELLER for similar services. The price charged for the materials supplied under the order by the supplier shall in no event exceed the lowest price at which the supplier or his/her agent/principal/dealer, as the case may be, sells the materials of identical description to any person/organisations including the purchaser or any department of the central government or any department of a state government or any statutory undertaking of the central or state government as the case may be, during the currency of the order”. A system integration services provider has no way to honour such clauses in a contract 16. Inspection of facilities, accounts and records and inspection of the CONTRACTOR: Clauses such as the following in contracts are very impractical: “if and when required by the Engineer-in-Charge or any other officer of the Client designated by the Engineer-in-Charge in this behalf, for examination, any cost or other book(s) of account and/or other records and documents in the possession of the CONTRACTOR or any sub-contractor or subsidiary or associated organisation of the CONTRACTOR or any sub-contractor, and/or copies of extracts thereof and/or other information or returns relative thereto (such returns to be verified in the manner prescribed by the Engineer-in-Charge or other officer aforesaid designated in this behalf) as may be required relative to the execution of the contract or for verifying or ascertaining the cost of any material, labour, service or item or thing
  • 77. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study77 whatsoever in connection with the contract, and the decision of the Engineer-in-charge or other officer designated in this behalf as the case may be, as to whether any book, record, document, information or return is relevant for any of the purpose aforesaid, shall be final and conclusive”. Inspection and audit shall be restricted to technical/project management records only. Vendor cannot be requested to provide employee confidential records such as compensation and other benefits, procurement terms including price thereon from the OEM, sub-contractor whom the vendor has placed an order on 17. ‘Events of default’ by the government are not defined. Vendor’s failure to perform its contractual responsibilities, services, or to meet the agreed service levels shall be excused if and to the extent Vendor’s non-performance is caused by the purchaser’s omission to act, delay, wrongful action, failure to provide inputs, or failure to perform its obligations under this agreement 4.9 Dispute resolution 1. Arbitration Clause: Arbitrators are not mutually decided as per Indian Arbitration Act. Arbitrator in case of dispute cannot be a Secretary, Principal Secretary to the same department as is normally the case a. Sometimes the same type of dispute with two different departments or vendors is resolved in different ways 4.10 Tender evaluation 1. Significant difference between L1 and L2 seems to be a pain point for both industry members and government departments. This requires an evaluation of base cost estimations and floor prices to discourage aggressive bidding and also unviable bids leading to poor quality execution 2. Post award vendor briefing is not followed a. Transparency of tender evaluation can be improved by communicating scores to all bidders 3. Evaluation criteria not in line with the industry staffing practices a. In many tenders, the government bids want the vendor to declare all project resources, that will be assigned to the project by name. Given current industry practices of just in time staffing of projects and utilisation, coupled with the uncertainty of timeframes in securing contracts, this is an expectation difficult to meet 4. “Available tender capacity” not considered while evaluating bidders, leading to some vendors being over leveraged in execution of eGovernance projects 5. Tenders not evaluated within specified bid schedules leading to repeated bid validity extensions 6. Certifications/experience certificates submitted by the organisations are not diligently verified and accepted on face value, leading to qualification of ineligible bidders 7. In case of techno commercial evaluation, combined Quality-cum-Cost-Basis-Evaluation (QCBS) there is a wide variation in determining the weightage for quality parameter and cost parameter. In some case, the weightage for the quality parameter is set at 50 per cent, in other case at 60 per cent and in other case at 70 per cent. A common standard could be evolved for different category of projects a. Particularly in QCBS evaluation, the evaluation criteria and objective scoring is not clearly defined in many bids
  • 78. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study78 8. Commercial bid of selected bidder, is not shared even with the rest of the bidders in some projects 9. Process of reverse auction, initially adopted for hardware procurement is also being adopted in procurement of complex solutions and services projects 4.11 PPP projects 1. Most PPP projects are first-of-a-kind project and it is difficult to anticipate revenues. Further they aredependentonanumberofupstreamactivitieslikecomputerisationofgovernmentdepartments. Given the risk of these projects, compensation in case the losses cross a minimum threshold is not provided. Risk mitigation measures, counter guarantees to reduce the investment risk of the bidders is not considered 2. To improve the present framing of PPP projects, a JV, SPV between the government and winning bidder is not being considered 3. Risks in PPP projects due to wide variance in estimate of likely services to be delivered through the project. To elaborate, in case of many citizen-centric projects, during the tendering stage, many services were yet to be delivered by the government departments and needed to be anticipated by the vendor. Given that the service cost is dependent on the numerator (expected investment which has a fixed and variable component) and denominator (expected number of services), thus the best price discovery may not happen as vendors may take a conservative view of the number of services. Or a service provider with aggressive estimations may win, leading to project unviability/ poor quality execution 4. PPP projects in eGovernance do not borrow best practices from infrastructure projects where the government assures minimum return on investment 5. PPP projects not designed in a manner to enable re-negotiation in cases of excessive or losses to vendor or profitability 4.12 Issues regarding consultants for eGovernance projects 1. Multiplicity of consultants involved in the project, one to prepare the DPR, another for bid management and RFP preparation, another for acceptance testing and third-party audit, and sometimes another for project management. This is more an issue in state level eGovernance projects. Given the multiplicity of evaluation consultants, each consultant interprets the RFP in a legalistic manner and does not consider field level implementation issues 2. Consultants are given unrealistic deadlines to write DPRs, ‘As-IS’, ‘To-Be’ and also RFPs not allowing them to do a comprehensive study. This leads to several challenges in bid and execution phases 3. Conflict of interest regarding role of consultants and implementing agencies. A vendor who is a consultant, is not allowed to bid as an implementing agency in the same project. However, it is observed that when many similar projects like SWAN or SDC are being tendered out, in many states in a short time span, there needs to be a revised guideline. There is a perception that a vendor being a consultant in one or more states, and bidding as an implementing vendor within a short time frame in other states, for the same project like SWAN, SDC, leads to a conflict of interest
  • 79. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study79 4.13 Third-party Audit (TPA) 1. The TPA is not aware of the context of the project, and not involved in the conceptualisation, bid and contract phases. Some TPAs are also not knowledgeable about e-Governance projects, and interpret the RFP in a very legalistic manner, not taking into consideration field constraints in requirements gathering, finalising feature design and site readiness issues 4.14 Process of pre-bid meeting/pre-bid clarification 1. The current model of pre-bid meetings do not allow for clarification of all issues of the vendor. Most pre-bid meetings are only of 2-3 hours duration and many times queries are not answered in a comprehensive manner, during the pre-bid meeting or in written responses. However, in several NeGP and SWAN, SDC projects elaborate pre-bid meetings are conducted and clarifications are issued 2. Pre-bid meetings announced in bid schedule are cancelled and new meetings are scheduled without much notice to vendors 4.15 Post tender process 1. Insomecases,thegovernmentdepartmenttriestonegotiatewiththeL1vendor.Inthisnegotiation, while the L1 vendor has quoted the lowest total cost but the department tries to make the L1 vendor agree to reducing the prices for those sub-components in its price bid where some other vendor may have quoted a lower rate. This practice is against L1 tendering norms 2. Clarity of guidelines in case only a sole bidder or paucity of bidders. The course of action in such a scenario varies. The guidelines for such situations are sometimes at a department’s discretion 3. Cancellation of the tender/withdrawal of tender takes place after the entire bid process 4.16 Bidding terms and conditions/bidding process 1. Earnest money for large projects being requested in the form of DD is a big constraint for small and medium organisations 2. In some projects, the timeframe between the date of release of pre-bid clarifications and the last date of submission of tender is even as less as 2-3 days 4.17 Post implementation 1. SeniorofficersaremoreengagedduringpreGo-Livephases.PostGo-Liveandcontinuousmonitoring is delegated to mid and junior officers. This ignores support and hand-holding needed from the department, in operations and replication phase. 4.18 Other issues 1. Inadequacies in compliance certification by OEMs, leads to non-compliance by SIs and delays in acceptance sign-offs and payments to SIs 2. OEMs submit compliance to specifications even in case where projects are marginally non-compliant,insuchcasetheSIbecomesresponsible,leadingtodelayinacceptanceconsequently delaying payment 3. OEMs do not work as a partner in PPP projects or extend credit terms thus increasing the financial risk to bidders
  • 80. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study80 Study of Global Public Procurement Practices – Canada/Singapore
  • 81. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study81 The study of IT procurement practices in Canada and Singapore was done through secondary research of publicly available information, and discussion with members from the IT industry, who have served in these governments in the past, or engaged with the governments in some other capacity. 5.1 Good practices in Singapore Government 5.1.1 Standard ICT operating environment project 5.1.1.1 Project description The objective of the ‘Standard ICT operating Environment’ project of the Singapore Government is to implement an agile Infocomm environment that promotes innovation and enhances productivity at work. The SOEasy will enable public officers to work together as one government and improve overall operationalefficiencyinthepublicsector.Emphasisingthisoutcome,MrLimHupSeng,deputysecretary (performance) of the MOF said, “SOEasy will allow more than 60,000 public officers to enjoy a robust, connected, innovative and agile infocomm environment.” SOEasy will consolidate Infocomm services into a single environment which will allow government agencies to achieve greater efficiency in Infocomm usage and cost savings. This involves harmonising desktop, messaging and network environments across all government agencies. Agencies can then fully utilise and benefit from integrated Infocomm services and allocate resources optimally resulting in operational efficiency that will bring about S$500 million cost savings to the government. This translates to an average of 28 per cent over current Infocomm expenditure for equivalent services. Individual public officers can also look forward to greater mobility at work, through use of mobile computing devices as they can seamlessly access government resources from anywhere and anytime. Additionally,publicofficerswhotransferfromonegovernmentagencytoanotherwillcontinuetoaccess government resources and their work data using the same set of tools and interface. 5.1.1.2 Scope of work of SOE Under the SOE initiative, agencies will procure SOE services from a pre-defined menu of bundled SOE services and each complete bundle is referred to as a SOE seat. Each SOE seat will differ in the combination of SOE services, such as: 1) Computing provisioning services – different hardware, software and IT peripherals 2) Support services – different service level requirements 3) Messaging and collaboration services – different email features and storage quota 4) Network services – different Wide Area Network and Local Area Network services 5) Computing lifecycle management service – different refresh periods In addition to the SOE seats, agencies will be given flexibility to customise their SOE seats by subscribing to add-ons, such as a larger screen size, higher performance computing devices, or higher service level. Study of Global Public Procurement Practices Canada/Singapore
  • 82. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study82 5.1.1.3 Key facts S No. Criteria Fact 1 Value S$ 1.3 billion 2 Date of Award February 28, 2008 3 To be implemented by 2010 4 Winners oneMeridian, a consortium led by EDS International. The other key members in the consortium include Alcatel-Lucent, Avanade, Cisco Systems, Frontline, Microsoft, Singapore Computer Systems and SingTel 5 Reason for selection Best value for money, technical fit 6 Other Bidders The other three qualified consortia from the pre-tender qualification stage were iN'spire led by HP, NexGenea led by NEC Solutions, and One Team led by NCS. 5.1.1.4 Tendering procedure With SOEasy being the biggest government Infocomm project in terms of scope, scale and value, a rigorous and thorough tender evaluation was conducted throughout the two-stage selective tendering process. The two-stage selective tendering consisted of a pre-tender qualification stage and tender cum qualification notice stage. In the pre-tender qualification stage, consortia were qualified based on financial strength; expertise and deployment track record; programme management; and technical competencies to deliver SOEasy. Subsequently, the qualified consortia were consulted on the draft SOEasy specifications to enable the Singapore Government to fully exploit emerging Infocomm technologies and leverage on industry best practices. In the tender cum qualification notice stage, companies that were not qualified during the pre-tender qualification stage were allowed to submit their bids for qualification. However, no new submissions were received. At the close of the tender cum qualification notice stage, four bids were submitted by the qualified consortia. All tender bids were evaluated on technical merits to ensure that technical evaluation was conducted without price influence. The bids were rigorously and carefully evaluated by a multi-agency evaluation committee comprising 53 members. 5.1.1.5 SOEasy implementation timeline SOEasy will be implemented in phases for a total of 74 government agencies, excluding the Ministry of Defence which has developed their own system, and Ministry of Education (Schools) which will be building a separate system. ThetenderwasearlierscheduledtobeawardedinOctober2007.Theevaluationtookmoretimegivenits complexity. The SOEasy will be fully implemented on schedule by 2010. Major SOEasy implementation milestones have remained unchanged. Some adjustments to the timeline have been made to take into account the delay in the tender award. In particular, the transition schedule of government agencies has been adjusted to even out the implementation workload. 5.1.1.6 Insights and learnings 1) The Singapore Government saw a need for a uniform computing environment comprising desktop environment,O/S,desktopsoftware,messagingsystem,networkingetc.andplannedtoimplement it across the government 2) However, two departments were left out of this
  • 83. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study83 a) TheMinistryofDefenceandtheSchools,implyingdepartmentsthathavespecialrequirements, were allowed to have their own solution 3) A standard environment helps in support and operations and is similar to practices followed in IT deployment in enterprises 4) Aggregating all desktop and messaging platform requirements into one bid, would have helped in significant discounts based on volume discounts 5) The tender evaluation was complex and due to this complexity there was a delay in announcing the successful winners. Originally, it was expected that the tender would be awarded by October 2007 but it was delayed by four months. But the delay appears to be small compared to the entire SOE project 5.1.2 Announcement of future business in public sector The Singapore Government announced in May 2009 that IT projects worth about S$ 1.73 billion would be tendered in FY09 ( April 1, 2009 – March 31, 2010) This announcement was made by RADM(NS) Ronnie Tay, Chief Executive Officer of the Infocomm Development Authority of Singapore (IDA) at the annual industry briefing on business opportunities for Infocomm in the public sector. This meeting was attended by more than 700 participants, and this annual briefing provides Infocomm businesses with an early indication of government procurement plans which allows them to be prepared to plan for and respond to government tenders. The details provided in the annual briefing were: 1) Inspite of the economic downturn, Singapore Government continued to invest in information technology, as it remains an important part of the government’s ability to deliver quality public service. In FY08, the government awarded a total of S$ 1.6 billion worth of Infocomm projects. Some of these projects included the Next Generation National Broadband Network (Next Gen NBN) NetCo by IDA, the provision of integrated IT support services for Defence Science and Technology Agency (DSTA), and contact centre services for the Ministry of Manpower (MOM) 2) The Singapore domestic IT industry has benefited from the government’s continual investment in IT and in FY08, local companies were awarded a total of 67 per cent of Infocomm contracts, while multi-national companies obtained 33 per cent. This trend has been consistent in the last four years 3) The Singapore Government works in a consultative manner and works with the industry to find new and innovative ways to use Infocomm technology to improve the delivery of government services, strengthen Infocomm infrastructure as well as encourage citizens and businesses to adopt an Infocomm-enabled lifestyle. “We look forward to more opportunities for partnership with industry, which serves to encourage sophisticated demand for Infocomm, spur the development of innovative services and knowledge capital and strengthen Singapore as an economic hub,” said RADM(NS) Tay 4) New Infocomm projects in FY09; In FY09, the government planned to invest about S$ 1.73 billion in more than 392 new Infocomm projects. Some of these projects were: a) Calls-for-collaboration issued by IDA, and these included an invitation to companies to form consortiaandintegratetheirkeyITsystems,businessprocessesanddatathroughtradeXchange
  • 84. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study84 so as to achieve greater business efficiency; the deployment of contactless point-of-sale terminals to promote ePayment adoption via Near Field Communication technology; and the development and deployment of mobile commerce applications, location-based services and innovative mobile services for the Digital Concierge programme b) Standard ICT Operating Environment for Schools (SOE Schools) by the Ministry of Education; The Ministry of Education (MOE) has completed consultations with schools and bidders of the pre-qualification exercise for the Standard ICT Operating Environment (SOE) for Schools, or SOE (Schools). SOE (Schools) aims to consolidate the provision and management of desktops, messaging and network environment, as well as ICT support for schools. It will provide an enhanced ICT infrastructure to support MOE’s third ICT Masterplan, mp3 c) TheContentandDocumentationManagement SystembyDSTA;onekeyInfocomminvestment that DSTA presented at the event was the next-generation Content and Documentation Management System. The project will review viable technical options and involve acquisition of hardware and software and engagement of professional services. Other projects include the implementation of an alternate disaster recovery site for several DSTA infocomm systems; a resource and competency management system for human capital; a system for streamlining approval workflows; a study to examine the migration implications of existing and future applications from Microsoft Windows XP to Windows 7; and wireless infrastructure enhancement d) The two key projects which MHA plans to implement are BorderWatch System for Immigration and Checkpoints Authority (ICA) i) The BorderWatch System is an intelligence management system that enhances ICA’s data mining, data analysis and targeting capabilities, and provides real-time information support to checkpoints and: ii) Fire Safety Online Processing System II (FISOPS II) for the Singapore Civil Defence Force (SCDF). FISOPS II is a key SCDF system for the processing of all fire safety and shelter related matters, with new capabilities to process on-line 3D building plan submissions from the Building Control Authority (BCA) on-line portal e) MINDEF ( Ministry of Defence) presented a few key projects which will enhance its operational efficiencyanddefencemanagementcapabilities.BesidestheSAF’sAutomatedFuelDispensing System, which aims to enhance its vehicle fuel dispensing needs through Radio Frequency Identification (RFID) technology, its Knowledge Management System (KMS) seeks to deliver and build a more user-centric knowledge-sharing environment within MINDEF. Supporting the KMS are initiatives such as the content digitisation project, which digitises content for easy archival and accessibility, and the enterprise digital rights management project, which allows for better control over the security of digitised content f) Ministry of Manpower, plans to call a tender for IT infrastructure and application systems outsourcing later in 2009, to provide comprehensive maintenance and support services for MOM’s IT infrastructure and application systems. The project also includes plans to migrate and redesign the MOM website, which includes the provision of hosting, maintenance and support services 5.1.3 Conclusion and learnings The briefing to industry on upcoming public sector projects is an annual affair attended by about 700 industry professionals. It is fairly detailed in scope and talks about the initiatives to be implemented
  • 85. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study85 by various government departments. Industry briefings of this nature at a state level provides an opportunity for all vendors, including SMEs to understand government’s IT procurement plans, and projects expected in the coming year. 5.2 Good practices in Canadian Government 5.2.1 Office of the Procurement Ombudsman of Government of Canada 5.2.2 Key facts about the office of Procurement Ombudsman 1) Canada has established a Legislative Ombudsman as part of the Federal Accountability Act. 2) The mandate of the Procurement Ombudsman is as following a) Review procurement practices across government on an ongoing basis to ensure fairness and transparency b) Make recommendations for improvements to the relevant department c) Review complaints from potential suppliers after contract award with respect to procurements of goods and services of certain pre-determined dollar value d) Review complaints with respect to the administration of contracts; for the acquisition of materiel or services by a department e) Ensure that an alternative dispute resolution process is provided 3) The Procurement Ombudsman reports to the Minister of Public Works and Government Services Canada and submits an annual report to the minister for tabling in parliament 4) Procurement Ombudsman to operate at arms length from the departments 5) Procurement Ombudsman is not an auditor. While it can investigate issues, its recommendations are not binding on departments 6) Current Procurement Ombudsman is a government servant with several years of experience in the audit department of the government of Canada 7) The current procurement ombudsman views the goals of the organisation as; a) Creating an atmosphere of trust and cooperation between stakeholders b) Have a proactive approach and not only guided by complaints and merely focus on transactional aspects of public procurement c) Focus on outreach and communication activities with both suppliers and government departments d) Collaborate with the other organisations that are also working to improve the system e) To identify areas for improvement, to assess them carefully in collaboration with the supplier and government communities f) Identify effective practices and seek to develop workable and affordable improvements that can be implemented to the benefit of all stakeholders 8) The current procurement ombudsman has defined the above objectives based on his understanding of the issues of the stakeholders relating to public procurement. Many suppliers view government procurement process as too cumbersome and have given up bidding for government tenders. Further, government departments feel that there are simply too many rules to follow, and overemphasis on compliance with the rules takes precedence over achieving real results
  • 86. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study86 5.2.3 Introduction An Ombudsman typically is an independent, objective investigator of people’s complaints against government and/or private sector organisations. After a fair and thorough review, the Ombudsman decides if the complaint is valid and makes recommendations in order to resolve the problem. The two most common kinds of Ombudsman are: • Legislative (or Classical) Ombudsman who are established by statute, and who can report findings and recommendations to the government or to the parliament • Executive Ombudsman report only to the head of the organisation whom they investigate, such as government departments, universities/colleges or even private businesses In Canada, as part of the Federal Accountability Act and action plan, the federal government established thepositionofProcurementOmbudsman,hencetheProcurementOmbudsmaninCanadaisalegislative Ombudsman. The Procurement Ombudsman will help to ensure that the government’s procurement practices are fair and transparent. The Procurement Ombudsman reports to the Minister of Public Works and Government Services, Canada, and will submit an annual report to the minister for tabling in parliament. It is important to note that the Procurement Ombudsman is designed to operate at arms length from the departments who are subject to this review. A memorandum of understanding signed by the Deputy Minister of Public Works and Government Services, Canada, and the Procurement Ombudsman identifies their specific roles and responsibilities, thus ensuring the independence needed by the office to carry out its operations. 5.2.4 Regulatory framework for public procurement in Canada Public Procurement in Canada is regulated by 15 acts of the government and over 35 different policies. There exists many key players, with various roles and responsibilities – including treasury board, operating and programme departments, the department of justice, and public works and government services Canada as a common service organisation for contracting. The ultimate accountability for ensuring the integrity of the procurement process however rests with the deputy heads of departments and agencies. 5.2.5 Mandate of the office of Procurement Ombudsman The mandate of the Procurement Ombudsman is to: • Review procurement practices across government on an ongoing basis to ensure fairness and transparency • Make recommendations for improvements to the relevant department • Review complaints from potential suppliers after contract award with respect to procurements of goods and services that are covered by the Agreement on Internal Trade (AIT) but which are below the monetary thresholds of that agreement (S$ 25,000 goods and S$ 100,000 for services) • Review complaints with respect to the administration of contracts; for the acquisition of material or services by a department, regardless of dollar value • Ensure that an alternative dispute resolution process is provided, if both parties agree to participate
  • 87. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study87 5.2.6 Operational plan for Procurement Ombudsman The Office of the Procurement Ombudsman will operate in the following manner: • It will review complaints from suppliers with the objective of solving them quickly and efficiently. This should result in immediate relief to the supplier. When dealing with complaints about contract award or contract administration, the Procurement Ombudsman will provide each party to the dispute with a report on his findings • For recurring issues, the office may look further to see if this is a systemic issue across the government. If so, this may result in the office undertaking a review of procurement practices in departments and agencies and making recommendations for the improvement of those practices. It is expected that the implementation of the recommendations, which will be followed up by the office of the Procurement Ombudsman, will result in improved fairness, openness and transparency in the procurement process • The office also reports on best practices identified in the government and other jurisdictions in order for the procurement community to benefit from lessons learned • The Procurement Ombudsman will also carry out reviews of procurement practices by the various departments Finally,theProcurementOmbudsmanwillproduceanannualreportinwhichhewillreportonallactivities carried out by his office during the year. The Minister of Public Works and Government Services, Canada, will table this report in parliament. 5.2.7 Profile of the current Procurement Ombudsman The current Procurement Ombudsman is Mr Shahid Minto, an officer from the office of the auditor general with over 28 years of work experience in conducting national audits. Immediately previous to this role he worked as the first chief risk officer in a federal department mandated to ensure that all of the operations of public works and government services, Canada were carried out in a fair and transparent manner. 5.2.8 Analysis of the mandate of the office of Procurement Ombudsman It needs to be clarified that the office of Procurement Ombudsman is not that of an auditor, required to focus on identifying and reporting on deficiencies. Additionally, it is also not a tribunal or court dealing with points of law and regulations and will seek to apportion responsibility. The formal power of an Ombudsman rests officially in the authority to investigate complaints of wrong doing and review the practices of government institutions. At the same time, Ombudsmen, having arrived at conclusions and apparent solutions to problems, can only make recommendations but will not have the authority to make or enforce specific changes and improvements. While not having powers of enforcement may be construed as a disadvantage, it is an advantage as it enables the Ombudsman to facilitate and assist communications between parties with issues to resolve, and to help the parties find solutions to problems and thus results will be achieved not by the application of mandatory enforcement, but through the power of persuasion. As per the Procurement Ombudsman Mr Shahid Minto, “The goal of this office is to use that power of persuasion to contribute to an ongoing process of change, so that all Canadians have confidence in
  • 88. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study88 the federal procurement system. For us to succeed, we must work cooperatively with all stakeholders in the procurement environment. We must be seen by all concerned as credible independent agents of change. Professional in our approach and well-informed on procurement issues, we must show in every aspect of our work that we are strictly neutral – neither lobbyists for suppliers nor apologists for government. When we make recommendations, whether transactional or on a more systemic basis, it must be evident that we are proposing reasonable, well thought-out, doable and affordable solutions.” The current Procurement Ombudsman’s view is that of creating an atmosphere of trust and a positive environment that will lead to an increased likelihood that the recommendations of the Ombudsman will be broadly accepted. The Procurement Ombudsman’s view is that the office needs to be proactive and should not be guided only by the complaints they receive, as if people see the Ombudsman to be dealing only with limited transactional problems, there will be an inevitable reluctance to become involved as time progresses. The Procurement Ombudsman of Canada has placed major emphasis on outreach communications, speaking in particular with suppliers and public servants across the country. In these meetings, the communication has been that the Ombudsman is here to make things better through a spirit of consensus and cooperation. ThisapproachoftheOmbudsmanofgivingimportancetoworkingonproactivemeasuresandimproving public procurement practice through a spirit of consensus and cooperation and its various outreach activities spreading its message has given an opportunity to the various stakeholders to share with the Ombudsman what the real problems and issues are. As per the Ombudsman, following are broadly the issues of the suppliers and government 5.2.9 Common issues faced by suppliers The Ombudsman received feedback that suppliers face the following issues related to bidding for government contracts and thereafter executing government contracts. • Suppliers have doubts about the contract award process: they are not certain that when the government has published its decision-making criteria and process for a specific procurement, those criteria will be applied in a consistent and fair manner, and that the government will in fact make the contract award based solely on those criteria • Part of that distrust of suppliers may come from the inconsistent way in which the government debriefs unsuccessful bidders. Those bidders often cannot find out, in terms that will be useful to them, why they did not win a contract • Most suppliers feel that the government takes too long to pay its bills: slow payment can dissuade otherwise-competent suppliers from seeking government contracts • Standing offers ( Rate Contracts) are a significant concern, as many suppliers not included in rate contracts see that these standing offers reduce supplier access to government business • Communications between suppliers and government authorities are inadequate and the right information is not being exchanged at the right time • Generally, suppliers have difficulty in finding relevant information on how to do business with the government
  • 89. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study89 5.2.10 Common issues faced by government entities regarding public procurement Government authorities have an equally wide range of issues: • Lack of capacity in the domain of procurement, there are not enough properly trained people to do the job • Many government servants see the required processes as being excessively time consuming and leaving little room for professional judgment or innovation. Further, government servants feel that there are too many rules to follow, and over emphasis on compliance with the rules takes precedence over achieving real results • There is no consistency in implementation of government rules from organisation to organisation, even within individual departments • The efforts to streamline procurement processes through the introduction of automated working tools adds to complexity 5.2.11 Goals of the office of Procurement Ombudsman Given that procurement is not an objective in itself but rather, is a mean through which the government can achieve its policy objectives, and departments can achieve their operational objectives of delivering services to citizens. The very nature of the procurement process is to be helpful and supportive. When the procurement process works well, programmes achieve what they were designed to achieve and are delivered on time and within budget because the government is working with the best possible suppliers. The Procurement Ombudsman, will aim to help strengthen the trust and confidence of all citizens in federal procurement. To achieve this objective, the Ombudsman will collaborate with the other organisations in the federal government that are also working to improve the system, to identify areas for improvement, to assess them carefully in collaboration with the supplier and government communities, identify effective practices and seek to develop workable and affordable improvements that can be implemented to the benefit of all stakeholders. 5.2.12 Insights and learnings • Office of procurement Ombudsman provides an Alternative Dispute Resolution (ADR), to resolve disputes as a neutral third party, and minimises lengthy and costly litigation in the courts • The office also reports on best practices identified in the government and other jurisdictions in order for the procurement community to benefit from lessons learned • Either the supplier or the government department (buyer) can make a complaint. Once a complaint is received and they are able to investigate, the course of action is informed within ten working days. Once the review is complete, a report is submitted with findings and recommendations • Proactive approach and outreach by Ombudsman office to both government and supplier community
  • 90. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study90 Study of IT Management in a PSU Bank
  • 91. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study91 As part of the study methodology, it was considered important, to understand the IT department and its practices in deploying and managing IT in a PSU Bank. Canara Bank was selected for the same, and the information was obtained through discussions with the IT team. The information technology function of Canara Bank is currently headed by an officer of the deputy general manager rank in the organisation. Mr B Shandilya is from the general management pool of the bank but has been in the IT wing of the bank, for about nine years now. The IT department of the bank has about 200 employees managing different projects. This is in addition to the support staff provided by the various vendors implementing the projects. For instance, their core banking solution provider has provided a team of 30 members to support core banking services. Key highlights of NASSCOM’s discussion with Canara Bank team and Mr Shandilya: 1. Canara Bank like all banks recruits specialists for the IT wing but the leadership functions of the IT wing is headed by officers from the general management pool 2. The specialist IT cadre officers are mainly in the networking wing or responsible for specialist technical functions like database management 3. The IT procurement for the bank reports to DGM IT, and is composed of a team of six officers of which, two of them are of senior manager cadre 4. The officers in the IT procurement wing are also from the general management cadre and not from the specialist IT cadre 5. It was observed that the specialist IT cadre was not much interested in general technology management functions, but were interested in staying in pure technology domain like networking, programming 6. The bank strictly follows the CVC guidelines and the bank’s own procurement manual for procurement of IT goods 7. The only place the bank deviates from the CVC guidelines is in negotiating with L1 vendor. This is a directive from the bank’s senior management and is a common practice for all banks. The bank also negotiates with L1 to ensure that individual components in the bid are at the best price, and usually L1 is requested to match L2 prices if found lower for subcomponents. The bank observed that this approach was acceptable to their vendors. NASSCOM team has not studied the bank’s vendors perspective on the same 8. The bank publishes all tenders on its website including limited tenders (tenders issued only to empanelled vendors) 9. The bank also publishes all awards of contracts above INR 20 lakh on its website 10. Even for complex IT solutions, the bank does not follow combined Quality Cum Cost Basis Selection (QCBS). It evaluates bids in three stages, pre-qualification, technical bid and evaluation of commercial bids of all technically qualified bidders 11. The bank procurement staff have trained themselves on the procurement manual in a self-learning mode or through on-the-job training. However, recently they held a programme on CVC guidelines for all IT procurement teams for all banks. The CVC team from Delhi briefed the banks on good procurement practices Study of IT Management in a PSU Bank
  • 92. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study92 12. The bank has a system of empanelment of vendors for common items like PCs, system software. The empanelment is an annual exercise and limited tenders are called from the empanelled vendors 13. For non-standard requirement and first time procurement of an equipment, they go for open tenders 14. The bank does not go for DGS&D rate contract purchases for IT 15. The bank IT staff undertake skills development through the following ways: a. Interaction with other IT heads of banks in various meetings organised by Indian Banks Association, IDRBT, Reserve Bank b. Seminars organised by technology vendors c. Vendor presentations on upcoming technologies, developments d. Formal open house sessions with vendors on new projects like financial inclusion, eProcurement 16. The process of procurement of a new solution is as following: a. User departments gives IT team, their requirements b. The IT department discusses with different vendors on the required solution c. The IT department and the user department jointly prepare the RFP. Inputs of the vendors are also taken during formalising the equipment/solution specifications d. The IT department has a committee of senior officers who review the RFP e. The RFP is then submitted for approval to DGM IT f. In case of a high value requirement, the RFP is also submitted to an advisory committee of General Managers of the bank. In such cases, professors from IISc are also invited to the committee 17. A review of a new tender for solution development related to card reconciliation software solution showed that the contract is simple in nature and issue of limitation of liability is treated in the following manner: a. Unlimited liability for IPR violation b. In all other cases, liability capped to the value of the solution. 18. The main issue which the bank faces with vendors relates to administering change requests. They agreed that it was a difficult aspect and there was no science in evaluating change requests and due care and diligence needs be undertaken, while scrutinising change requests of vendors. The IT department submits its recommendation to the management, who finally takes a decision on the matter. The DGM, however, stated that there should be attitude of partnership with the vendor and taking a very legalistic attitude will lead to the project suffering. 19. The bank does not have an eProcurement platform and is evaluating various solutions for implementation. 20. Core Banking System (CBS) implementation: a. The Bank finalised the RFP internally for the core banking system b. The functional requirements were prepared by a group of senior bank employees. This group put in long hours over a six month period to prepare the RFP for the CBS
  • 93. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study93 c. IBM was appointed as the turnkey solution provider for implementation of CBS. The CBS platform selected was Flexcube d. The CBS programme implementation group is the largest group in the IT department. It has approximately about 70 employees in addition to about 30 staff provided by the CBS solution provider, IBM. L0 and L1 support is provided by bank staff and L2 support is provided by IBM. The CBS group is headed by a person of Chief Manager rank e. Bank has implemented a datacentre and DR centre, the location of which is confidential. Bank staff have access only to the relevant transaction data f. The deliverables of their CBS provider, is audited by an independent third-party auditor g. A review of the CBS RFP, did not reveal clauses related to unlimited liability for vendor even for specific deficiencies of the vendor 6.1.1 Key learnings for government in managing IT 1. The bank is self sufficient with experienced staff, handling both the management of IT as well as IT procurement 2. Surprisingly the specialist IT cardre of the bank, is not playing an important role in management of IT projects of the bank 3. The bank has a structured process and skilled resources for a. Development of IT projects b. Tendering of IT projects c. Management of IT projects 4. An advantage that banks have over government departments is that the computerisation of the functions of bank is a mature domain. The process of computerisation began in 1985 with banks taking up computerisation in stages. Further, they have a large peer group in both private and public sector from whom, learning can take place. The financial services and banking sector is a large sector for all technology organisations and given the huge size of market, organisations have developed proven off the shelf solutions for this vertical, thus reducing the implementation risk 5. Specialist institutions like Institute for Development and Research in Banking Technology (IDRBT) provide much needed technology advisory and support to the banks
  • 94. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study94 Summary, Recommendations
  • 95. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study95 Based on the feedback from the government officers and industry, and NASSCOM team’s research, the following best practices are suggested: Overarching enablers and recommendations 1) A dashboard of all eGovernance projects in the country, both upcoming and ongoing, and their status during conceptualisation, bid, implementation and post implementation phases. A central dashboard in the public domain, will help bring attention to projects going into red, at the highest level, in both government and industry. This will also facilitate information sharing on all projects in the country 2) Model documents for RFPs, contract, services agreement for various type of IT projects a. Software application project involving bespoke development b. Turnkey projects incorporating application development, installation of hardware, software, operation and maintenance, support c. Infrastructure projects like SWAN / SDC, secretariat networks d. Public-private partnership, BOOT projects 3. Werecommendthatthemodeldocumentsarepreparedbyajointgovernment-consultants-industry team (including representatives from banking sector, IDRBT) a. Review by a joint government-consultants-industry panel including DIT, department of expenditure • Customise these for state projects, and drive standardisation 4. Growing the ecosystem of service providers a. Revisit eligibility criteria norms for different category of projects, including CMM level b. Guidelines for financial credential norms based on category of project, size and business model c. Publish guidelines on various certifications and their applicability for different kinds of IT projects d. Measures to increase participation by small and medium players in eGovernance • Enablers to support their direct and indirect participation • Consortiums and subcontracting clauses • NASSCOM to replicate the EMERGE Forum success for eGovernance e. Evolve a framework for enlisting and developing small partners to grow the ecosystem and footprint, to support eGovernance in all districts • Joint efforts led by industry with support from state nodal agencies 5. Streamlining contracts and execution phase a. Contracts should incorporate ‘conditions of precedent’ and obligations of government departments and agencies b. SLAs and ‘events of default’ to be defined for both vendor and government departments and agencies Summary, Recommendations
  • 96. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study96 c. Incorporate applicable best practices of infrastructure concessionaire agreements and model documents, published by the planning commission for infrastructure sector, into eGovernance PPP Projects, with necessary customisation 6. Toolkits for PPP, BOOT projects and business model options, to guide departments on the right choice 7. Similar to pre-bid meetings, standardise on suppliers debriefing, post project award, and publish all award details on the dashboard 8. Project governance structure a. Publish a governance model for different category of projects b. Government project team resourcing and skills profile across lifecycle stages c. Consult enterprise CIOs, industry and banking PSUs in finalising this 9. Dispute resolution and arbitration guidelines a. Create panel of retired officers from government and academia, knowledgeable with IT projects execution b. Evaluate alternative dispute resolution mechanism on lines of Procurement Ombudsman of Canada 10. Centralised digital repository of all information assets on a secure government network • RFPS, pre-bid queries, bid amendments, contracts, MSAs • Project reviews, audit reports, impact assessment reports • Vendor defaults/force majeure situations and action taken Industry actionables 11. eGovernance functional/domain skills ramp-up for delivery teams 12. Sensitisation of industry leadership on failed projects due to unviable bids, vendor defaults, project termination, litigation and their impact on government a. Help drive rigour into bid review process, of their sales teams 13. NASSCOM to build a repository on eGovReach portal of a. Success stories, case studies in eGovernance b. Leanings from failed projects We request department of IT, to review the study and its findings, jointly with the states, and initiate the next steps in working towards actioning and resolving some of them. The study report and its findings and recommendations, we hope will initiate a deeper dialogue between government and industry, to address the current challenges and help the country realise its eGovernance vision, through partnership with the IT industry.
  • 97. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study97 Annexures
  • 98. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study98 1. Weblinks for procurement project 1.1 Government of India a. Department of Expenditure, Ministry of Finance http://finmin.nic.in/the_ministry/dept_expenditure/index.html b. Website of PPP in India http://www.pppinindia.com c. Various RFP’s guidelines etc. regarding PPP projects http://www.pppinindia.com/guidelines-forms.php#5 d. Secretariat of infrastructure planning commission http://infrastructure.gov.in/ e. Central Vigilance Commission http://www.cvc.nic.in/ 1.2 World Bank/ADB/multilateral agencies a. World Bank procurement guidelines page http://go.worldbank.org/1KKD1KNT40 b. Below is the document on guidelines procurement under IBRD loans and IDA credits http://siteresources.worldbank.org/INTPROCUREMENT/Resources/ProcGuid-10-06-ev1.doc c. The ADB procurement guidelines link http://www.adb.org/documents/guidelines/procurement/default.asp d. World Bank repository of all bidding documents http://go.worldbank.org/Q28TJSP5F0 1.3 International best practices a. Singapore i. Singapore S$ 1.3 billion standard ICT operating environment tender awarded to oneMeridian http://www.ida.gov.sg/News%20and%20Events/20080228151049.aspx?getPagetype=20 ii. Singapore Government announces plans for IT industry http://www.dsta.gov.sg/index.php?option=com_content&task=view&id=7074&Itemid=401 iii. Singapore Government agency responsible for IT for the Ministry of Defence http://www.dsta.gov.sg iv. Singapore Government eGovernment portal http://www.igov.gov.sg/ v. Singapore Government eProcurement page http://www.gebiz.gov.sg/ Annexures
  • 99. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study99 b. Canada i. Government of Canada National Portal http://canada.gc.ca/home.html ii. Office of CIO http://www.tbs-sct.gc.ca/cio-dpi/index-eng.asp iii. Public Works and Government Services Department http://www.tpsgc-pwgsc.gc.ca/comm/index-eng.html iv. Information Technology Services http://www.tpsgc-pwgsc.gc.ca/apropos-about/fi-fs/its-sct-eng.html v. Office of Procurement Ombudsman http://opo-boa.gc.ca/index-eng.html vi. http://www.collectionscanada.gc.ca/webarchives/20071125180244/http://www.tbs-sct. gc.ca/btep-pto/index_e.asp c. United Kingdom i. UK Government National Portal http://www.direct.gov.uk/en/index.htm ii. The Office of Government Commerce (OGC) is an independent office of HM treasury, established to help government deliver best value from its spending http://www.ogc.gov.uk/index.asp iii. UK Government (OGC) guidance for ICT contracts (needs prior registration) http://www.partnershipsuk.org.uk/ICTguidanceWelcome.aspx iv. UK Government ICT strategy page http://www.cabinetoffice.gov.uk/cio/ict.aspx v. UK Government IT professionals external page http://www.civilservice.gov.uk/my-civil-service/networks/professional/it/index.aspx d. US Government procurement websites i. National association of state procurement officials – briefs/surveys and whitepapers http://www.naspo.org/content.cfm/id/briefs_and_whitepapers Note: Several other department sites were referenced to review publicly available RFP documents, and pre-bid clarification, bid amendments
  • 100. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study100 S No. Question Response 1 Name of the organisation 2 Value of eGovernance business in the past three years INR crore Contracts secured (TCV) Turnover / billing 2007-08 2008-09 2009-10 (approx) 4 Details of eGovernance projects secured by the organisation in the past five years (list maximum of five) S No. Name of the project Bid value Business model (full payment/ QGR/BOOT/ BOO/PPP etc. Services provided 5 Name of the respondent, designation, contact details 6 List of five projects bid for in the past two years and reasons for non securing the project. (The organisation should meet pre-qualification criteria for the project) S No. Name of the project Reason for not winning the project Winner of the project 7 List of five Projects that organisation did not bid for in the past two years and reason for not bidding. (The organisation should meet pre- qualification criteria for the project) S No. Name of the project Reason for not bidding for the project Winner of the project 8 List of specific suggestions regarding a few RFP’s that have come in the past two years. Please provide suggestions only regarding high value ( Value > than five crores) eGovernance projects, preferably NeGP MMP’s S No. Name of the RFP Section of the RFP Specific suggestion Project being executed by 9 Any issues that have come up in execution of eGovernance projects and suggestions for resolution of the same S No. Name of the project Details of the project Issue Suggestion for resolution 10 Any project for which organisation has been awarded the LOI or was competitive but did not sign the contract including reasons for not signing the contract Or Any project that the organisation has exited prior to completion of the project term Or Any project that is under any dispute with the government department 2 Questionnaires 2.1 Questionnaire for IT services organisations Note – In case responses or part of requirements to Questions 2 and 3 of Section 1 and Questions 1 and 2 of Section 2 are considered confidential, the organisation may mark NA as response to these questions
  • 101. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study101 2.1.2 International eGovernance experience 2.2 Questionnaire for OEM organisations Note – In case responses or part of requirements to questions 2 and 3 of Section 1 and questions 1 and 2 of Section 2 violate confidentiality requirements, the organisation may mark blank or NA as response to these questions 2.2.1 Domestic eGovernance business S No. Question Answer 1 Value of international eGovernance business in the past three years INR crore Sales turnover 2007-08 2008-09 2009-10 (approx) 2 Details of international eGovernance projects secured by the organisation in the past five years (list maximum of five) with sale value 3 Name of the respondent if different from the respondent in Section 1 4 List some of the international best practices as articulated in RFP’s, contracts, best practices in implementation that you would like to be implemented in India S No. Details of the RFP Name of vendor executing the project Section of RFP / contract Specific suggestion to be replicated in Indian eGovernance projects S No. Question Answer 1 Name of the organisation 2 Value of sales to eGovernance projects in the past three years INR crore Sales turnover 2007-08 2008-09 2009-10 (approx) 3 Details of eGovernance projects secured by the organisation in the past five years (list maximum of five) with value 4 Name and designation of the respondent 5 List of specific suggestions regarding a few RFP’s that have come in the past two years S No. Name of the RFP Name of vendor executing the project Section of RFP Specific suggestion
  • 102. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study102 2.2.2 International eGovernance experience S No. Question Answer 1 Value of international eGovernance business in the past three years INR crore Sales turnover 2007-08 2008-09 2009-10 (approx) 2 Details of international eGovernance projects secured by the organisation in the past five years (list maximum of five) with sale value 3 Name of the respondent if different from the respondent in Section 1 4 List some of the international best practices as articulated in RFP’s/contracts that you would like implemented in India S No. Details of the RFP Name of vendor executing the project Section of RFP Specific suggestion to be replicated in Indian eGovernance projects S No. Name of the project Name of department Brief scope of work (25 words) Date of release of tender Date of appointment of vendor Name of vendor or name of prime bidder in case of consortium Project term Name of government officer responsible for project implementation Date of appointment of vendor Name of vendor or name of prime bidder in case of consortium Project term Name of government officer responsible for project implementation Value of project 2.3 Questionnaire for state IT departments 1. List of eGovernance projects of the state government The department should only list those projects that have been tendered to private sector
  • 103. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study103 2. List of issues regarding the outsourcing of eGovernance projects that are under implementation or have been implemented in the past and suggestions for resolving the issue: a. During the bidding stage Discussion points with state governments and central ministries 1. What in your view are the top three issues related to procurement of IT services by the government from the government perspective, consultants perspective and the perspective of the private vendors. Your recommendations on how these issues can be addressed 2. One of the issues faced by vendors has been of inconsistency of pre-qualification criteria for projects. Same type of projects across government departments and some time even within the same state, have different pre-qualification criteria. Any resolution to this issue 3. Most contracts either that were earlier prepared by NISG or other consultancy organisations are pretty comprehensive. However, post contract award, only a small proportion of government officers administering the contracts are able to implement the contract SLAs and understand the intricacies of the various provisions of the contract. What can be done to mitigate this issue of project governance and vendor management 4. In very few cases of eGovernance projects there exists a mechanism to consult with industry prior to public release of tender. In many cases RFP’s are released and thereafter vendors point out various issues in the RFP. In such case either the tender process is delayed or vendors remain aggrieved regarding the RFP. Your views regarding institutionalisation of a process of vendor consultation prior to release of RFP 5. Some private vendors implementing eGovernance projects may be unhappy that despite their fulfilling deliverables related to the project, payments may be delayed due to various reasons. Your suggestions on how deliverables, milestones can be objectively established, leading to less discretion on this subject b. List of specific suggestions regarding eGovernance projects that are under implementation c. List of specific suggestions regarding eGovernance projects post implementation/Go-Live stage S No. Name of RFP/ project Issue regarding tendering process Specific suggestion S No. Name of project Name of vendor executing the project Issue related to project implementation Specific suggestion S No. Name of project Name of vendor executing the project Issue related to project Post Go–Live stage Specific suggestion
  • 104. eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study104 6. Your suggestions relating to project governance of projects to enable government department, retaining strategic control of the project 7. What in your view would be the criteria under which you would opt for a business model that would be a PPP model or a deferred payment (e.g. quarterly guaranteed payment model for SWAN) or a outright payment model based on deliverables 8. HowcangovernmentensurefinancialviabilityofPPPprojectstovendor,andincorporateappropriate risk-rewards 9. What in your opinion is appropriate institutional framework for dispute resolution, arbitration in large eGovernance projects in both bid, contract process and project governance. This is to minimise scope for litigation, and amicable resolution of disputes 10. In your opinion what are the specific challenges in eGovernance projects from a government perspective, and areas for improvement needed from industry
  • 105. International Youth Centre Teen Murti Marg, Chanakyapuri New Delhi 110 021, India T 91 11 2301 0199 F 91 11 2301 5452 egovreach@nasscom.in www.nasscom.in