Procurement Reforms in GoAP

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• Procurement Reforms in GoAP
• by
• Sathish Chandra, IAS,
• Secretary, ICAD (Projects)

• Irrigation Command Area Development Dept
  Government of Andhra Pradesh

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Agenda

• Irrigation Sector outlays in GoAP
• About EPC Contracts
• eProcurement outcome
• Auto Bid Evaluation
• Reforms/ BPR in Procurement
• Future Road Map
• Learnings

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Out lays in Irrigation Sector in GoAP

• Major Irrigation Prioritized Projects
• Minor Irrigation Prioritized Projects
• Targetted to complete by 2008

Number of Projects Estimated Cost Irrigation potential (Acres) Irrigation potential (Acres) Power Generation (MW) Number of districts benefited
Number of Projects Estimated Cost New Stabilization Power Generation (MW) Number of districts benefited
30 US 12,305 Million INR 55,374 Cr. 6,797,136 2,132,459 1,410 17
Number of Projects Estimated Cost Irrigation potential (Acres) Number of districts benefited
17 USD 394 Million INR 1,774 Cr. 258,561 7
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Type of contracts

• Engineering Procurement Construction (EPC)
• Expeditious delivery
• Single agency approach
• Offshore Construction Majors
• Competition brings best of Engineering
• Contractor responsible for delivery
• Improved quality
• Mile stone based payments
• Turn key contracts
• 180 EPC contracts of value Rs 20,000 Cr finalised
  through eProcurement
• Two cover system

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eProcurement outcome in Irrigation Dept

• Irrigation Dept selected for Pilot in 2003
• eProcurement mode - A grand success
• 100 eProcurement above Rs 10 Lakhs threshold
• Contributed to 80 value and 20 to Numbers
• Major advantage Remote submission of Bids
• Provided a level playing platform Equal
  Opportunity
• Created favorable environment for new suppliers
• Bidder participation increased ( 4.75 to 6.5)
• Yielded Significant Cost Savings to Department(
• Tender cycle time reduced (from 120 to 36 days)
• Transparency protects the interest of Bidders

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Stakeholders Reaction

• Satisfied Stakeholders, but high expectations
  from the System
• Present system Automated processes but linkages
  to databases is yet to happen
• Technical Evaluation Veracity of support
  documents is still manual
• Grey areas Subjectivity in evaluation persists
• Dept could still tailor Bid conditions to help a
  favored supplier
• Discretion exists in evaluation
• Suppliers Depts percieve eProcurement to be a
  Magic wand
• To resolve all ills of the Govt Procurement
  system
• System shall decide the successful bidder
  instantly
• Prime demand Auto Bid Evaluation

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Too many evaluation Parameters

• Technical Evaluation in works contracts is on
  multiple parameters
• Valid Registration as Contractor with State Govt
• Payment of Security Deposit
• Similar work experience
• Experience in execution of principal items
• Key and critical equipment
• Quality control equipment
• Technical personnel to be employed
• Annual turnover in previous years
• Existing commitments on Hand
• Bid capacity
• Liquid assets
• VAT registration
• Income Tax returns
• Litigation History
• Criminal History
• Any other criteria as indicated in Bid document

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Standardisation of Processes

• Govt appointed a Sub- Committee in 2003, chaired
  by Secretary ICAD (Proj)
• Standard Bid Document
• Standard Processes across work Depts
• Business process Reengineering to improve
  eProcurement efficiency
• Auto Bid evaluation

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Auto Bid evaluation- Road Map

• Components
• Contractors Registration
• Contractors/ Suppliers Database of Key details
• Contract Management System
• Linkage with VAT database
• Linkage with Income Tax database
• Standard Bid document
• ePayments
• Requirements
• Reforms in procurement processes to remove
  subjectivity
• Business Process Reengineering to objectivise
  evaluation
• A Sub committee constituted by GoAP to propose
  reforms/ BPR

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• BPR in Similar work experience
• To be Responsive, a Contractor shall have
  Similar work experience in previous years
• Objective is to select a contractor with relevant
  experience
• Definition unclear- gives scope for subjectivity
• Case1 Disqualified for not having internal roads
  experience in a Building complex
• Case 2 Disqualified for not having experience in
  C.D works in a Highway project
• Case 3 Disqualified for not having experience in
  C.D works in a Canal Project
• Similar work Criteria is redundant as Depts
  Prescribe one more criteria I.e., experience in
  execution of Prime items, which any way fulfils
  the objective.

Reform Dispense off similar work criteria and
instead seek for experience in Civil Engg works.
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• Documentation to prove credentials
• Depts list out documents to be uploaded by bidder
• Mismatch between the list in online form and bid
  document
• Suppliers rely on the list in online form
• Supplier is disqualified citing documentation
  requirement in the bid document

Reform Depts to give a comprehensive list of
documentation requirement in online bid
submission form. A bid shall be qualified if all
the documents are attached properly as per this
list.
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• Undertakings by bidders
• Departments are prescribing undertakings from
  contractors on a Non-Judicial stamp paper
• No Litigation History
• No criminal record
• Availability of equipment
• Correctness of information given by contractor in
  the bid form
• Contractors are facing disqualification if any of
  these are not uploaded at the time of online bid
  submission
• The contractor has to repeat this for every
  tender

Reform Online Undertakings, Supplier clicks I
Accept button
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• Modification of Eligibility criteria
• The departments modify bid eligibility criteria
  after publication of tender notice on
  eProcurement platform.
• In some instances it is done a few days before
  bid submission closing time, by which time a few
  bids could have been already submitted in the
  system.
• This is a serious impediment to the transparency
• Could be to tailor criteria to suit a favored
  supplier

Reform Bid eligibility criteria shall be freezed
by the departments prior to publication of tender
notice and any modifications of eligibility
criteria through corrigendum shall not be allowed
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Tasks Ahead

• Backward Integration
• Estimates
• Standardisation coding of Civil Engg Specs
• UN Standard Products Services Code(UNSPSC)
• Forward integration
• Contractor Data Base system
• Contrator Registration system
• Contrat Management system
• ePayments
• 100Roll out to all Depts and World Bank projects

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Contractors Database Information system

• ICAD Dept issued Govt orders in May 2004.
• Online Contractors Database Information system
  hosted in 2004
• One time validated data would be available for
  auto bid evaluation
• Ownership Commissionerate of Tenders, GoAP
• 800 Special Class/ Class I Contractors uploaded
  Data
• Company details, experience details, Turn over
• Manpower equipment details
• Data sent to Executing Authorities for validation
• Validation reports are delayed making the system
  disfunctional
• Now, Contractor is made accountable for the data
  genuineness
• Data of All contractors will be in Public domain
  for objections
• Penal action against Contractors uploading false
  data

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On line registration of Contractors

• Registration of Contractors into various classes
  and categories by departments Manual process
• No consolidated list of registered contractors
  due to multiple registering authorities
• Difficult to Prevent re-registration of a black
  listed contractor
• On line registration system will eliminate all
  these draw backs
• Unique number is possible with online system to
  identify a Contractor

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Contract Management On line payments

• Ineffective Contract Monitoring is resulting in
  cost time overruns
• Manual system is inefficient
• Improper documentation
• Tampering/ loss of records with passage of time
• Arbitration cases are lost for want of
  documentation
• Online Contract Management System improves the
  situation
• Contract monitoring
• Work bill generation
• Scrutiny passing of work bills
• Online payments
• Revised estimates
• Completion reports
• Good tool to meet RTI Act requirements
• Ideal to tag on this module with eProcurement

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100 Roll out by March 2007

• Present thresholds Rs 10 L for Works,Rs 5L
  goods
• Targeted major procurement depts
• Future target All Depts above Rs 1.00 L
• Phenomenal increase in Dept users/ Suppliers
• Constraints
• Connectivity
• Trainings ( 2 day module)
• Non availability of Service centers in small
  towns
• Solution
• Establish More Citizen Service Centers
• Train RAJiv Kiosk operators ( Good commercial
  value)
• AP Broadband Network with 2MB connectivity up to
  village

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Learnings

• Reforms/ BPR in Procurement processes and
  eProcurement to Synchronise to derive full
  potential of eProcurement
• Statewide eProcurement portal beneficial
• Stakeholders are demanding for complete
  automation
• State Govts can either adopt Incremental approach
  or Monolithic approach for End to End
  eProcurement depending on the maturity level of
  procurement processes
• Desirable to Develop a Monolithic platform with
  all modules, but implement incrementally

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Question Answers
THANK YOU
For more details Visit www.eprocurement.gov.in