nasscom e-governance study

A NASSCOM Study

eGovernance & IT Services ProcurementIssues, Challenges, Recommendations

eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study2

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Disclaimer

The information contained herein has been obtained from sources believed to be reliable. The information

contained in sections of the report refl ects content that was derived from both public and confi dential

information collected and received during the conduct of a study by NASSCOM. Readers should note

that NASSCOM has not independently verifi ed 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.


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

industry is moving from a vendor-buyer towards a more strategic partnership. To enable this partnership,

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 identifi ed 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 eff ective public

procurement process, for IT services, in the country.

With support from the government, NASSCOM will take these fi ndings 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 offi cials at the Department of Information Technology, Ministry

of Communications and Information Technology and all the state IT secretaries and department

offi cers, 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


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 offi cers 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 fi ndings, during the fi ve 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 eff orts and contribution towards this report.

Som MittalPresident

Acknowledgements


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 Aff airs, 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


Executive Summary


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

redefi ne 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 defi ning

services and outcomes. Most project DPRs, RFPs and services agreements, contracts are demonstrating

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 fl aws at diff erent stages: their conceptualisation, scope defi nition, 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 eff ective 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


e) Co n s u l t a n c y o r g a n i s a t i o n s l i ke E r n s t & Yo u n g , I D FC , I L & FS , N I S G a n d

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 offi cers of the IT department and line departments at both

HoD and mid and junior offi cers 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

Based on our research and interactions with a wide cross-section of state and central

government offi cers, NASSCOM team obtained some insightful feedback.

Government Perspective

Key highlights of feedback from government offi cers 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

• “Industry should change its focus from product orientation to citizen service delivery in 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


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 offi cer regarding a project, are not accepted by the successor.

Many times the successor likes to re-evaluate/review the certifi cation of work, and even SoW

& Contract

• Delays in deliverables from the government

• Delays in giving timely sign-off s 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-qualifi cation 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 fi ve 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-qualifi cation 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 diff erent category of projects


- The model documents we recommend, are prepared by a joint government-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 defi ned for both vendor and government departments

and agencies

- Incorporate the best practices of infrastructure concessionaire agreements and model

documents published by the Planning Commission for the infrastructure sector, into eGovernance

PPP projects

- Toolkits for PPP, BOOT projects and business model options to guide departments

• Similar to pre-bid meetings, standardise on suppliers debriefi ng, post project award

• Project governance structure

- Publish a model for diff erent category of projects

- Government project team resourcing & skills profi le across lifecycle stages

- Consult enterprise CIOs, industry and banking PSUs in fi nalising 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 fi ndings 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.


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


Introduction


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

redefi ne 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 defi ning

services and outcomes. Most project DPRs, RFPs and services agreements, contracts are demonstrating

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

Depending upon the size and nature of projects in diff erent ministries and departments, the government

has been adopting diff erent 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 identifi es 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 specifi ed 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 offi cers, implementation support comprising staff augmentation 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


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 Aff airs. 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 identifi ed 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 fl aws at diff erent stages: their conceptualisation, scope defi nition, 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 diff erently 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 signifi cant 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 fi eld 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 fl agship eGovernance initiatives in Land Records, Transport, and Agriculture


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

signifi cant 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 fi nancial 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-qualifi cation norms for bidders

b. Payment model/Business model

c. Requirements defi nition and Scope of Work (SoW)

d. Contract (terms and conditions document, services agreement) including associated

processes of

i. Dispute resolution process


2. Bidding phase process including associated processes of

a. Tender publication

b. Process of pre-bid meetings and issue of pre- bid clarifi cations

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. Specifi c 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) Established large SIs who have been implementing many eGovernance projects like HCL Infosystems,

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 organizat ions l ike 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 offi cers of the IT department and line departments at both HoD

and mid and junior offi cers 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


Guiding Principles forPublic Procurement


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

- For projects fi nanced by a loan from the International Bank for Reconstruction and Development

(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 defi ned 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


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 orDepartment will set up a Review Committee consisting of a representative each from theAdministrative 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 defi ned Review Committees, several eGovernance initiatives have suff ered due to the absence of an empowered committee to review. Most review committees, have also not had the empowerment or probably the fl exibility to approve variations in cost estimates, approved during the bid phase. Several eGovernance initiatives are fi rst-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 beapplied 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. Review Committee for projects above a certain threshold, with necessary empowerment to sanction 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.


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 fi nancial powers of procuring goods in public interest shall have the responsibility and accountability to bring effi ciency, 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 specifi cations in terms of quality, type, etc., as also quantity of goods to be procured, should be clearly spelt out keeping in view the specifi c needs of the procuring organisations. The specifi cations so worked out should meet the basic needs of the organisation, without including superfl uous and non-essential features, which may result in unwarranted expenditure. Care should also be taken to avoid purchasing quantities in excess of requirement to avoid inventory carrying costs

b) Off ers should be invited following a fair, transparent and reasonable procedure

c) The procuring authority should be satisfi ed that the selected off er adequately meets the requirement in all respects

d) The procuring authority should satisfy itself that the price of the selected off er is reasonable and consistent with the quality required

e) At each stage of the procurement, the concerned procuring authority must place onrecord, in precise terms, the considerations which weighed with it while taking theprocurement 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 identifi ed 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 specifi cally required by that department or offi ce

b) Credentials, manufacturing capability, quality control systems, past performance,after-sales service, fi nancial background, etc. of the supplier(s) should be carefully verifi ed

before registration


c) The supplier(s) will be registered for a fi xed 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 fulfi l 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) Rule 147 prescribes rules for direct purchase of goods under rate contract from suppliers. It mandates

that the Central Procurement Organisation (e.g. DGS&D) should host specifi cations 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) Rule 150 prescribes detailed guidelines for open ‘Advertised’ tender enquiry for all goods procurement

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 off ers 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, fi xed 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 qualifi cations to be met by the bidders such as minimum

level of experience, past performance, technical capability, manufacturing facilities and

fi nancial position, etc.

ii) The procedure as well as date, time and place for sending the bids


iii) Date, time and place of opening of the bid

iv) Terms of delivery; special terms aff ecting 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 specifi cations of the required goods should be clearly stated without any ambiguity

so that the prospective bidders can send meaningful bids. In order to attract suffi cient

number of bidders, the specifi cation should be broad based to the extent feasible. Eff orts

should also be made to use standard specifi cations 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,

about the specifi cations and other allied technical details of the plant, equipment and machinery

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 suffi ciently 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 off ering 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


16) Rule 161 prescribes the need for effi ciency, 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 offi cials 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 have customised solutions, services to be implemented, including installation and support requirements which vary from project to project.

GFR also recommends use of rate contracts method. While both DGS&D and state IT nodal agencies, have eff ectively 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 declinein 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 confi gurations unique to a vendor, with specifi c features and enhancements.Hence, a standardised rate contract for a similar category of IT product from diff erent 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


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-qualifi cation

criteria to be met by the consultants should also be clearly identifi ed at this stage

3) As per Rule 168, for consultancy assignments below INR 25 lakh, the departments can fl oat requests

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 fi nancial 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 fi nancial bids of only those bidders

who have been declared technically qualifi ed 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, justifi cation should be recorded

and approval should be obtained from competent authority prior to resorting to single

source selection

10) Rule 177 mandates that the department should be involved throughout in the conduct of consultancy,

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 effi ciency. 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.


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, defi nite and without any ambiguities. The terms should

not involve an uncertain or indefi nite 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 modifi cations as are

considered necessary in respect of individual contracts. The modifi cations should be carried out

only after obtaining fi nancial and legal advice

3. In cases where standard forms of contracts are not used, legal and fi nancial 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 specifi cations, a simple one page contract can be entered into by attaching copies

of the GCC and SCC, and details of scope and specifi cations, Off er 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-fulfi llment of this condition of executing a contract by the contractor or

supplier would constitute suffi cient 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 specifi cation once entered into, should not be

materially varied. Wherever material variation in any of the terms or conditions in a contract becomes

unavoidable, the fi nancial and other eff ects involved should be examined and recorded and specifi c

approval of the authority competent to approve the revised fi nancial 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


12. A warranty clause should be incorporated in every contract, requiring the supplier to, without charge,

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 specifi cations

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 fi le a suit where the contract does not include an arbitration clause. The draft of

the plaint for arbitration should be got vetted by obtaining legal and fi nancial advice. Documents

to be fi led in the matter of resolution of dispute, if any, should be carefully scrutinised before

fi ling to safeguard government interest

Comments on section on contract management

Chapter 8 of GFR dealing with management of contracts is fairly comprehensive and outlines the various

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 diff erent categories of eGovernance projects, could contribute to

cutting down time and eff ort 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 modifi cations, additions for specifi c 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 fi eld 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.


Consequent upon promulgation of an ordinance by the President, the Central Vigilance Commission has

been made a multi-member commission with ‘statutory status’ with eff ect 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 offi ce 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-qualifi cation 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 specifi c. 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 fi eld and fi nancial 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-qualifi cation 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 qualifi ed

5. Mandates that evaluation criteria both for pre-qualifi cation 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

qualifi ed 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 clarifi es that there can’t be any negotiation with the

L2, L3 or any other bidder


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 fi nalisation 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. Clarifi es 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 (specifi cally 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 specifi c issue of submission

of tender samples, inspite of detailed specifi cations 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 specifi cations, 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


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-qualifi cation criteria, contract terms, giving of mobilisation advance, preparing

specifi cations, etc.

26. Provides directions and checklists to chief vigilance offi cers in departments to audit tenders fl oated

by the organisation

27. Directs chief vigilance offi cers 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 off er 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 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


Summary of various guidelines issues by the CVC from latest to oldest

A detailed overview of specifi c CVC circulars is given below for easy reference

No Offi ce 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

Clarifi es that guidelines on no negotiation with L1 also implies that there cannot be negotiation with L2, L3 or L4 on pricing. Further clarifi es 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 fi nalisation

Gives details of issues which have been pointed out by the Chief Technical Examiner’s offi ce 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 fi nalise 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





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 offi cials particularly those dealing with IT procurement activities educated and updated regarding the procurement procedures, CVC guidelines. Raises concern on a number of bank offi cials lacking basic skills in computer operations and knowledge of the banking software. Tendency on the part of senior offi cers to disclose their password to junior offi cials/staff for operating the system on their behalf, citing reasons, including work pressure and ignorance is criticised. Therefore, imparting of proper training to such offi cers 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

Simplifi es 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 infl uence 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 fl aws in all aspects of tendering from live fi eld examples in government departments like preparation of specifi cations, pre qualifi cation criteria, submission of EMD, etc. and prescribes changes required to mitigate these issues





17 23/7/07 005/CRD/19

Jul 5,2007

Transparency in works/purchase/consultancy contracts awarded on nomination basis (Offi ce 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 justifi ed 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 specifi cations

As far as possible, items with standard specifi cations 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 clarifi cations 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 modifi cation 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





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 least10 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 fl oated 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.





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 negotiations4) 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 fi le 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

Clarifi es 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





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 clarifi cations regarding the hosting of tender documents on websites of department. Clarifi es on issues like huge size of tender document, issues related to security of websites, limited tenders. For limited tenders to empanelled vendors, CVC clarifi es that the exercise for empanelment of vendors should be atleast undertaken every year. Clarifi es 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





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 offi cials, the names of atleast two offi cials 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 byJuly 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-backtie-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 ofsub-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 specifi cations 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





52 44/9/03 98/ORD/1

Sep 4,2003

Irregularities in the awarding of contracts

The circular mandates that the pre-qualifi cation 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 qualifi ed

53 33/7/03 98/ORD/1

Jul 9,2003

Short-comings in bid documents

Mandates that evaluation criteria both for pre-qualifi cation and bid evaluation should be explicit and should not bepost 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 inthe 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 qualifi ed prior to the opening of thetechnical 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 specifi cally 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 181998

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





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 specifi es that PSUs should recruit consultants in a structured manner

64 NA 12-02-1-CTE-6

Dec 17,2002

Pre-qualifi cation criteria (PQ)

Detailed circular on framing ofpre-qualifi cation criteria – Extract and Summary ‘While framing thepre-qualifi cation 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 specifi c

65 12-02-1-CTE-6

May 7,2004

Pre-qualifi cation 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 specifi c 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.


The Asian Development Bank (ADB) guidelines are available at:

http://www.adb.org/documents/guidelines/procurement/default.asp

Note – Wherever specifi c 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. Section 1.14 of the guide states that it is the bank’s policy that borrowers as well as bidders, suppliers,

and contractors and their sub-contractors under bank fi nanced contracts, observe the highest

standard of ethics during the procurement and execution of such contracts. In pursuance of this

policy, the World Bank has specifi cally defi ned 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 defi ned 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

fi nanced 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

the loan agreement, (Note – In most cases, ICB or other procurement methods with due justifi cation)

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. Selection of Consultants: If the project includes the selection of consulting services, the procurement

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 fl exible 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


deadline and opened and evaluated simultaneously, so as to determine the bid or combination of

bids off ering the lowest evaluated cost to the borrower

8. Two-stage Bidding: 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 fi rst stage,

unpriced technical proposals on the basis of a conceptual design or performance specifi cations will

be invited, subject to technical as well as commercial clarifi cations and adjustments, to be followed

by amended bidding documents and the submission of fi nal technical proposals and priced bids in

the second stage

9. Wide Publicity: The bank desires timely notifi cation 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 offi cial gazette, or in an

electronic portal with free access

10. The tender shall be advertised such that there is suffi cient time to enable prospective bidders to

obtain pre-qualifi cation or bidding documents and prepare and submit their responses

11. Pre-qualifi cation of Bidders: Under Sections 2.9 and 2.10, the bank desires pre-qualifi cation for

large or complex works or where detailed bids are required. Pre-qualifi cation also ensures that

invitations to bid are extended only to those who have adequate capabilities and resources.

Pre-qualifi cation 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) fi nancial position. In Section 2.10, the bank

specifi es certain guidelines regarding the practice of pre-qualifi cation 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 qualifi cation shall be sent to those who responded

to the invitation

b. All such applicants who meet the specifi ed criteria shall be allowed to bid

c. Borrowers shall inform all applicants of the results of pre-qualifi cation

d. As soon as pre-qualifi cation is completed, the bidding documents shall be made available to

the qualifi ed prospective bidders

e. For pre-qualifi cation 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-qualifi ed organisations in such instances shall be updated periodically

g. Verifi cation of the information provided in the submission for pre-qualifi cation shall be

confi rmed 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


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. Specifi cations 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 refl ect only the cost

of their printing and delivery to prospective bidders, and shall not be so high as to discourage

qualifi ed bidders

d. The borrower may use an electronic system to distribute bidding documents, provided

that the bank is satisfi ed with the adequacy of such systems. If bidding documents are

distributed electronically, the electronic system shall be secure to avoid modifi cations 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-specifi c conditions

13. Validity of Bids and Bid Security: The bank guidelines states that bidders shall be required to

submit bids valid for a period specifi ed in the bidding documents which shall be suffi cient 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 quantifi ed 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-bid Conference: For works or complex supply contracts, a pre-bid conference may be arranged

whereby potential bidders may meet with the borrower representatives to seek clarifi cations

(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, clarifi cation, correction of errors, or modifi cations of bidding

documents shall be sent to each recipient of the original bidding documents in suffi cient


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 specifi cations 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: Specifi cations shall be based on relevant characteristics and/or performance

requirements and references to brand names, catalogue numbers, or similar classifi cations 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 fi xed.

In exceptional cases where delivery stretching beyond 18 months, the price adjustments will be

made to refl ect 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 defi ne 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 specifi c

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 suffi cient

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 defi ciencies 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 specifi ed

in the contract when such earlier completion or delivery would be of benefi t 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 defi ned in the conditions of the contract

22. Applicable Law and Settlement of Disputes: The conditions of contract shall include provisions

dealing with the applicable law and the forum for the settlement of disputes. The bank recommends

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. Use of eProcurement: Borrowers may also use electronic systems permitting bidders to submit bids

by electronic means, provided the bank is satisfi ed with the adequacy of the system, including, inter


alia, that the system is secure, maintains the confi dentiality 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. Clarifi cations 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 clarifi cation 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 clarifi cation 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. Confi dentiality: After the public opening of bids, the bid evaluation process shall not be disclosed

to bidders or other persons not offi cially 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 specifi cations 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

that permits a comparison on the basis of their evaluated cost, the bid with the lowest evaluated

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


d. The borrower shall prepare a detailed report on the evaluation and comparison of bids

setting forth the specifi c reasons on which the recommendation is based for the award of

the contract

30. Extension of Validity of Bids: 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 justifi ed 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 off er

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. Publication of the Awarding of Contract: 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 off ered, 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

justifi ed when there is lack of eff ective 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 specifi cations, 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-qualifi ed organisations, or with the agreement of the bank from only

those that submitted bids in the fi rst 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


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 refl ected in a reduction of the contract price.

However, substantial reduction in the scope or modifi cation 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. Debriefi ng: 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 debriefi ng meeting, at the option of the borrower. The

requesting bidder shall bear all the costs of attending such a debriefi ng

35. Exceptions to International Competitive Bidding: In select cases, due to specifi c 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

specifi c 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

eff ect to such preference

37. Bank Review: The World Bank guidelines stipulate a thorough review of the borrower’s procurement

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 specifi es the extent to which these review procedures

shall apply in respect of the diff erent categories of goods and works to be fi nanced, in whole or in

part, from the bank loan

Comments and Conclusion

The World Bank has specifi ed 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. Suffi cient opportunity is not given to bidders to interact with the department in understanding

the project and obtaining clarifi cations

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, specifi cally citizen

services projects


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.


eGovernance ProjectsGovernment Perspective


The NASSCOM Study consulted with a large cross-section of government offi cers, from both central

and state governments. Offi cers 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 diff erent 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

The overarching enablers are those enabling factors that would improve the procurement of eGovernance

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

Offi cers 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 offi cers feel constrained in evaluating technology choices and solutions,

including key elements of solution architecture and security.

The departmental staff need to be trained on specifi c 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


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, fi nance; hence, offi cers 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 offi cer (Joint Director/

Joint Commissioner) in the department, would be trained on eGovernance and IT. The objective of the

CIO scheme was for the departmental offi cer 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 offi cer 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 offi cers have been trained under the programme. However, the limitations of the programme

have been

a) Very few of the 183 offi cers 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 offi cers would work in

the departments and develop, manage eGovernance programmes

b) It was envisaged that offi cers 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 offi cers trained under the programme have been mid and junior offi cers who were not

empowered to lead eGovernance initiatives in their departments

c) Offi cers 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 offi cers of the Finance Department

have knowledge of the fi nancial code and rules. Feedback was given that there is need for co-opting

offi cers from these functions, to guideline departments and support & review eGovernance tenders

and contracts.

3.3.1.4 Capacity for use of eGovernance projects

In addition to the above capacity for developing eGovernance projects, there is a need to create a capacity

within the government staff at various levels, for use of eGovernance systems. Practice of senior and

mid-level offi cers delegating the use of eGovernance applications, including workfl ow applications, to

support staff , including data entry operators and sharing of passwords, digital certifi cates 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.


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 Benefi ts

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, diff erent states may have adopted diff erent approaches and a

repository of this nature, would enable other government departments to learn from the diff erent

approaches. To illustrate, AP Police has implemented police computerisation project ‘eCops’ in a modular

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

diff erent 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 modifi cations,

for example Road Transport or Registration or Treasury Department solutions can be replicated in

other states. Additionally, some departments or states may have some specifi c 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 fl edged solutions and also particular modules, which

could be plugged into department specifi c 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


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 diff erent

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 diff erent 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 offi cers 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 benefi ts 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 Diffi culty in initiating eGovernance projects

There is an inherent diffi culty in initiating eGovernance projects especially if they are fi rst-of-a-kind

project. The diffi culties range from preparation of DPR, developing of technology model, bidding

process, selection process, etc.


3.2.2 Constraints in the selection of consultants

An important constraint for government departments in initiating eGovernance projects is that

they need to fi rst prepare and fl oat 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 offi cers 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 offi cers and operations staff , need to be educated about the security aspects.

Only if government offi cers 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 benefi t 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 eff orts may allow optimisation of

these processes and thus allow effi ciencies 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.


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, eff ort in tender preparation

eGovernance projects, due to the complexity both in defi ning the business processes to be computerised

and selection of technology need to be resourced with the right skills in the department. Additionally at

this point, most eGovernance projects are fi rst-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 eff ort 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 certifi cates, probably there

may be no eff ort to ascertain the time taken to issue a caste certifi cate in the current manual system,

the issues in the current system, and other soft parameters like diffi culty to citizens based on their

socio-economic status, adherence to process, etc. Thus, if the process of issue of caste certifi cates

is computerised, post computerisation it will be diffi cult 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 ineffi ciency. Once processes are

computerised, the need for multiple entry of the same data is obviated leading to effi ciency, 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 benfi ts of the computerised system. Line department offi cers who participated in the study, felt

there was need for a comprehensive documentation of ‘as-is’ processes and their ineffi ciencies.

3.2.13 Diff erent 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.


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 diffi cult than the manual system. For instance, government offi cers

are comfortable scrutinising paper fi les and making notes and passing orders on paper fi les. Any

solution which enforced scanning of all documents, reviewing documents online, was felt to increase

time for scrutinising fi les, leading to delayed response times. eGovernance projects, which initiated

such sudden transitions in the way government offi cers 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 workfl ow and fi le monitoring solutions, which do not

factor various authorisation and approval workfl ows, spanning diff erent 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 offi ces, and users being online with no

offl ine 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 diffi culties 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 fi nancial 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.


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 suff ers.

Another reason why framing SLA’s was considered diffi cult was that most IT projects are fi rst-of-a-kind projects, hence, there was an issue in defi ning the SLA’s which neither the government department or consultant can defi ne comprehensively at the project conceptualisation stage.

A central body like DIT could help in framing a standard set of SLA’s for diff erent 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-off s 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 justifi cation should be given for choice. Probably a framework needs to be evolved on specifi c types of projects that should be paid for through a full cost bidding and specifi c 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 Defi nition of scope of work

Services to be delivered in any eGovernance project needs to be defi ned 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 Specifi cations of IT equipment

Specifi cations should be prepared in a manner that only essential features regarding any equipment should be mentioned. Additionally, in case preparation of specifi cations in a rigid manner leads to a limited choice, the department should examine if the specifi cations 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 diffi cult to specify specifi cations that are generic in nature and fair to all vendors. This is because many times it is diffi cult 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 diffi culties in testing and certifi cation and acceptance sign-off s.

3.4.3 Certifi cations

It was felt that there does not exist good understanding regarding certifi cations in the government department. ISO, CMMi, diff erent security certifi cations, are mandated without fully evaluating their relevance for a particular project on hand. It was believed that several vendors with necessary credentials,

may not be meeting the minimum eligibility criteria, due to CMMi Level 5 requirement. It was broadly


agreed, that there needs to be a thorough review of diff erent types of certifi cations, their relevance

for diff erent 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 diffi cult 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

diff erent profi les. 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 profi les 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 fi nd it diffi cult 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

offi cers felt a design, architecture, development of a complex eGovernance solution, compared with

data entry, digitisation require diff erent kinds of organisational profi les 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 fi rst-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.

It is apparent that it is not possible for the government department to envisage an end state initially and

either processes will change or some new requirements come up during the software development phase.

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.


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 defi ned, 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 fi rst 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 defi nition 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 offi cers. 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 diff erent

category of projects should be published in consultation between the government and the industry.


Infrastructure and public works contracts have some clearly defi ned 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, benefi ts, 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, benefi ts, 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 fi rst 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 specifi c performance under this agreement or the SLAs

e) The Project Director, MEA shall be entitled to claim the remedy of specifi c 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 fi nancial 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 verifi ed by any third-party agency (ies) before accepting it

The liability amount in case of Passport Seva has a higher limit


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 offi cers administering the contract

either do not go through the contract in detail or fi nd it diffi cult to understand all the aspects of

the contract

5) Model contracts could be prepared for diff erent 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 diffi cult to modify.

3.6 Pre-qualifi cation

The department heads are mostly guided in deciding the pre-qualifi cation based on their past

experience. Some offi cers have had a good experience with large SIs and some with small SIs and these

perceptions sometimes guide framing of the pre-qualifi cation criteria. Given that most IT projects are

diff erent, it is diffi cult 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 offi cers 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 offi cers that were met regarding the study.

Many times it is seen that there is a considerable diff erence 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 infl exible 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

mechanism suggested by some offi cers is to determine the base costing for every project and establish a

fl oor 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 offi cers feel that QCBS selection lends itself

to subjectivity. Another government offi cer 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 offi cers, and there is a need for a thorough review of

evaluation methodologies and norms arrived at, for diff erent categories of projects.


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-defi ned, 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-off s 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 offi cer with a fi xed 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 offi cials

eGovernance projects need to be reviewed at the highest levels of the government. This is essential

because eGovernance projects are many times, fi rst-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 offi cer not respected by the successor

In some cases sign-off ’s are not respected and in case the offi cer 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 suff er and may need recourse to re-bid or sometime litigation. Hence, some offi cers felt that


eGovernance projects need to provide for some fl exibility to the departments in applying SLA’s and

penalties on the vendor, to factor unforeseen challenges in the fi eld.

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 diffi cult 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-defi ned 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 off er 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-off s 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 Diffi culty in execution of geographically dispersed eGovernance projects

There is a huge diffi culty 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.


3.10 Post implementation

3.10.1 Diffi culty in handover of project

Government offi cers 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 offi cers 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 fi rst

vendor requires a long planning cycle. In case of handover of project from one vendor to another, the

following should be adhered to:

1) A third-party auditor should be hired to check the quality of equipment, software, software licenses,

documentation that is being handed over from one vendor to another

2) The pre-qualifi cation 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 defi ned handover period from the incumbent vendor to the new vendor, with

necessary overlap

4) In the specifi c 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 profi ts’ and the need to share/limit such windfall profi ts of


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 infl ationary 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 diffi cult 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 fi nancial model while undertaking design of PPP projects. Capex, fi xed 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.


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 traffi c & toll, composition of traffi c,

traffi c 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

fi nanced 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 fi nancing 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 traffi c growth is now agreed between both

parties. If traffi c falls below projected growth, they extend the concession term and reduce the term

if the converse happens. Inherent reward built for higher growth in traffi c, toll collection.

3.11.1.3 Bidding terms and conditions/Bidding process

Most infrastructure projects, particularly PPP projects follow a two-stage process of fi rst calling for a

request for qualifi cation and thereafter issuing the request for proposal to only the shortlisted bidders.

This is because, bid response to a infrastructure RFP requires substantial eff ort and resource investment

on the part of the bidders, and it is best that this eff ort, is made by few qualifi ed bidders.

Additionally, it was agreed that a pre-qualifi cation 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 specifi ed 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 suff er any liability if and to the extent, performance of

any of its obligations under this agreement is aff ected 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) This declaration of obligations, events of default, for the government contracting agency, and an

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


4) Force majeure events including political events are well-defi ned. Termination due to a (force majeure)

or other defi ned 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 fl ows

5) In the event of project termination, since the contract provides for a well-defi ned 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 profi ts

3.11.1.5 Pre-qualifi cation

Most infrastructure projects follow the following norms regarding pre-qualifi cation criteria:

1) Allows consortiums to participate usually in an appropriate mix of organisations with technical

capability and fi nancial strength

2) Diff erent eligibility criteria for technical and fi nancial

a) Technical capacity/eligibility usually measured as projects completed in the last fi ve 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 diffi cult 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, fi nancial 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.


3.13 Dispute resolution

To enable dispute resolution for IT projects between the government and vendor, it was recommended

that DIT can set up a panel of retired government offi cers with knowledge of IT projects implementation.

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 briefi ng the

government lawyers on the technical aspects of the case.

3.14 Strategic control

Most offi cers 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 offi cers. 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 offi cer 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 offi cers 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 diff erent from working

on private sector, global contracts. Interaction with government departments and users at various


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 offi cers 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 offi cer’s control too.

Instances like assembly session, fl oods were cited for a department offi cer 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 offi cers

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.


Industry Perspective


This NASSCOM study and report had its genesis, in several members, over the years, reaching out

to NASSCOM, with specifi c 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 diff erent 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 clarifi cations, service agreements, and ongoing

and upcoming eGovernance projects.

Consultancy organisations also contributed to the study, by providing their perspective on issues and

challenges in diff erent phases of an eGovernance project, and most importantly to recommendations.

They had also provided feedback on both government and IT service providers. The study did not attempt

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 specifi c 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


c) Pre-qualifi cation 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-qualifi cation criteria, including turnover limits, certifi cations like CMMi Level 5 were persistent

challenges for SMEs

6) Sign-off s 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-qualifi cation 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 responses for that issue

Total No. of unique issues

1 Project execution 0 12 12 25 8 8 65 32

4 Pre-qualifi cation 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 fulfi llment 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 fl exibility, 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


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 certifi cation 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 offi cers

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 defi ned and accepted.

While application solutions are designed to the defi ned ‘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,

networking operations are awarded to two diff erent agencies. Challenges in these projects are more

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


payments of vendors, but warranty and free support term on hardware and COTS software. A SI

does not have the fl exibility 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 profi ts’, 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-qualifi cation turnover norms, and also risk overload on vendors.

The acceptance criteria/specifi cations for such non-IT services is not clearly defi ned. 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, COTS software decided for an eGovernance solution, is not procured directly by the government

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 fi eld 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 fi ve-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 off er 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 fi eld 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, aff ecting business viability for one or all vendors. eSeva, APOnline,

RAJiv in Andhra Pradesh were seen to be having overlapping initiatives


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 fi rst time. Hence they may not be able to comprehensively

defi ne the requirements and solution feature set and design. This leads to continuous scope creep,

change requests and delayed sign-off s

13. Projects are implemented as big bang approach rather than in a phased manner

4.5 Scope of work, specifi cations 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 specifi cations 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 specifi es the end-to-end turnkey services and service levels

as well as specifi es very detailed specifi cations 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

specifi cations may be too detailed and redundant and escalating costs to government and

investments by vendor

a. The specifi cations are not defi ned generically allowing the SI to procure and deploy the

equipment which best fi ts the requirement


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 diff ering 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 specifi cally SWAN, the scope of work also includes connectivity of remote offi ces, the number of which is not capped in some SWAN contracts

11. In some cases specifi cally 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 fl ow 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-qualifi cation

Issues related to the framing of pre-qualifi cation norms is an important issue for IT service providers specifi cally incumbent SME organisations and aspirant large organisations

1. Pre-qualifi cation criteria not framed as per the work requirements, redundant pre-qualifi cation criteria like CMMi level 5 for consultants or CMMi certifi cation 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-qualifi cation requirement, and UIDAI and also vendors believe that this has opened up the bid for

more entrants


2. Pre-qualifi cation criteria drawn in a manner to restrict bidding to a select few

3. Pre-qualifi cation criteria drawn up in a manner that favours large incumbent organisations

4. Pre-qualifi cation 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-qualifi cation criteria across similar types of projects, or almost the same

project across states. Additionally some projects pre-qualifi cation criteria require net worth, in

some profi tability, in some case 3 or 5 years past revenues. Lack of standardised criteria tends to

impact ‘Level playing fi eld’

6. For turnkey and outsourcing, BOOT projects while consortiums are allowed, cumulative turnover of

all members is not considered. In several projects, the turnover, fi nancial 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. Rectifi cation 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 fi rst reported, the CUSTOMER

shall have the right to get the defect rectifi ed by a third party without eff ecting 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 defi ned events can trigger the release of the

source code to the government


7. Indemnity: Indemnity clauses are not well-defi ned in eGovernance projects. As several projects

require country-wide roll-out, with vendor staff working on government premises, there is a need

for well-defi ned 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

identifi ed by it, need to be defi ned

8. Warranty: While warranty terms are well-defi ned for COTS software, warranty terms for application

software is ambiguous and subject to interpretations. While defects during the warranty period

shall be rectifi ed by the vendor, the vendor cannot not be liable for all defects or failure resulting

from their reasonable reliance on government department instructions, specifi cations, 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-defi ned

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 eff ort 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 offi cer 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 verifi ed in the manner prescribed by the Engineer-in-Charge or other

offi cer 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


whatsoever in connection with the contract, and the decision of the Engineer-in-charge or other

offi cer 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 fi nal and conclusive”.

Inspection and audit shall be restricted to technical/project management records only. Vendor

cannot be requested to provide employee confi dential records such as compensation and other

benefi ts, 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 defi ned. 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 diff erent departments or vendors is resolved

in diff erent ways

4.10 Tender evaluation

1. Signifi cant diff erence 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 fl oor prices

to discourage aggressive bidding and also unviable bids leading to poor quality execution

2. Post award vendor briefi ng 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 staffi ng 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 staffi ng

of projects and utilisation, coupled with the uncertainty of timeframes in securing contracts,

this is an expectation diffi cult 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 specifi ed bid schedules leading to repeated bid validity extensions

6. Certifi cations/experience certifi cates submitted by the organisations are not diligently verifi ed

and accepted on face value, leading to qualifi cation 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 diff erent

category of projects

a. Particularly in QCBS evaluation, the evaluation criteria and objective scoring is not clearly

defi ned in many bids


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 fi rst-of-a-kind project and it is diffi cult to anticipate revenues. Further they

are dependent on a number of upstream activities like computerisation of government departments.

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 fi xed 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 profi tability

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 fi eld 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. Confl ict 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 confl ict of interest


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 fi eld constraints in

requirements gathering, fi nalising feature design and site readiness issues

4.14 Process of pre-bid meeting/pre-bid clarifi cation

1. The current model of pre-bid meetings do not allow for clarifi cation 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 clarifi cationsare 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. In some cases, the government department tries to negotiate with the L1 vendor. In this negotiation, 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 clarifi cations and the last

date of submission of tender is even as less as 2-3 days

4.17 Post implementation

1. Senior offi cers are more engaged during pre Go-Live phases. Post Go-Live and continuous monitoring

is delegated to mid and junior offi cers. This ignores support and hand-holding needed from the

department, in operations and replication phase.

4.18 Other issues

1. Inadequacies in compliance certifi cation by OEMs, leads to non-compliance by SIs and delays in acceptance sign-off s and payments to SIs

2. OEMs submit compliance to specifications even in case where projects are marginallynon-compliant, in such case the SI becomes responsible, leading to delay in acceptance consequentlydelaying payment

3. OEMs do not work as a partner in PPP projects or extend credit terms thus increasing the fi nancial risk to bidders


Study of Global Public Procurement Practices – Canada/Singapore


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 offi cers to work together as one government and improve overall

operational effi ciency in the public sector. Emphasising this outcome, Mr Lim HupSeng, deputy secretary

(performance) of the MOF said, “SOEasy will allow more than 60,000 public offi cers 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 effi ciency in Infocomm usage and cost savings. This involves harmonising

desktop, messaging and network environments across all government agencies.

Agencies can then fully utilise and benefi t from integrated Infocomm services and allocate resources

optimally resulting in operational effi ciency 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 offi cers 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, public offi cers who transfer from one government agency to another will continue to access

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-defi ned menu of bundled

SOE services and each complete bundle is referred to as a SOE seat. Each SOE seat will diff er in the

combination of SOE services, such as:

1) Computing provisioning services – diff erent hardware, software and IT peripherals

2) Support services – diff erent service level requirements

3) Messaging and collaboration services – diff erent email features and storage quota

4) Network services – diff erent Wide Area Network and Local Area Network services

5) Computing lifecycle management service – diff erent refresh periods

In addition to the SOE seats, agencies will be given fl exibility 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


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 fi t

6 Other Bidders The other three qualifi ed consortia from the pre-tender qualifi cation 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 qualifi cation stage and tender

cum qualifi cation notice stage. In the pre-tender qualifi cation stage, consortia were qualifi ed based

on fi nancial strength; expertise and deployment track record; programme management; and technical

competencies to deliver SOEasy. Subsequently, the qualifi ed consortia were consulted on the draft

SOEasy specifi cations to enable the Singapore Government to fully exploit emerging Infocomm

technologies and leverage on industry best practices. In the tender cum qualifi cation notice stage,

companies that were not qualifi ed during the pre-tender qualifi cation stage were allowed to submit

their bids for qualifi cation. However, no new submissions were received.

At the close of the tender cum qualifi cation notice stage, four bids were submitted by the qualifi ed

consortia. All tender bids were evaluated on technical merits to ensure that technical evaluation was

conducted without price infl uence. 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.

The tender was earlier scheduled to be awarded in October 2007. The evaluation took more time given its

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, desktop software, messaging system, networking etc. and planned to implement

it across the government

2) However, two departments were left out of this


a) The Ministry of Defence and the Schools, implying departments that have special requirements,

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 signifi cant 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 Offi cer of the Infocomm

Development Authority of Singapore (IDA) at the annual industry briefi ng on business opportunities

for Infocomm in the public sector. This meeting was attended by more than 700 participants, and this

annual briefi ng 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 briefi ng 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 benefi ted 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 fi nd

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

consortia and integrate their key IT systems, business processes and data through tradeXchange


so as to achieve greater business effi ciency; 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-qualifi cation 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) The Content and Documentation Management System by DSTA; one key Infocomm investment

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 workfl ows; 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 fi re 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

effi ciency and defence management capabilities. Besides the SAF’s Automated Fuel Dispensing

System, which aims to enhance its vehicle fuel dispensing needs through Radio Frequency

Identifi cation (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 briefi ng to industry on upcoming public sector projects is an annual aff air attended by about 700

industry professionals. It is fairly detailed in scope and talks about the initiatives to be implemented


by various government departments. Industry briefi ngs 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 Offi ce of the Procurement Ombudsman of Government of Canada

5.2.2 Key facts about the offi ce 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 act iv it ies with both suppl iers 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 eff ective practices and seek to develop workable and aff ordable improvements that

can be implemented to the benefi t of all stakeholders

8) The current procurement ombudsman has defi ned 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


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 fi ndings

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

the position of Procurement Ombudsman, hence the Procurement Ombudsman in Canada is a legislative

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 identifi es their

specifi c roles and responsibilities, thus ensuring the independence needed by the offi ce 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 diff erent 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 offi ce 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


5.2.6 Operational plan for Procurement Ombudsman

The Offi ce of the Procurement Ombudsman will operate in the following manner:

• It will review complaints from suppliers with the objective of solving them quickly and effi ciently.

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 fi ndings

• For recurring issues, the offi ce may look further to see if this is a systemic issue across the

government. If so, this may result in the offi ce 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

offi ce of the Procurement Ombudsman, will result in improved fairness, openness and transparency

in the procurement process

• The offi ce also reports on best practices identifi ed in the government and other jurisdictions in

order for the procurement community to benefi t from lessons learned

• The Procurement Ombudsman will also carry out reviews of procurement practices by the various

departments

Finally, the Procurement Ombudsman will produce an annual report in which he will report on all activities

carried out by his offi ce during the year. The Minister of Public Works and Government Services, Canada,

will table this report in parliament.

5.2.7 Profi le of the current Procurement Ombudsman

The current Procurement Ombudsman is Mr Shahid Minto, an offi cer from the offi ce of the auditor

general with over 28 years of work experience in conducting national audits. Immediately previous

to this role he worked as the fi rst chief risk offi cer 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 offi ce of Procurement Ombudsman

It needs to be clarifi ed that the offi ce of Procurement Ombudsman is not that of an auditor, required to

focus on identifying and reporting on defi ciencies. 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 offi cially 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 specifi c 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 fi nd 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 offi ce is to use that power

of persuasion to contribute to an ongoing process of change, so that all Canadians have confi dence in


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

aff ordable 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 offi ce 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.

This approach of the Ombudsman of giving importance to working on proactive measures and improving

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 specifi c 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 fi nd 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 off ers ( Rate Contracts) are a signifi cant concern, as many suppliers not included in rate

contracts see that these standing off ers 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 diffi culty in fi nding relevant information on how to do business with

the government


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 eff orts to streamline procurement processes through the introduction of automated working

tools adds to complexity

5.2.11 Goals of the offi ce 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 confi dence 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 eff ective practices and seek to develop workable and aff ordable improvements

that can be implemented to the benefi t of all stakeholders.

5.2.12 Insights and learnings

• Offi ce 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 offi ce also reports on best practices identifi ed in the government and other jurisdictions in

order for the procurement community to benefi t 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 fi ndings and recommendations

• Proactive approach and outreach by Ombudsman office to both government and

supplier community


Study of IT Management in a PSU Bank


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 offi cer 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 diff erent 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 offi cers from the general management pool

2. The specialist IT cadre offi cers 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 offi cers of

which, two of them are of senior manager cadre

4. The offi cers 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-qualifi cation, technical bid and evaluation

of commercial bids of all technically qualifi ed 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


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 l ike f inancia l

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 diff erent 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 specifi cations

d. The IT department has a committee of senior offi cers 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 diffi cult 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 fi nally 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 suff ering.

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 fi nalised 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


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 confi dential. 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 specifi c defi ciencies of the vendor

6.1.1 Key learnings for government in managing IT

1. The bank is self suffi cient 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 fi nancial 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


Summary, Recommendations


Based on the feedback from the government offi cers 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. We recommend that the model documents are prepared by a joint government-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 diff erent 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 certifi cations and their applicability for diff erent 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 eff orts 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 defi ned for both vendor and government departments

and agencies

Summary, Recommendations


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 debriefi ng, post project award, and publish

all award details on the dashboard

8. Project governance structure

a. Publish a governance model for diff erent category of projects

b. Government project team resourcing and skills profi le across lifecycle stages

c. Consult enterprise CIOs, industry and banking PSUs in fi nalising this

9. Dispute resolution and arbitration guidelines

a. Create panel of retired offi cers 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 fi ndings, jointly with the states, and initiate

the next steps in working towards actioning and resolving some of them.

The study report and its fi ndings 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.


Annexures


1. Weblinks for procurement project

1.1 Government of India

a. Department of Expenditure, Ministry of Finance

http://fi nmin.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


b. Canada

i. Government of Canada National Portal

http://canada.gc.ca/home.html

ii. Offi ce 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. Offi ce 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 Offi ce of Government Commerce (OGC) is an independent offi ce 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.cabinetoffi ce.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 offi cials – 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 clarifi cation,

bid amendments


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 fi ve years (list maximum of fi ve)

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 fi ve projects bid for in the past two years and reasons for non securing the project. (The organisation should meet pre-qualifi cation criteria for the project)


Reason for not winning the project

Winner of the project

7 List of fi ve Projects that organisation did not bid for in the past two years and reason for not bidding. (The organisation should meet pre-qualifi cation criteria for the project)


Reason for not bidding for the project

Winner of the project

8 List of specifi c suggestions regarding a few RFP’s that have come in the past two years. Please provide suggestions only regarding high value ( Value > than fi ve crores) eGovernance projects, preferably NeGP MMP’s

S No. Name of the RFP

Section of the RFP

Specifi c suggestion

Project being executed by

9 Any issues that have come up in execution of eGovernance projects and suggestions for resolution of the same


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 confi dential, the organisation may mark NA as response to these questions


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 confi dentiality 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 fi ve years (list maximum of fi ve) with sale value

3 Name of the respondent if diff erent 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

Specifi c suggestion to be replicated in Indian eGovernance projects


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 fi ve years (list maximum of fi ve) with value

4 Name and designation of the respondent

5 List of specifi c suggestions regarding a few RFP’s that have come in the past two years

S No. Name of the RFP


Section of RFP



2.2.2 International eGovernance experience


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 fi ve years (list maximum of fi ve) with sale value

3 Name of the respondent if diff erent 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


Section of RFP

Specifi c suggestion to be replicated in Indian eGovernance projects


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 offi cer 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 offi cer 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


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-qualifi cation criteria for

projects. Same type of projects across government departments and some time even within the

same state, have diff erent pre-qualifi cation 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

offi cers 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

fulfi lling 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 specifi c suggestions regarding eGovernance projects that are under implementation

c. List of specifi c suggestions regarding eGovernance projects post implementation/Go-Live stage

S No. Name of RFP/ project Issue regarding tendering process Specifi c suggestion

S No. Name of project Name of vendor executing the project

Issue related to project implementation


S No. Name of project Name of vendor executing the project

Issue related to project Post Go–Live stage



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. How can government ensure fi nancial viability of PPP projects to vendor, and incorporate appropriate

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 specifi c challenges in eGovernance projects from a government

perspective, and areas for improvement needed from industry

International Youth CentreTeen Murti Marg, ChanakyapuriNew Delhi 110 021, IndiaT 91 11 2301 0199 F 91 11 2301 [email protected]