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Mapping public procurement practices in India

Article  in  International Journal of Knowledge Management Studies · January 2017

DOI: 10.1504/IJKMS.2017.10005271

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Int. J. Knowledge Management Studies, Vol. 8, Nos. 1/2, 2017 99

Mapping public procurement practices in India

Saroj Koul*
Jindal Global Business School,
OP Jindal Global University,
NCR of Delhi 131001, India
Email: skoul@jgu.edu.in
*Corresponding author

Uma Kumar and Vinod Kumar

Eric Sprott School of Business,
Carleton University,
Ottawa, ON K1S 5B6, Canada
Email: Uma.Kumar@Carleton.ca
Email: Vinod.Kumar@Carleton.ca

Rakesh Verma
Department of Decision Sciences and Information Systems,
National Institute of Industrial Engineering (NITIE),
Vihar Lake, Mumbai, Maharashtra 400087, India
Email: rakeshverma@nitie.edu

Abstract: Public expenditure and hence a good public procurement (PP)

practices are used by most governments to meet specific responsibilities for
their citizens. As per World Bank, public procurement is a strategic tool for
achieving development, social and environmental objectives of governments,
rather than using it as a tool for mere compliance with rules and regulations.
In India, the estimated PP expenditure is between 20 and 30% of GDP. The
introduction of Public Procurement Bill in the Parliament of India in 2012, with
a commitment to rollout e-procurement system across all departments, makes it
imperative to understand the complex challenges of using PP to achieve
national economic and social objectives. This study explores the prevalent PP
activity in India. It attempts to identify and map benchmarking practices vis-à-
vis recent international studies available including those conducted by World
Bank and the Organization for Economic Cooperation and Development.

Keywords: benchmarking; best practices in procurement; e-procurement;

India; international examples; Public Procurement; Public Procurement Bill
2012 (India); technology adoption.

Reference to this paper should be made as follows: Koul, S., Kumar, U.,
Kumar, V. and Verma, R. (2017) ‘Mapping public procurement practices in
India’, Int. J. Knowledge Management Studies, Vol. 8, Nos. 1/2,
pp.99–114.

Copyright © 2017 Inderscience Enterprises Ltd.

100 S. Koul et al.

Biographical notes: Saroj Koul is a Professor of Supply Chain Management at

the Jindal Global Business School, India. Her industry, teaching and research
experience spans 35 years. She has her credit over 45 refereed publications and
two books for post graduate management students. She was a Recipient of the
Research Achievement Award for the years 2011–2013. In 2012 and 2014, she
was a Recipient of Teaching Excellence Award. She is on the editorial board of
International Journal of Operations Research and Information Systems,
International Journal of Electronic Transport and AIMS International Journal of
Management and was also on the board of International Journal of Business
Performance and Supply Chain Modelling during 2008 to 2011. Her current
research focuses on system dynamics models, supply chain management,
e-government and organisational communication.

Uma Kumar is a Professor of Technology Management and the Director of the

Research Centre for Technology Management at Carleton University. Her
research is in the area of management of technology including technology
transfer, efficiency in new product development, e-government, quality in
R&D, managing R&D internationally, sustainable new product development
and ERP adoption and implementation. She has published over 250 articles in
journals and refereed proceedings. Her more than 20 papers have won best
paper awards at prestigious conferences. Twice, she has won Carleton’s
Prestigious Research Achievement Award for the years 2005 to 2006 and 2012
to 2013. She is the recipient of a number of research grants from reputed
research funding agencies.

Vinod Kumar is a Professor of Technology and Operations Management of the

Sprott School of Business (Director of School, 1995–2005), Carleton
University. He has published over 300 articles in refereed journals and
proceedings other than publishing several books and monographs. He has won
several Best Paper Awards in prestigious conferences, Scholarly Achievement
Award of Carleton University (1985–1988), Research Achievement Award for
the year 1993, 2001, 2007, 2014 and the Graduate Mentoring Award in 2011.
He has widely consulted industry and government. He is on the editorial board
of two international journals. His research interests are in optimising
performance of operation systems; technology transfer; new product
development; sustainable supply chain management; technology adoption;
e-commerce applications and e-government.

Rakesh Verma is an Associate Professor of Operations Management in

National Institute of Industrial Engineering (NITIE), Mumbai, India. He
received his Doctorate in Operations Research from Indian Institute of
Technology, Kharagpur, India. He is a DAAD alumni. He has to his credit
more than 35 refereed publications in journals such as The Journal of Fuzzy
Mathematics, Fuzzy Sets and Systems, Asia Pacific Journal of Operational
Research, Physics and Chemistry of the Earth, International Journal of Soft
Computing and International Journal of Business Performance and Supply
Chain Modelling. He is a member of INFORMS, USA, POMS, India, ORSI,
India and International Society on Multiple Criteria Decision Making, USA.
His research interests include: facility location; transportation systems; multiple
criteria decision-making, fuzzy MCDM and supply chain management.

This paper is a revised and expanded version of a paper entitled ‘Public

Procurement in India: Mapping Best Practices’ presented at International
Conference on Management Cases (ICMC-15), Greater Noida, Uttar Pradesh,
India, 1–2 December 2015.
 Mapping public procurement practices in India 101

1 Introduction

The Government of India (GoI) is increasingly recognising the importance of the public
procurement (PP) function as a “strategic tool for the socio-economic development of the
country”. It has, starting in 2012, initiated several reforms to make its PP align with
relevant best practices. Experiences gained from several international and regional PP
systems are being used to inform the policies and procedures to be used for the
development of an integrated and centralised PP system.
Progress in India’s economic growth because of business confidence, and the GoI’s
commitment to reduce red tape, eradicate corruption and increase investments in
infrastructure development, has led the Organization for Economic Cooperation and
Development (OECD) to project India’s gross domestic product (GDP) to increase to
7.9% in 2016 (OECD, 2014). Massive public and private investments are expected to be
both a cause and a consequence of economic growth during the current decade.
Investment, as measured by Gross Domestic Capital Formation, is expected to increase to
41.3% of GDP during 2020 (Dun & Bradstreet’s India 2020 Economy Outlook, 2011).
Governments and state-owned enterprises are the biggest spenders of public funds.
Public expenditure refers to expenses incurred by the governments at the central, state
and local levels. This is required for the upkeep of the government, for the security of the
nation, and for the socio-economic well-being of the people. Government spending on
public services in developing countries generally ranges between 15 and 20% of the GDP
and is almost 50% of the expenditure by the government (UN Commission on
International Trade Law [UNCITRAL], 2012). Moreover, the amount of government
expenditure spent on obtaining goods and services through PP has been steadily
increasing.
India’s annual PP ranges from 20 to 30% of its GDP and is estimated at over US$300
billion as per CUTS-Centre for International Trade, Economics & Environment (CUTS-
CITEE, 2014). In ministries, such as, Ministry of Defence, Ministry of Railways or
Ministry of Telecommunication, 50% of the total budget is spent on PP (India: Probity in
Public Procurement, 2013). These massive outlays create opportunities for implementing
national policies and for positively impacting the economy, but unfortunately, are
vulnerable to mismanagement, fraud and corruption. Consequently, the PP function needs
to be well managed, and implemented transparently and efficiently.
Although, PP has gained increasing attention during the last decade (Knight et al.,
2003), and continues to be an indispensable instrument for achieving economic and
social goals (McCrudden, 2004), PP practitioners face challenges mostly imposed by
factors such as that of the market, legal, political, organisational and socio-economic
conditions (Osei-Tsutu, 2011). Additionally, many officials (internal experts) frequently
bypass the procuring department (McCue and Pitzer, 2000).
Remedying these problems requires implementation of clear procedures and
standards to provide decision makers with objective information regarding performance
of the procurement function. Given the magnitude of spending involved, even small
efficiencies realized in PP operations can release large financial resources. McKinsey
study by Dobbs et al. (2013) indicates that if countries incorporated the best PP practices
the total infrastructure spending could possibly be reduced by almost 40%. Citing India
as an example, a 10% saving would mean a release of US$30 billion per year, which
could be used for further development efforts. Implementation of a procurement policy
which provides long-term support to Small and Medium Enterprises, injects money into
102 S. Koul et al.

the economy, sustains employment, and can help shape a more inclusive national
economic growth (Dobbs et al., 2013).
Allen and Tommasi (2001), state, each countries national budget is the single most
important policy vehicle for giving effect to a country’s economic and social priorities
within the scarce resources that are available to government for public expenditure. In
India, the ‘estimate-of-expenditures’, in the form of the budget document, is submitted
for parliamentary approval every year (GoI/Article 112: The Constitution of India, 1949).
This document classifies expenses under various categories for purposes of accounting,
financial management and better reporting. The introduction of Public Procurement Bill
in the Parliament of India, in 2012, and the GoI’s commitment to rollout the Government
e-procurement system (GePNIC) motivates the two-fold focus of this paper:
1 Investigate the status of PP activity in India.
2 Identify benchmarking practices in line with recent international studies including
the pilot World Bank (2015) benchmarking study.
This paper opted use of selected public domain articles for investigating the status of PP
in India and use of recent international studies. The remaining paper is set out as follows:
Section 2 introduces public e-procurement and reviews some successful applications by
governments around the world. Section 3 summarises PP policies, guidelines and the
commitment of GoI. Section 4 summarises recommendations presented in recent
benchmarking studies. Finally, Section 5 concludes the research work and includes
recommendations for improving public e-procurement in India, and identifies future
research scope.

2 Survey of PP

Public procurement is defined as, the purchase of goods and services by governments and
state-owned enterprises. It encompasses a sequence of related activities starting with the
assessment of needs through awards to contract management and final payment
(Gershon, 1999). Arrowsmith (1995) denotes PP as government’s activity of purchasing
the goods and services needed to carry out its functions.
Public procurement policies and procedures impact a countries economic efficiency.
The objective of a PP system is to serve the public by identifying sources of supplies,
within the acceptable limits of quality and at the low-cost potential price. PP follows a set
of prescribed procedures and processes that have evolved from various laws and
directives, and administrative or political decisions. Regulatory objectives determine the
principles of PP which include:
1 Transparency: this ensures that prospective participants understand the actual
processes by which contracts are awarded.
2 Responsiveness: this obliges PP to respond to the aspirations of its stakeholders
including the citizens, electorate, taxpayers, elected officials and procurement
officials.
3 Professionalism: this enjoins the PP officials to do what is promised and to avoid
improper, wasteful or corrupt and collusive practices.
 Mapping public procurement practices in India 103

4 Constitutionality: this provides provisions regarding Fundamental Rights and

confines PP within certain limits not applicable to private procurement.
5 Multiplicity: this warrants PP to achieve goals, such as promoting public trust in
governance and supports the government’s broader social policy and programs.
6 Accountability: this holds PP officials accountable to official bodies in the country.
A PP officer is therefore obliged to operate under intense public scrutiny.
7 Transactional evaluation: this requires each PP transaction to be evaluated
independently instead of judging the entire procurement process.
The Internet has created a new economy that is characterised by terms such as: online
bidding, e-purchase, e-sourcing, reverse auction and supplier management. These terms
can be categorised under the umbrella term e-procurement. e-procurement uses web-
based processes that allow a buying organization to purchase goods and services, and
allow suppliers to manage and communicate the fulfillment of those purchase orders to
the buyer (Croom and Brandon-Jones, 2007). Typically, an e-procurement process
includes advertisement of tenders, electronic submission of tenders, electronic ordering,
internet sourcing via third parties, electronic mail between buyers and sellers, electronic
mail in contract management, research into supplier markets, integration of procurement
within the financial and inventory systems (van-Weele, 1998). This changeover from the
traditional paper-based purchasing system to an Internet-based system is expected to
improve the efficiency of the procurement processes (Emilio and Stefano, 2003). It has
been suggested that if e-procurement were fully implemented, it could save governments
at least 5% on expenditure and up to 80% on transaction costs (Commissions of European
Communities, 2004).
Corporations that use e-procurement testify 42% savings from transaction costs
(Davila et al., 2003). In addition, while there is a reduction in the number of suppliers,
there is also shrinkage of some purchasing processes (Davila et al., 2003). Despite its
apparent attractiveness, the adoption of e-procurement varies from country to country.
While e-procurement systems have been used worldwide—such as in Singapore (Kheng
and Al-Hawamdeh, 2002), USA (Davila et al., 2003), Australia (Hawking et al., 2004), in
the EU (Carayannis and Popescu, 2005) and in Canada (Rankin et al., 2006)—very little
statistics about the efficiencies of the process have been published. The outcomes of
some e-procurement implementations, and suggested reforms in PP systems, are
summarised below:
1 Seong and Lee (2004) study on the Korea’s e-procurement system (G2B) endorses
the system for its transparent and professional best practices since 1997. OECD
(2016) recommends inclusion of small businesses and social goals in the centralised
e-procurement system and workforce training. It also highlights good practices that
can encourage reform effort in other countries.
2 Croom and Brandon-Jones (2007) evaluated five e-procurement themes “system
specification, implementation management, total acquisition costs, organisational
characteristics and governance structures” in nine UK public sector organisations.
Their analysis suggests that the benefits claimed in the literature could be realised.
They found e-procurement strengthens existing hierarchical relationships among
firms rather than market-based relationships (Barratt and Rosdahl, 2002). In another
study of 775 construction organisations, Eadie et al. (2011) identified that the
104 S. Koul et al.

Architecture, Engineering and Construction sector—diverse in both scale and nature,

ranging from traditional house buildings, through to complex structures—has been
lagging behind other sectors in the adoption of e-procurement and that smaller
companies may be put off by the costs of software (Kauffman and Mohtadi, 2004).
3 Purchase and Dooley (2010) studied 317 responses from Australian procurement
professionals regarding their experiences of using e-procurement systems. The
results indicate that if greater e-procurement acceptance is to be realised, then the
centralised procurement department must integrate the requirements of their supplier
base into the system’s processes and policies. Early introduction of e-tendering and
communication between suppliers and procurement professionals was found to be a
significant facilitator for greater acceptance of e-procurement.
4 Lee (2010) compared four e-procurement systems. He reports that Australia and
New Zealand utilise a dispersive supply method, whereas those in the US and Korea
utilise a central supply method. While Korea provides services based on procurement
transparency and efficiency, the US, Australia and New Zealand fulfil a contract
based on purchasing efficiency.
5 McKinsey, based on their study of 400 global cases (Garemo, et al., 2015), estimate
the global economy requirements of US$57 trillion by 2030 on transportation,
telecommunications, energy, and other infrastructure. Again governments could raise
infrastructure productivity by US$1 trillion a year by improving project selection,
streamlining delivery, and utilising existing investments for which no radical change
is required (Dobbs et al., 2013). One of its findings was that the cost of infrastructure
in one country was 50% higher as compared to its neighbouring country with similar
characteristics—a discrepancy driven by different approaches to design, engineering,
management, procurement and sourcing. This suggests that reforming the overall
planning processes and selecting the right project can reduce spending significantly.
This research also found that by utilising existing investments, such as improving
maintenance and paying congestion charges, increases in existing capacity are
possible. For example, the use of advanced signalling at M42 roadway in UK to
direct and control the flow of traffic reduced journey times by 25%, accidents by 5%,
pollution by 10% and fuel consumption by 4%—at only 20% of the cost of widening
the road. Another way to lower the cost of infrastructure is through improved
maintenance rather than building new facilities, which is far more expensive.
6 Bello and Iyagba (2013) and Ibem and Laryea (2015) investigated the use of
e-procurement in South Africa and Nigeria, respectively. They identified unreliable
IT infrastructure, lack of national IT policy, established cultures and security
concerns as the major hurdles to the uptake of e-procurement technologies. They
advocate improvements to the quality and quantity of Information and
Communication Technology infrastructure across the countries, skill development
programs in the use of e-procurement and to innovatively use existing e-procurement
technologies and tools to suit the needs of the industry.
7 European 2020 Strategy calls for simplification of PP policy in EU. The Single
Market Act (2011) has identified specific reforms in PP policy for delivering public
services and hence growth and competitiveness (Bovis, 2013). The reforms are
 Mapping public procurement practices in India 105

necessitated as public sector organisations exhibit an inability to regulate contractual

relationships.
8 Huka et al. (2014) report that reforms to encourage competition, transparency,
efficiency, accountability have been instituted in Kenya, Tanzania and Uganda, but
poor dissemination of the procurement laws, lack of training for procurement
officials and political interference with the procurement process remain as significant
challenges. Additionally, achieving value for money has remained as a distant goal
(Mamiro, 2010). The World Bank Group estimates that had the African nations
expended $12 billion on road maintenance in the 1990s, it would have led to savings
of $45 billion in reconstruction costs (World Bank, 2012, 2013).

3 PP in India

Public procurement in India, aims to fulfil objectives such as: maximize public welfare by
providing quality services and products, maximize growth opportunities for the private
sector and ensure efficient spending of government money (Sinha, 2009). India’s PP
policy, which seeks to ensure transparency, equality and fairness, and that public funds
not be wasted or misused is supported strongly by the judiciary. For example, the
Supreme Court of India in the Erusian Equipment and Chemicals Limited vs. State
Government of West Bengal case (Ray, 1975) emphasised the entitlement to equal
treatment of those who offer tenders or quotations for the purchase of goods. It also
reiterated that procurement policies be fair, transparent, non-discriminatory and non-
arbitrary and that the courts in future would safeguard any such transgression.
In 2006, the GoI issued guidelines to all ministries and internal departments for
procurement of all Goods, Works and Services. This was done to endorse transparency
and to remove arbitrariness in the system, and to encourage competition. Key aspects of
the guidelines were that:
1 The tender document should be user-friendly, self-contained and unambiguous.
Terminology used should be such as in common parlance in the industry.
2 The eligibility criteria (past performance, financial position, technical capability)
should be specified, as should the procedure for preparing and submitting the
tenders; and deadline for submission; date, time and place for public opening of
tenders.
3 Parameters for determining responsiveness; tenders evaluating and ranking of
tenders and criteria for acceptance should be clearly stated in the tender documents.
4 Any condition which was not incorporated in the tender document should not be
considered while evaluating the tenders.
5 Negotiation with tenderers is severely discouraged.
6 The name of the successful tenderer should be informed to the general public
7 Every effort should be made to conclude the contract within the original validity of
the tenders without the need for extension (CUTS-CITEE, 2012).
106 S. Koul et al.

Apart from the GoI, the other major public purchasing departments are the GoI’s
Directorate General of Supplies and Disposals (DGS&D) department, the Ministry of
Defense, the Ministry of Railways and the Central Public Sector Enterprises (CPSEs).
The DGS&D buys on behalf of the country’s 29 States and 7 Union Territory
governments. As on 1 January, 2015 the value of orders placed by DGS&D was nearly
US$700 million with 989 registered vendors (DGS&D, 2015). Similarly, the Ministry of
Railways procurement is valued at US$6.7 billion (Indian Railways, Annual Report for
2013-14). CPSEs, which are largely owned by the government, also make large
procurements to meet their requirements. The gross investment for FY 2013-14 was
US$274.16 billion (Department of Public Enterprises [DPE] Survey for 2013-14).
Additionally, various Ministries/Departments, District Authorities and the Local Bodies
also perform PP. Other government bodies that engage in PP include Indian embassies in
foreign countries, public sector banks, legislative branch and judiciary, both at the Centre
and State.

3.1 Public Procurement Bill, 2012

In 2011, the GoI set up the Dhall Committee to improve transparency in the PP arena. It
subsequently, decided to enact ‘Public Procurement Act’—which is under consideration
of Parliament (GoI/Public Procurement Bill, 2012). Salient features of the Bill are
summarised below:
1 The Bill applies to all PP entities and to any company in which GoI has ownership of
more than 50%. The Bill provides detailed rules for Goods, Works and Services,
Public Private Partnerships, Procurement by CPSEs and procurements for national
security.
2 Procuring entities have the responsibility to ensure efficiency, economy and
transparency and to ensure that prices of successful bids are reasonable and reliable,
in order to prevent corrupt practices.
3 All bidders are required to follow norms prohibiting practices like corruption, fraud
or collusion between the procuring officials and the bidders.
4 Provides for penalisation of individuals and companies with both imprisonment and
fines.
The PP Bill envisages a set of rules which will eventually replace the existing General
Financial Rules (GFR) 2005 (GoI/GFR, 2005) and Ministry of Finance’s (MoF) Manuals
on policies and procedures 2006 (GoI/MoF, 2006). Although, these regulations presently
constitute the applicable framework of best practices, they are not comprehensive enough
to cater to the exclusive requirements of individual departments. Ministries,
consequently, follow their own procedures. Additionally, the Central Vigilance
Commission supplements the rules and procedures by issuing its own ‘guidelines’ for PP.
The issue of fraudulent practices and corruption is being addressed by a shift towards e-
procurement.
 Mapping public procurement practices in India 107

3.2 Public e-procurement status in India

Web procurement promises to streamline administrative routines. It consolidates
purchasing practices to receive better service from the suppliers (Mohsen, 2001). In
India, e-procurement success stories, both in the private sector and the public sector, have
shown the utility of this approach. The e-Choupal by ITC Ltd. (Bowonder et al., 2007)
while facilitating purchase of commodities for soybean farmers also enabled them to
make better trading decisions with increasing transparency in the procurement process.
The Andhra Pradesh government’s procurement portal which provides services like
e-procurement, e-Tendering, e-Selling and e-Auctions, has also increased simplicity of
the procurement processes. Similarly, the Karnataka State Police Housing Corporation
uses e-tendering, and an online bidding mechanism for successfully procuring services.
The Mission Mode Project (MMP) of GoI (2006) is committed to rollout of the
GePNIC solution developed by National Informatics Centre (NIC), which is the
implementing agency for the e-procurement project. MMPs are individual projects that
focus on one specific facet of electronic governance, for example, commercial taxes, land
records or banking. This portal consolidates all tenders floated by various State
Government and Union Territories and provides details of contracts awarded across the
country. This consolidation aims to improve the efficiency, and integrity of the
procurement process, and, hence, bring about procurement reform across the
Government.
Major CPSEs use standardised web-based tools such as e-RFQ, e-Tendering,
e-Auctions and e-Invoicing (Panayiotou et al., 2004). Such e-procurement processes are
the foundation for the successful execution of e-Governance. It would be relevant to
mention that private sector companies are also playing an important role in acceptance of
digital governance and e-government.

4 Benchmarking procurement functions

In this section, recommendations of recent benchmarking studies are presented so as to

bring forth the areas of concern.
The benchmark survey (Davila et al., 2003) reports software for e-procurement
systems is usually acquired from third party vendors. However, integration of
e-procurement solutions with legacy systems, dealing with unidentified vendors,
deficiency of technology standards and the organisational readiness for e-procurement
were identified as the major concerns (Davila et al., 2003).
Although considerable research attention was focused on procurement during the
1990s, it was set primarily within the private sector and comparatively little attention was
paid to public sector procurement strategy and management (Murray, 2007). However,
the desire to understand best practices and benchmarks in PP has emerged over the past
two decades. For example, the Group of Twenty leaders, at the 2010 Seoul Summit,
emphasised the need for cross-country benchmarks to help identify areas for reform and
promote more transparent, competitive and efficient PP systems.
The US National Institute of PP in its 2014 benchmarking report (survey-based)
identifies four improvement areas: training and professionalisation, corporative
procurement, satisfaction surveys and spends management. It recommends to increase the
annual number of training hours in the procurement departments, to increase intake of
108 S. Koul et al.

employees holding procurement certifications, and to increase efforts on cooperative

purchasing, in addition to the requisite due diligence in contracting. Conducting of
periodic surveys for customer satisfaction and establishment of real-world processes for
spend management is also recommended.
The World Bank PP benchmarking study examined laws, regulations and practices in
four policy areas chosen for their high relevance in 10 specific countries (World Bank,
2015). The study looked at ‘accessibility of PP information’, ‘bidding for a procurement
tender’, ‘filing a complaint’ and ‘accountability and oversight mechanisms’. Analysis of
the data on ‘accessibility of PP information’ suggests there is room for reform in support
of greater transparency and accessibility. For instance, while results confirm that
accessing information during the pre-tendering and tendering phases is crucial for
prospective suppliers, it also reveals that predictability during the contract
implementation phase helps a supplier decide whether or not to bid for the tender The use
of information systems, their quality and capacity to be both centralised information
platforms and interactive tools to support communication between potential suppliers and
procuring agents, is an important instrument for analysis of accessibility. In the ‘bidding
for a procurement tender’ category, the approach of identifying the burdens that firms
may face when participating in a public tendering can spur governments to encourage the
private sector to compete for government contracts.
The study did not assess all factors considered pertinent to the ‘filing a complaint’
category. It however, represents a first step towards answering questions as to the
existence and characteristics of complaint mechanisms. This suggests the need for a
compliance checklist that measures adherence to recognised global good practices to
detect, identify and prevent irregularities. Again, in the ‘accountability and oversight
mechanisms’ category, the need is to preserve the delicate balance between the existence
of a normative system for accountability and oversight and the flexibility and efficiency
of the overall system. The study identified good practices, such as recording each step in
the procurement process or establishing special procedures for public officials to report
misconduct.
Below is a suggested list of PP best practices as identified from above for the likely
adoption and implementation (Barratt and Rosdahl, 2002; Davila et al., 2003; Seong and
Lee, 2004; Kauffman and Mohtadi, 2004; Croom and Brandon-Jones, 2007; Purchase and
Dooley, 2010; Lee, 2010; Huka et al., 2014; Ibem and Laryea, 2015; McKinsey, 2015;
World Bank, 2015; OECD, 2016) and include.
• Make continuous improvements and look for opportunities to automate; invest in
technology; Identify IT infrastructure and a national IT policy with security to uptake
of e-procurement technologies.
• Establish appropriate levels of control and minimise risk.
• Establish laws, and reforms to emphasise transparency, competitiveness and efficient
systems accountability for delivering public services and hence growth and
competitiveness.
• Include small businesses and social goals in the centralised nationwide
e-procurement system.
• Adopt due diligence in contracting, cooperative purchasing and standard templates.
 Mapping public procurement practices in India 109

• Training and professionalism; train employees on procurement; intake of employees

holding procurement certification; periodic surveys for continuous improvement.
• Establish real-world processes for spend management.
• Interactive tools to support all communication with the prospective suppliers;
communicate with employees and partners.
• Establishing a complaint mechanism in the entire system, identify and prevent
irregularities, such as recording each step in the procurement process or establishing
special procedures for public officials to report misconduct; induct complaint
mechanisms in all systems.
• Preserve right balance between the existing normative system for accountability with
flexibility mechanisms so as build in the efficiency of the overall system.
Some data points merit further exploration. For instance, certain practices may be more
efficient than others when it comes to improving PP systems and fighting corruption. The
efficacy of these practices, especially when employed in domestic PP systems, needs
further examination. Further, all the studies were of a pilot nature and the results,
consequently, require further analysis, exploration and careful interpretation. In future, as
more countries get involved, a comprehensive assessment of the complexity of
procurement processes from the viewpoint of prospective suppliers can be obtained.

5 Findings and recommendations

Public procurement practitioners in every country face challenges that stem from the
economic, social, cultural and political environment that are unique to each country
(Thai, 2004). These internal challenges range from interference from other departments,
to shortage of funds. External challenges result from factors such as the markets in which
they operate, legal and political set-ups, organisational and socio-economic factors. These
challenges can be addressed by using benchmarks for improving PP (Sanchez-Rodrigues
et al., 2003) and achieving effective progress and reforms (Tudor, 2005).
In India, a country-wide attempt at implementing a public e-procurement system is
underway. A patchwork of existing regional PP systems is now evolving into a robust
national system which is being driven by a legislative framework. However, significant
challenges exist. The fact that PP generates huge financial flows makes is vulnerable to
fraud, corruption and political influence. The technical challenges include transitioning
from legacy to digital system, procurement ambience in the country and ensuring security
of the procurement data and online transactions. The resistance to change, lack of
technical standardisation and lack of user training also hamper full use of e-procurement.
For example, requiring digital signatures could create a barrier in the absence of widely
accepted standards for digital signatures.
Based upon the factors that have emerged from the PP studies investigated, and
mapped as mentioned in Sections 2–4, some suggestions for improving public
e-procurement in India are listed below:
110 S. Koul et al.

5.1 PP involvements and implementations

Government of India should ensure a definite objective for all the concerned departments
and have relevant measures put in place to evaluate the end-results. This can be
accomplished by means-and-matrices to observe if the prevailing procurement system
meets and monitor the requirements of the buyers and sellers. Every major process or
legislative change, as such, needs to be vetted through surveys including customer
(internal and external) satisfaction. Legal regulation and validity of electronic
information exchange must be clarified. Customary training of staff on regular basis, and
certification of officials must be made mandatory for all procurement-related functions.
Procurement bodies such as, GePNIC, should ensure that all state governments
implement the e-procurement system by the stipulated date. Further, alliances need to be
forged with nations for multilateral online trade and e-procurement activities.

5.2 Technological assurances

NIC, as the implementing agency for the public e-procurement project, needs to be
abreast of the latest technologies for online procurement. It must ensure that a suitable
technology platform (Azadegun and Reich, 2010) is available for implementation through
the GoI’s MMP portal and that PP information, at a national level, can be accessed by
authorised users only. To combat security issues, the use of open standards-based Digital
Signatures, Strong authentication and Encryption techniques is necessary. The
confidentiality, integrity and availability of the e-procurement system, and of all the
PP-related data, while at rest or in motion must be maintained. Finally, NIC should also
ensure that proper regulations are followed for Electronic Fund Transfer System.

5.3 Economic thrust matters

The challenges of transitioning from legacy to transactional systems, because of the
suppliers willing to continue with existing system rather than invest in new technologies,
hampers e-procurement adoption. GoI should, in the initial phases, provide financial
incentive to all buyers and suppliers to take-up the online procurement route. It should
encourage environmental considerations in each stage of the procurement lifecycle and
the use of internationally or nationally standard commercial terms and model documents.

6 Conclusion

Public procurement plays a broad social and political role apart from its economic role.
Its stated goals are to achieve public confidence in the procurement process, improve the
efficiency and effectiveness of the public monies being spent, and to retain consistency
with other national policies World Bank (2015). These goals, often, are not in full
harmony, because practicing PP is a highly complex endeavour which is susceptible to
multiple pressures. Nevertheless, GoI can use its huge purchasing power and use PP as a
strategic tool to promote sound social, industrial and environmental policies, and to
catalyse more inclusive growth. Even small improvements in PP functioning can bring
benefits in the form of economic-safety and well-being of the citizens. Furthermore,
reporting on the efficiency gains can strengthen the role played by PP towards good
 Mapping public procurement practices in India 111

governance in the country. As a limitation, the study has not been able to scale the recent
initiative of public e-procurement in fully meeting the developmental, social and
environmental goals. This is anticipated to be taken up as future research.

Acknowledgements

The authors would like to acknowledge the helpful comments made by the Journal’s
editors and the three anonymous reviewers that have made the paper more systematic and
instructive.

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