Management Accounting

MAB30 eProcure

Submitted By

Deep Vaghasiya 428

Jigesha Yadav 440
Rajni 473

FACULTY OF MANAGEMENT STUDIES

UNIVERSITY OF DELHI
 Jan 2003 Government of Andhra Pradesh's
e-GP System Go-live

May 2005 e-GP system Go-live in Indian

Railways

Nov 2006 Amendment to KTPP Act by GoK

2007 DoC identified as Line dept. for e-GP

MMP

Aug 2007 Government of Chhattisgarh (GoC) e-

Proc Go-live

Dec 2007 Government of Karnataka (GoK) e-

Proc Go-live

Jan 2008 GePNIC software first release

Jun 2009 NRRDS adopts GePNIC

Sep 2009 CVC issue e-GP security guideline

2009 DGS&D initiates process for e-GP ASP

empanelment

Jan 2010 Govt. of Kerala e-GP RFP published

May 11 Govt. of NCT adopts GePNIC

May 2011 STQC issue draft e-GP security

guideline

Jan 1st, 2012 eGP made operational

August 2016 Government e-Marketplace

(GeM) was launched

2017 General Financial Rules for procurement

of goods and services

Key Milestones in e-GP Development in India

https://eprocure.gov.in/cppp/sites/default/files/eproc/CPPP-AnnualReport-2017-18.pdf

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 No. of tender published
1200000

1000000

800000

600000
1124245

400000 827397
699948 717669
509941
200000 357980
250818
102853
0 34 1663 38129
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22

Financial Year

Value of Tenders Published( In Rs. Cr)

1200000

1000000

800000

600000
1124245

400000 827397
699948 717669
509941
200000 357980
250818
102853
0 34 1663 38129
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22

Financial Year

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Background

Traditionally, procurement in Government departments has always been operated through a manual
tendering process. This process generally started from getting departmental approval for a specific
project, publishing about it through media outlets, bid submission by suppliers, bid evaluation by
Government departments or an authority and finally awarding the tender and signing of the terms &
conditions. So the whole process requires many inter department approvals, scrutiny and visits to
suppliers and of course many reams of papers!. All of this is time consuming and expensive and at
the same time open to biasness, sensitivity, and subjectiveness.

Since the procurement system in India was decentralized, the emergence of e-procurement was
inevitable. By adopting unified e-procurement, it reduced the number of installations. Although
multiple e-procurement systems do exist, they are made interoperable to develop a national e-
procurement system.

The National e Governance Program (NeGP) push to implement e-GP MMP(mission mode project)
occurred against the backdrop of institution-driven unified e-GP system implementations and
continuous acceptance of eGP systems in individual departments.

In its meeting on the 13th of June 2006, the Apex Committee constituted to monitor the
implementation of NeGP (headed by the Cabinet Secretary) requested to speed up the deployment
of e-GP. In 2006 and 2007, the Ministry of Finance's Department of Expenditure issued two
instructions requiring all departments and public sector organisations to use e-Procurement.

Four procurment entities:(i) State Government of Kerala (SGoK), (ii) State Government of Himachal
Pradesh (GoHP), (iii) State Government of Madhya Pradesh (GoMP), (iv) Ministry of Health and
Family Welfare (MHFW) that are selected for pilot e-GP implementation, out of which GoMP and
MHFW dropped out of the pilot. GoMP wanted to improve two ea-GP systems that were already in
use in th of the pope state. Kerala and GoHP each received two RFP documents. The Kerala
government issued the RFP(Request for proposal) in January 2010, but no significant movement has
been made since then. The GoHP has requested explanations on financial arrangements for the
implementation of e-GP, and the pilot programme has been placed on hold in the meanwhile.

In order to speed up the implementation of the e-GP system, the idea of a national e-GP site was
proposed. Instead of setting up their own e-GP systems, government departments might use the
National e-GP site to manage their procurement activities. DGS&D took the lead in establishing the
National e-GP Portal and promoting its use as a shared infrastructure among government
departments in all Indian states and union territories. Himachal Pradesh, Goa, Madhya Pradesh, and
Uttarakhand are among the states that have expressed interest in implementing the national e-GP
system. However, because the tender to pick an e-Procurement solution provider to construct the
National e-GP system could not be finalised, this plan did not materialise. This tender was the
subject of a lengthy legal battle.

Government departments had the option to use the e-GP solution developed in-house by NIC titled
“GePNIC”. The solution has been operational since 2007. NIC offers to host the solution in their data
centers located in States across in India and their central data center. The support required for
implementing e-GP system would be provided by NIC offices located in States and the offices located
in the District level. Interested Government departments can choose to procure the services of NIC
directly since procurement from a Government agency need not go through a tendering process.
The adoption of e-GP solution developed by NIC is an option available to expedite the adoption of e-
GP across India.

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Committee Chaired by Shri. Vinod Dhall, former Secretary, Ministry of Corporate Affairs submitted
report3 on key reform recommendations in public procurement and and setting up the portal. This
portal is intended to serve as a centralised system where aggrieved parties can file complaints and
request a review if processes have been broken. The facts of the contract award will also be made
public. The creation of a centralised portal is envisioned as a means of increasing competitiveness.
The Department of Commerce was in charge of building up this site in collaboration with the
Department of Expenditure (DoE). A group made up of officials from DIT/NIC, DoC, DoE, and main
procurement departments decided on the technical details of the platform.

Objective

Procurement was always a hot topic when it comes to the transparency of the process. Public
procurement mainly includes two parts: infrastructure projects and service projects. Perhaps it is the
most alleged process of large scale bias and corruption.

As IT adoption increased, E-procurement became an attractive solution for governments both

central and state as it brings more transparency, cost cutting, competitiveness and efficiency. With
this path-breaking initiative government departments can eliminate inordinate delays, multi-level
inspection time, cartel formation by bidder

The prime objectives of adopting e-procurement for the government are demand aggregation, to
find best possible bidder, reduce unnecessary inventory cost and utilise this capital elsewhere,
increase transparency, create fair and equal opportunities for suppliers and make whole process
seamless

 Improving connectivity between stakeholders mainly government departments, inter-

government agencies, private companies, citizens.
 To develop Unified and end-to-end procurement system
 To enhance transparency and accountability
 Improve efficiency of procurement process by way of reducing costs and cycle times
 Assurance of high quality services
 Remove entry barriers for bonafide sellers
 Promote inclusiveness by providing platform to large number of sellers and buyers
 Adopting the cashless, contactless, and paperless transactions

Functionalities of e-procurement Marketplace

 Online registration – Procurement department and vendors

Contractors and suppliers, as well as procurement bodies, must enrol in the CPP site using a
Digital Signature Certificate (DSC).

 Creating and publishing the tenders:

This provides procuring entities to generate and publish tenders online by writing down
essential tender information such as bid submission, opening/ending dates, pre-bid
meetings, procurement nature, tender values, EMD, tender fees, tender validity, and so on.
The entire Notice Inviting Tender document and relevant documents must be published in
pdf format.

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---------------------------------------------------------
3 http://www.gajendrahaldea.in/download/COPP_Report_June_2011.PDF

 Publishing of corrigendum and pre-bid meeting decisions

If procuring party wants to edit the tender documents after floating, in this situation there is
a provision to issue corrigendum on portal

 Online bid submission/re-submission/withdrawal

Bidders must submit their bids online in accordance with notice inviting tenders
(NIT)/Invitation for bids (IFB) guidelines. There is also the option to resubmit bids an
unlimited number of times, as well as withdraw offers prior to the bid closing date and time.
Digital signatures are required on all documents. On submitting the bids online, the bidder
receives an online acknowledgement.

 Technical & Financial evaluation

After the closing time for bid, Bidders are chosen based on their technical and financial
qualifications. The bid documents are downloaded and evaluated, and the committee's
recommendations are updated. For price bids made from templates available on the CPP
platform, automatic comparative charts are generated.

 Allocation of contract
Selected bidder is officially notified on CPP portal.

 Security with secure socket layer ( SSL) encryption, strong authentication with digital
certificates, PKI encryption of data

Incentives for small and medium-size enterprises to access market opportunities

As per the World Bank Group report 4, many countries are using various techniques of
incentivising small and medium enterprise to participate in public procurement system. One
reason could be the large number of business and the employment opportunities. Despite this,
only 43% of the economies studied have put in place particular legal requirements and/or
policies to encourage SMEs' fair access to government contracts.

In the EU, incentives are uniformly applied to all EU members. The new public procurement
regulations require that huge public contracts be divided into smaller batches, allowing SMEs to
compete in large auctions.

In other regions, such incentives come in a variety of shapes and sizes. For an example, In our
case (India) and countries like Algeria, Côte d'Ivoire, Dominican Republic, and Morocco procuring
bodies must "put aside" roughly 20% of the entire value of government contracts for SMEs. In
Kenya and Angola, the ratio rises to 25%, while in Taiwan, China, it rises to 40%.

Bid Security

In terms of bid security, we have bank guarantee for it whereas other countries like Israel, USA
and UK have Insurance guarantee also. This provides additional level of confidence for sellers.
Moreover in USA and Israel, there is consultation between procuring entity and private sector
for needs assessment and it is publically advertised.

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 ----------

4 https://openknowledge.worldbank.org/handle/10986/32500

Complaint review time

If service provider has some issue and entity raises this issue than time for first-tier review body
to render decision in our case is 365 days whereas for USA UK 60 days which fasten the whole
process. For second-tier review too, we have 90 day time limit to appeal whereas USA UK has 10
days. This shows in some cases why we have so much delay in procuring.

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 Cost Benefit Analysis
Central public procurement portal has revolutionised the procurement process starting from
posting the requirements to the final payments. One of the most obvious benefit that we can
easily see is the elimination of the paperwork and tedious approval process from different
departments. Now government offices are saving lakhs of rims and rather than transferring
application departments manually now with one click they can do the same which helped to
fasten the process and saving on stationary cost, eventually resulting in reducing tender cycle
time and saving tax payers’ money. This was all possible due to adoption of DSC and this
initiative.

To create healthy competition, government is also aware about the difficulties that small and
medium size enterprises are facing. For providing equal ground to this companies, some
procuring departments are giving exemption to SMEs and start-ups for years of experience
required and turnover criteria. This is beneficial to both for procuring departments and biding
companies. Presence of healthy competition reduces the overall procurement cost and
respective departments can take maximum value out of allocated capital.

Cost item can be divided into three parts. First one is set-up cost which are fixed and one time
needed. Mainly e-GP software, server infrastructure and training set-up fall in this category.
Second one is Marginal cost which increases with the adoption and usage. software
customisation, e-procurement cell, help desk, hand holding support require recurring
expenditure and it increases marginally with the adoption whereas IT infrastructure and DSC to
users fall in one time expenditure category but they are not fixed as it depends on how many
departments are using it. Lastly Maintenance expense which are recurring and more or less
fixed. Training operation, System administration and data center hosting fall into this category.

In the case of unified e-GP systems, the setup and maintenance costs are shared across a larger
number of users. In addition, the cost of adding a new user department to a unified e-GP
platform is rather low.

Benefits to buyers:

 Uniform and standardized tendering process across the department

 Reduction in Procurement cycle time & Tender publishing costs
 Safe, Secured Platform
 Procurement Processes Efficiency increased
 Automated milestone based SMS and mail alerts
 Vast opportunities
 Reduction on Cartel formation

Benefits to bidders:

 Zero Cost to Bidders, No Per-Bid Charges or registration charges.

 Eliminates the tedious process like multiple bid copies in paper form.
 Reduces the unnecessary trips to departments
 Transparent, Free participation
 Provision to modify, re-submit and withdrawal the bid documents till bid closing time.
 Increased visibility: all tender information available at one place

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