While the goal of the government is to get the most cost-effective services at a competitive price, most often the objective is lost in government-bending rules to favour one party over the other. More often than not most tendering disputes relate to non-pricing factors like quality, which is usually determined at the prequalification stage, says Ramrao Mundhe
At a point when the future of the country hinges on the development of its infrastructure, unfair bidding can only be an impediment in the way to development.
Even while mere bidding does not guarantee a fair outcome of best quality and price, an unfair one can simply be disastrous to the public service delivery system at large.
The Planning Commission, Government of India expects a massive investment of $492 billion in the infrastructure sector over the Eleventh Five Year plan.
For this the government is largely banking on support from the private sector, as nearly a third of this investment is likely to come through the private sector with public private partnership (PPP) mode as one of the preferred routes.
PPPs in our country are still at a nascent stage compared to those in other countries. In its efforts to keep pace with the global scenario across sectors, the government at all levels is procuring at a rapid rate and entering into contracts with the private sector.
However, while it does so, the government’s contractual interactions with the private sector, and resistance to adoption of modern procurement tools due to vested interests, are becoming increasingly complex.
The country is desperate to see new capacities come up as fast as possible and flaws in the bidding process is the last thing one wants to witness. For that to happen we need to evolve a sound mechanism in our tendering process to accelerate an infrastructure upgrade.
Favouritism, double standards, illegal are often the terms used by the losing bidder in the court of law. For instance, Anil Ambani’s RIL Airport Development was crying foul over the Delhi and Mumbai airport bidding. It argued that, as originally the highest financial bidder for the Delhi airport and the highest technical bidder for the Mumbai airport modernisation programme, the company should have been awarded at least one of the projects. But the bids swung in favour of the GMR and GVK groups.
Similarly, the Rs 20,000 crore Sasan ultra mega power project to be set up through tariff-based competitive bidding got delayed by nearly seven months as the Lanco-Globeleq consortium, which initially won the bid in December last year, was disqualified later for violation of norms. Another such project at Mundra in Gujarat has been transferred recently, after delays, to the Tata Power Company.
Considering the magnitude and the number of upcoming projects in the PPP mode in the infrastructure sector, the bidding or tendering process assumes immense significance. And for that tendering in the public sector has to get more transparent so as to minimise the scope of vested interests at several levels, making the otherwise not so complex decision – a complicated and tedious procedure.
While the goal of the government is to get the most cost-effective services at a competitive price, most often the objective is lost in government-bending rules to favour one party over the other. More often than not most tendering disputes relate to non-pricing factors like quality, which is usually determined at the prequalification stage.
Ministerial conferences have been emphasising on the timely completion of power projects as a major reform agenda. But reforms are for the consumption of bureaucrats only. Distressingly, non-technical managerial issues and not equipment supplies, etc. are found to be responsible for holding back power projects. But the government now must ensure that such “mishaps” do not happen in future.
While incorporating reforms in PSUs tendering is not a Herculean task – it requires will on the part of the government. For one the process of short-listing the competent bidder should rest in the hands of professionals with expertise in the particular sector or alternatively with available cutting edge software.
According to experts, the Government of India agencies and all corporations should also consider using Request for Proposal (RFP) evaluation software like eRFP from a procurement management standpoint. The eRFP software permits purchasing organisations to track the progress of each evaluator, capture the evaluator’s comments for use at review meetings, identify strengths and weaknesses of each proposal, score proposals in a more objective and less subjective manner, and produce detailed reports that assist in the decision-making process.
The use of technology makes it simpler to identify the “best qualified” firm or proposal objectively. By ensuring the selection of the most qualified firms, the agencies anticipate that it will realise cost savings by having projects completed on time and within budget.
From the evaluator’s point of view, the eRFP software gives them the ability to enter their evaluation online.
The software guides each evaluator through an organised set of on-line forms with pre-defined evaluation criteria and standards. Evaluators have access to the relevant sections of the RFP that was issued for the project without having to revert to a paper copy of the RFP. Using the software, evaluators can record strengths, weaknesses, deficiencies, and statements regarding their rating of each evaluation criteria.
While UP and Punjab governments have announced e-tendering for greater transparency and accountability in the bidding process, other states have yet to come up with such steps to improve the bidding process. We do have the technology – but it needs stronger political will to implement?
The Author is an Economist with CUTS Centre for Competition, Investment and Economic Regulation and can be reached at rm6@cuts.org