nasscom e-governance study
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Nasscom has recently published a study of procurement practices in the e-Governance sector. The original study is hosted in www.egovreach.inTRANSCRIPT
A NASSCOM Study
eGovernance & IT Services ProcurementIssues, Challenges, Recommendations
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study2
Copyright ©2010
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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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study3
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study4
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study5
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study6
Executive Summary
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study7
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study8
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study9
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study10
- 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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study11
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study12
Introduction
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study13
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study14
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study15
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study16
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study17
Guiding Principles forPublic Procurement
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study18
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study19
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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study20
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study21
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study22
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study23
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study24
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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study25
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study26
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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study27
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study28
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study29
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study30
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study31
No Offi ce Order No.
File No. Date of Issue
Subject Details of the Circular
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study32
No Offi ce Order No.
File No. Date of Issue
Subject Details of the Circular
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study33
No Offi ce Order No.
File No. Date of Issue
Subject Details of the Circular
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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study34
No Offi ce Order No.
File No. Date of Issue
Subject Details of the Circular
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study35
No Offi ce Order No.
File No. Date of Issue
Subject Details of the Circular
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study36
No Offi ce Order No.
File No. Date of Issue
Subject Details of the Circular
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study37
No Offi ce Order No.
File No. Date of Issue
Subject Details of the Circular
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study38
No Offi ce Order No.
File No. Date of Issue
Subject Details of the Circular
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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study39
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study40
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study41
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study42
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study43
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study44
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study45
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study46
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 & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study47
eGovernance ProjectsGovernment Perspective
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study48
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study49
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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study50
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study51
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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study52
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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study53
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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study54
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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study55
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study56
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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study57
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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study58
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study59
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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study60
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 & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study61
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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study62
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study63
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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study64
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study65
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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study66
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study67
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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study68
Industry Perspective
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study69
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study70
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 res- ponses 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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study71
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study72
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study73
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study74
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study75
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study76
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study77
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study78
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study79
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study80
Study of Global Public Procurement Practices – Canada/Singapore
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study81
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$500 million cost savings to the
government. This translates to an average of 28 per cent over current Infocomm expenditure for
equivalent services.
Individual public offi cers can also look forward to greater mobility at work, through use of mobile
computing devices as they can seamlessly access government resources from anywhere and anytime.
Additionally, public offi cers who transfer from one government agency to another will continue to access
government resources and their work data using the same set of tools and interface.
5.1.1.2 Scope of work of SOE
Under the SOE initiative, agencies will procure SOE services from a pre-defi ned menu of bundled
SOE services and each complete bundle is referred to as a SOE seat. Each SOE seat will diff er in the
combination of SOE services, such as:
1) Computing provisioning services – diff erent hardware, software and IT peripherals
2) Support services – diff erent service level requirements
3) Messaging and collaboration services – diff erent email features and storage quota
4) Network services – diff erent Wide Area Network and Local Area Network services
5) Computing lifecycle management service – diff erent refresh periods
In addition to the SOE seats, agencies will be given fl exibility to customise their SOE seats by
subscribing to add-ons, such as a larger screen size, higher performance computing devices, or higher
service level.
Study of Global Public Procurement Practices Canada/Singapore
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study82
5.1.1.3 Key facts
S No. Criteria Fact
1 Value S$ 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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study83
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study84
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study85
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study86
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study87
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study88
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study89
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study90
Study of IT Management in a PSU Bank
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study91
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study92
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study93
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study94
Summary, Recommendations
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study95
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study96
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.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study97
Annexures
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study98
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study99
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study100
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)
S No. Name of 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)
S No. Name of 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
S No. Name of the project
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study101
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
S No. Question Answer
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
Name of vendor executing the project
Section of RFP
Specifi c suggestion
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study102
2.2.2 International eGovernance experience
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 that you would like implemented in India
S No. Details of the RFP
Name of vendor executing the project
Section of RFP
Specifi c suggestion to be replicated in Indian eGovernance projects
S No. Name of the project
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
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study103
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
Specifi c suggestion
S No. Name of project Name of vendor executing the project
Issue related to project Post Go–Live stage
Specifi c suggestion
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study104
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
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