E-procurem.andra Predesh

8/8/2019 E-procurem.andra Predesh

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eProcurementeProcurementin Andhra Pradeshin Andhra Pradesh



Procurement in GoAP Procurement in GoAP

GoAP annual procurement ~ Rs. 8000 Cr ± Goods, Services, Works and Turnkey contracts

Procurement Practices

± Centralised Procurement ± AP Medical Infrastructure, COT ± Distributed Procurement ± APSRTC

Common Procurement Mechanisms ± Tenders ± Open, Limited, Single

± Rate contracts ± Direct Purchase Orders

Processes governed by the guidelines of AP Govt. andof external agencies like WB and OECF



Problems in Conventional Problems in Conventional

Procurement Procurement Tender boxes at multiple locations

Delays in issue of tender schedules to suppliers

Cartel formation suppresses competition

± keeping financial bids close to the maximum permissible

Physical threats to bidders

Manual movement of tender files from districts to theoffices of the Heads of Department

Delays in finalisation of tenders

Possibility of tampering or loss of records

Human interface at every stage

Difficulty in maintaining confidentiality of evaluation



Cabinet subCabinet sub--committee on tender committee on tender

reformsreforms ± ± Year 2000Year 2000

Simplification of procurement procedures

Achieving greater transparency in procurement

Reducing delay in procurement

Improving quality of construction

Ensuring timely completion of projects



I nitial Steps in 2002 I nitial Steps in 2002

eProcurement identified as a core eGovernance project

± with relevance across the government

First among governments to implementeProcurement

Services of PwC utilized to prepare RFP

Steering Committee initially headed by SpecialCS, T,R&B ± later headed by CS

Transparent & meticulous selection process



ee--Procurement Objectives for GoAP Procurement Objectives for GoAP

Leverage buying power through demand aggregation

Better value for money for government

Significantly reduced cost and time of doing business

for both government and industry

Level playing field, ³fair´ competitive platform and

single registration for the suppliers

Increased transparency, monitoring and control of

procurement process



Steering CommitteeSteering Committee

Chaired by Spl. Chief Secretary, Transport Roads &Buildings Dept during pilot phase

Now chaired by Chief Secretary

Members include ± Concerned Principal Secretaries/ Secretaries

± Heads of all participating Departments and organizations

± Representative of Service Provider

Mandate to take decisions on business model, selectionof service provider, process re-engineering & changemanagement

Acted as platform for inter agency collaboration



Initiate

Implement

e-Procurement

Decision on

Exchange Model

Decision on

Ownership Model

Join Existing

Exchange

Build PrivateExchange

Independent

Exchange

Supplier-Led

Exchange

Exchange#1

Exchange#n

Govt.-Led

Exchange

Business & technology models Business & technology models

Decision on

Operational Model

Single Point

Co-ordination

Distributed

Operations

Decision on:

Technology

Leveraged

Solution

Ground up

Development

Package

Implementn.



Scope of eScope of e--Procurement Services Procurement Services

Pre-procurement processes

Tender Management system ± Online publication of tender notice

± Online bid submission ± Online evaluation

± Online issue of Letter of award

Rate contracts and catalog buying

Auctions & reverse auctions Supplier registration

Contract monitoring

ePayments, PKI



ee--Procurement Procurement ± ± Business Model Business Model

Public Private Partnership Model selected

Partner expected to:

± invest upfront in the project based on the ASP model

± build and customize an eProcurement exchange ± recover investment through hosting, transaction fees and

value-added services to suppliers

Pilot for 9 months with 4 key depts/organizations

± APTS, APSRTC, APHMHIDC & COT ( I&CAD, R&B)

After success of pilot, option kept to form JV, or toexplore alternate models



Departments Selected for Pilot Departments Selected for Pilot

APSRTC

Deals with big suppliers like MICO,Ashok Leyland etc.

Total procurement spend of Rs.946 crores

Over 2000 suppliers

Majority of tenders are µLimited¶.

APTS

Web interface for other department users

exists for inquiring the procurement

status, submitting the tender.

Procurement spend of over Rs 65 Crores.

APHMHIDCComputerization exists at the store levels.

Supplies drugs to over 1500 hospitalsProcurement spend of over Rs 100 Crores

Over 1000 PO¶s per annum

COT

Central cell for Irrigation and R&B

Total value of tenders accepted in

F.Y.2002-03 , 330Cr

Procurement of works above 1 Cr



Selection of Private Partner Selection of Private Partner

Ariba

Commerce One

12 Technologies

Iplanet ± SUN Oracle

SAP Markets

Tejari.com

Wipro01 markets

Indiamarkets

Freemarkets People soft

Broad vision

M/s PwC prepared RFP

Based on market research RFP was issued to 12

leading eProcurement firms in India and abroad



ee--Procurement project phases Procurement project phases

Phase I

Analysis and Design

Phase II

Solution Selection

Phase III

Conduct Pilot

Phase IV

Roll Out

Analyse spend Study business

requirements

Assess supplier

readiness

Identify high level

technical and

functionalrequirements

Develop business

model

Solution evaluationapproach

Solution selection

Identify select

departments for e-

Procurement pilot

Identify necessary

third party solutionproviders

Functionalrequirements for the

pilot

Creation of catalogs

Supplier adoption

Infrastructure

creation

³Sample´ transaction Training and

documentation

Change

management

Analysis of learnings

Roll-out plan

Departmental roll-out Additional

functionality roll-out

On-going operations,

maintenance,

administration

CurrentStage



I nfrastructure & Training in Pilot I nfrastructure & Training in Pilot

www.procurement.gov.in hosted on 4 high-end

RAID 5 servers at Tata Data Centre

Infrastructure made operational in:

R&B: 20 circles + 5 Chief Engineers + EnC Irrigation: 25 circles + 9 Chief Engineers + EnC

APHMHIDC: 23 stores + HQs

Commissionerate of Tenders

APTS & APSRTC (infrastructure upgraded)

More than 300 contractors/suppliers registered

500+ contractors/suppliers trained on eProc

More than 300 officers trained on eProc



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E E --Procurement Security Features Procurement Security Features

Encryption of sensitive information at the database level

PKI enabled: Supports Digital certificates from any CA

Digital Notorization services for time stamping

128 bit SSL encryption of all transactions

Admin & transaction log of each event

Firewall to prevent unauthorised access

Intrusion detection system

Antivirus protection



Ex ecutive OrdersEx ecutive Orders

& Service Level Agreement & Service Level Agreement Government orders issued

± Generic G.O. Ms. No. 2 dt. 15.01.03 by IT&C Dept

± Engineering: G.O. Ms. No. 36 dt. 07.03.03 by I&CAD Dept

_ On line tenders mandatory for transactions above Rs 1 Cr

± Instructions issued to publish all NITs on eProcurement

marketplace ± Model SLA approved by Steering Committee on Jan 24th 2003

± SLA signed by participating departments separately

eProcurement portal launched on Jan 29th, 2003

Threshold limit lowered to Rs 50 Lakhs for eprocurement

Roll out to all depts.: G.O. Ms. No. 20dt. 06.07.2004 byIT&C Dept

- Threshold limits further lowered to Rs 10 Lakhs



eProcurement eProcurement -- Benefits demonstrated Benefits demonstrated

Savings to Government

± Total anonymity generated more competition

± Discounts quotations even in Single bid tenders

± Savings estimated at Rs. 255 Cr in 2003-04 ± Significant reduction in newspaper advertising costs

± Automated work flows shortened tender cycle time from 90 to

180 days in the manual process to 45 days in eProcurement

Transparency

± Bid documents freely available on Net.

± Tender evaluation status automatically published to bidders

± Corrigendums in public domain

± No interface with departments upto tender opening



Reformist outlook to Govt

± Eliminated cartels, syndicates

± Avoided fighting among potential bidders

± Drastic reduction in adverse press reports

± Project won Golden Icon award for eGovernance

Initiative

Empowerment of Bidders ± Remote submission of bids

± Reduced bidding costs

± No more dependence on departmental officials

eProcurement eProcurement -- Benefits demonstrated Benefits demonstrated



Tender AnalysisTender Analysis source source--COT COT

Year No. of tenders ECV(Cr) TCV (Cr) %

2001-02 188 755.29 735.57 (-)2.65

2002-03 125 558.36 510.07 (-) 8.65

2003-04 160 1101.69 884.21 (-) 19.74

Type No. of

tenders

ECV (Cr) TCV (Cr) %

eProcurement 107 733.55 549.93 (-)25

Conventional 53 368.14 334.78 (-) 9

Tender approved during 2003-04

Additional discount due to eProcurement was 16%



E-Procurement MISTheimage cannotbe displayed.Your computer may nothaveenough memory toopen theimage,or the imagemay havebeen corrupted. Restartyour computer,and then open thefileagain.If thered x stillappears,you may havetodeletethe imageand then insertit again.

http://www.eprocurement.gov.in/http://www.eprocurement.gov.in/



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ASP model to be continued

7 servers at Primary site and 2 servers at DR site

Exclusivity to C1 India for e-procurement for tendersabove Rs. 10 lakhs ECV.

APTS to develop an alternate eprocurement platformfor Rs. 10 lacs and below

Agreement period for 3 years (from 1-4-2004 to 31-3-2007)

Source Code will be kept in an Escrow account GoAP would buy the software at the end of three

years at the Residual Value of Software

Eprocurement fund proposed to sustain theeprocurement initiatives and for supporting related

projects

N ew Business Model N ew Business Model Recommended by SubRecommended by Sub--committee and approved by Steering Committeecommittee and approved by Steering Committee



Pricing payable to C1 India:

± No tender hosting charges

± 0.04% of ECV with a cap of Rs. 10,000/- per bidder for

all works upto ECV of Rs. 50 crores and Rs.25, 000(Twenty five thousand) per bidder for works with ECV

above Rs. 50 crores. Service charge @10.2% is extra

over above tariff.

± GoAP would not give any guarantee to C1 India on the

revenues

± The bid processing fee to be collected from the bidders

electronically at the time of submission of bid.

N ew Business Model N ew Business Model Recommended by SubRecommended by Sub--committee and approved by Steering Committeecommittee and approved by Steering Committee



Current statusCurrent status

Pilot done successfully & Rolled out

15 Departments & Organizations currently participating ± PR Engg, SW Engg, PH Engg, Police Housing, Animal Husbandry dept, APSRTC,

Horticulture, HMWS&SB, HUDA, APSTC, 6 Municipalities joined later apartfrom those in pilot phase

APTransco and Singareni are expected to join in

Decision taken to extend eProcurement to all Depts.

WB concurrence to use portal for funded projects sought

2003-04: Rs.1982 Cr (564 Nos)2004-05: Rs. 1308 Cr (1401 Nos - upto Jan 05)completed & Rs 1124 Cr (2070 Nos) in progress.

Target volume for 2004-05 is Rs. 5000 cr.



Change Management Change Management

Key officers of engineering depts trained as CIOs

³As Is´ position documented having multiple rounds of interaction with each department

eProcurement processes explained to officers

Series of workshops with departments and contractors tocapture requirements

³To Be´ models based on feedback from stake holders

Customized processes validated by departments

Friendly User interface ± departmental terms used Intensive training for officers and contractors

Tender fee pegged at zero in pilot project

Very active help desk support



Some lessons «Some lessons «

Support of Top Leadership is must

ASP model ± innovative & effective, but always under close scrutiny

Pricing model ± combination of value & no. of transactions ± a new pricing model has emerged

A significant part of Government¶s eProcurement isthrough engineering tenders

Denial of tender ad revenues initially alienates press Building support among suppliers essential

Core policy & implementation team critical for success

Supplemented by CIOs trained within key depts



W ay Forward «W ay Forward «

Contractors Database Information System

- Validated database of contractors experience

- Drastically reduces tender cycle time to 2 to 3days

- online updating facility of database

Auto bid evaluation in eprocurement Contract management module

Online work bills and e-payments to contractors



Message « Message «

Think Big ± Start Small- Scale up Fast

Quantum Jump but not Small

Long term plan with aggressive strategy Transparency and Accountability

Involve stake holders

Mobilise Top leadership support.

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Thank YouThank You

E-procurem.andra Predesh

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