AP saves Rs 616cr via e-procurement

The Andhra Pradesh government has saved a whopping Rs 616.27 crore in 2003-04 because of its use of the e-procurement platform.

In fact, so successful has been the e-procurement practice that the total amount spent by the government on 1,212 projects amounting to an estimated Rs 2,801 crore is 22 per cent lower than its own estimations.

Officials involved with the e-procurement initiative in the state have attributed this achievement to the near elimination of cartelisation, which was a major problem with the conventional mode of tender processing. Besides the monetary benefit, the government is also expected to save a lot of time with this method.

For example, it took only 42 days at an average for processing each tender through e-procurement while in the conventional method it used to take between six and nine months for the same, according to IT officials.

The e-procurement platform in use was developed by C1 India for the Andhra Pradesh government in close association with the state Information Technology department. It has received overwhelming response from the government departments in the first year itself.

As compared to Rs 1,146.96 crore worth of projects that were originally meant for e-procurement processing in the first year, the actual value of goods and services procured was more than two times the original estimation.

Beside processing 1,212 projects costing Rs 2,801.24 crore, C1 has also hosted 126 projects involving only NITs (notification for inviting tenders) amounting to Rs 114.90 crore.

Of the total projects received for processing through the e-procurement platform, the processing of 566 projects costing Rs 2,034.97 crore have been completed, while the tender finalisation process of the remaining 646 projects worth Rs 768.27 crore is at various stages of completion, according to official information.

C1 India receives 0.24 per cent as transaction fees on the total volume of each project, besides which it charges Rs 4,500 as hosting fee for each tender.

The proposal of turning the e-procurement initiative as a joint venture project between C1 and the AP government is expected to materialise only after the new government takes charge in the state.

But a senior official of IT department has said that the government is seriously considering lowering of the current transaction fee charges.

The e-procurement software is also slated to undergo upgrades and will feature advanced features like automatic bid-evaluation and contract monitoring systems.

The auto bid evaluation will allow the officials to finalise a particular tender on real time basis. But officials said that each of the technical information submitted by the respective bidders will be physically verified before the finalisation through auto-bid evaluation mechanism.

"Ours is a very superior platform which monitors the execution of a particular contract, including quality control, to the end, compared to any other similar facilities available in the country," P Rama Raju, project manager of the e-procurement initiative, told Business Standard.

According to him, the government will save thousands of crores of rupees in the long run as the abuse of provisions of arbitration and deviation on the originally agreed cost of a particular work will be contained to a greater extent with the e-procurement.

States like Karnataka, Punjab, Rajasthan, and even the Government of India have already evinced interest in the state's e-procurement platform in the wake of the Central Vigilance Commission (CVC)'s suggestion to the Centre that the procurement activity by all the central government departments should be made only through e-procurement.

States like Karnataka have gone a step further by expressing interest to participate in the proposed joint venture project.