Agenda

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2. Agenda Need e-Procurement for Growth Elements Expected Outcomes Issues Way Forward

3. Need for e-Procurement Lack of a common public procurement policy Lack of standardization in implementing procurement practices & processes Low efficiency � manual process Lack of transparency in procurement leading to corruption & pilferage of public monies Only two Indian states have an Act in place Malpractices by vendors Cartel formation Manipulate selection by bribing department staff Advances in electronic procurement through secured internet-enabled means have not being utilized in a widespread manner

4. e-Government Procurement

5. e-Procurement for Growth Excellent strategic cum operational tool to ensure large scale savings and thereby ensure growth e-Procurement savings are achieved through Transparency in the process Higher participation & better competition Streamlined processes Demand aggregation Indian Government spends an estimated $100 billion in public procurement each year* A 10% cut in procurement costs would translate to Rs. 45,000 crore Savings could be routed for Infrastructure Development Strategic- features such as centralized procurement platform for state which will facilitate standardized procurement processes across, demand and supply optimization, etc. Operational- streamlining of processes, reduction in cycle time, auto-bid evaluation, etc.Strategic- features such as centralized procurement platform for state which will facilitate standardized procurement processes across, demand and supply optimization, etc. Operational- streamlining of processes, reduction in cycle time, auto-bid evaluation, etc.

6. Key Elements of e-Procurement Process Reengineering Works Procurement- e.g. Electronic measurement book, Inter department approval workflow Goods Procurement- Centralization and demand aggregation Business model PPP is preferred by Governments to avoid high capital investment Technical architecture Scalable, secure, and interoperable Centralized vs. Decentralized Infrastructure Data Center, networking, Security (PKI, etc.) Capacity Building Government & Supplier Community

7. Expected Outcomes Enhanced transparency and control in procurement process Reduced cost of doing business for both government and suppliers Savings of up to 15-25% of procurement value realized by states Economies of scale through demand aggregation Streamlined integrated processes cutting across departments End-to-end automation of procurement (indent to delivery) Automatic bid evaluation Overall bid process time reduction Catalyst for procurement process reforms For AP, the projection for overall procurement at present is about $3 billion. Andhra Pradesh, which leads the way has clocked a e-procurement business of Rs 35,000 crore in the last two years, has netted a saving of Rs 5,630 crore on this count alone (as of June 06) In AP, after e-proc the avg. time for inviting and processing tenders has reduced from 6 months to 36 days. Supplier participation has increased from 3.5 players per tender earlier to 4.75 (as of June 06)For AP, the projection for overall procurement at present is about $3 billion. Andhra Pradesh, which leads the way has clocked a e-procurement business of Rs 35,000 crore in the last two years, has netted a saving of Rs 5,630 crore on this count alone (as of June 06) In AP, after e-proc the avg. time for inviting and processing tenders has reduced from 6 months to 36 days. Supplier participation has increased from 3.5 players per tender earlier to 4.75 (as of June 06)

8. Issues Concerns of security of data and online transactions Limited scope of current implementations- most implementations do not involve: Demand aggregation across departments & states Contract lifecycle monitoring Un-evolved Business Model Willingness of states to embrace e-Procurement & to what extent Parallel manual processes even after e-Procurement Insufficient positive publicity supported by data National level repository of e-Procurement successes and savings Legislative/administrative changes to accept e-Procurement Quality Management may include workflow integration with quality control agencies such as the DGS&D Un-evolved business model refer to how PPP should be brought in the e-Procurement arena; also how the e-procurement business of a state should be given to multiple vendors to promote competition and avoid monopolistic situation Quality Management may include workflow integration with quality control agencies such as the DGS&D Un-evolved business model refer to how PPP should be brought in the e-Procurement arena; also how the e-procurement business of a state should be given to multiple vendors to promote competition and avoid monopolistic situation

9. Way Forward Integration of various Govt eProcurement exchanges Demand aggregation MIS generation for better spend analysis Better and wider supplier response Access to supplier performance information Standardized procurement policies Integrated platforms facilitating seamless flow of data across departments & states Treasury, Finance Department Common Item Coding Systems Auto bid evaluation Digital certificates for Security International Scenario: Electronic procurement has evolved greatly over the last few years in developed countries Desktop procurement Common commodity coding system Auto bid evaluation Singapore, UK, USA and Australia set examples The European Union has developed model specifications for a e-Procurement solution Degree of adoption amongst the developing countries varies Involvement of multi-lateral development banks has greatly assisted in creating awareness on the issue Indian Scenario: Government agencies across the country have adopted e-Procurement in a limited manner (e-Tendering) Andhra Pradesh was the first state to go live with a State-wide e-Procurement system Other States who are in the process of implementation are Chhattisgarh, Karnataka and Orissa; while states about to join the group include Gujarat, Assam, Rajasthan and MP Department wide installations are more common than state-wide implementations DGS&D has adopted e-Procurement system to facilitate direct placing of rate contracted items by DDOs NIC has gone live with its e-Procurement portal PSUs such as GAIL have moved over to electronic procurement system International Scenario: Electronic procurement has evolved greatly over the last few years in developed countries Desktop procurement Common commodity coding system Auto bid evaluation Singapore, UK, USA and Australia set examples The European Union has developed model specifications for a e-Procurement solution Degree of adoption amongst the developing countries varies Involvement of multi-lateral development banks has greatly assisted in creating awareness on the issue Indian Scenario: Government agencies across the country have adopted e-Procurement in a limited manner (e-Tendering) Andhra Pradesh was the first state to go live with a State-wide e-Procurement system Other States who are in the process of implementation are Chhattisgarh, Karnataka and Orissa; while states about to join the group include Gujarat, Assam, Rajasthan and MP Department wide installations are more common than state-wide implementations DGS&D has adopted e-Procurement system to facilitate direct placing of rate contracted items by DDOs NIC has gone live with its e-Procurement portal PSUs such as GAIL have moved over to electronic procurement system

10. Thank You