While it is heartening that the move toward e-tendering has begun, it is important to ensure that non-transparent practices are not carried out in the garb of going electronic.

A much hyped e-tendering/e-procurement project is that of DGS&D. As per their own record, it has taken DGS&D four years to implement the project, for which a contract was awarded in November 2003 to a private company, C1, which was supposed to have gained experience in this area by developing an e-tendering system for the Andhra Pradesh government. In terms of security, even the most basic security requirement of digital signatures was not implemented.

Till date, DGS&D has implemented only a rate-contract system for e-tendering, and the so-called ad-hoc contracts or acceptance of tender was not implemented in DGS&D even till last February. Furthermore, without going through an open and proper tendering process, DGS&D has started promoting its service provider, C1, by making it sign MoUs in the name of DGS&D with various state governments and important central and defense organizations.

Under the MoUs, C1 offers the so-called ad-hoc system that has not even been implemented in DGS&D. In other words, apart from the objectionable and non-transparent manner in which DGS&D is promoting C1, which belongs to the Suresh Nanda Group, a system which has not even been tried in DGS&D is being offered to other government organizations in the name of DGS&D. Nanda is already facing a CBI probe for his alleged role in the purchase of armored recovery vehicles (ARVs), as the CBI alleged he had approached former Samata Party treasurer RK Jain to stop the contract going in favor of PSP Bohemia of Czech Republic whose bid for 87 ARVs was the lowest at Rs 247.75 crore.

The DGS&D and C1 saga is just an indication of a few negative aspects of the way e-tendering has been carried out in India over the last six years. This is a serious matter and needs detailed inquiry by competent people who are in no way connected with previous projects where questions have been raised.

Hype Vs Reality
While looking into these affairs, lets not get bogged down by the statistics of how many crores worth of e-tendering has been carried out under a particular project as a measure of its reliability and transparency. The focus should be on credibility and transparency of the e-tendering initiative and not on the total worth of e-tendering carried out.

One handicap of the regulatory and vigilance authorities has been lack of proper awareness and knowledge in this highly potential area. It is high time the regulatory and vigilance bodies of the Indian government plugged this loophole, so as to prevent scandals; and even if there are scandals, they can be dealt with in a timely and proper manner.

As Jitendra Kohli, an innovator and global pioneer in e-tendering, says, Merely adding an e before the word tendering does not automatically make the tendering process better or more transparent than the manual tendering process. Without proper checks in place, e-tendering can be worse than manual tendering. Properly addressed e-tendering can bring in the much sought after transparency and efficiency in public procurement.

Understanding the System
There can be many pitfalls in the electronic-tendering system. While some are reflective of similar lacunae in a poorly managed manual system, there are others that are peculiar to this system. It is extremely important to understand these lacunae and suitably address them, otherwise the electronic system can be worse than the manual system in terms of transparency. However, if the issues are properly addressed through appropriate technical and procedural remedies, the electronic system will be far more beneficial and transparent than the manual system.

In the e-tendering system, encryption of bids is done in lieu of sealing, which is done in the manual system. Where encryption of bids is done at the database level, the possibility of data theft is high. Since in this case encryption is not in the hands of the bidder, possibility exists for surreptitious decryption (and re-encryption of the bid) with connivance of the application-administrators and the buyer. A copy of the bid can be made just before encryption at the database level and its storage (software programs may be designed or surreptitiously embedded for this purpose).

E-tendering systems where final encryption of a bid is done using public key infrastructure (PKI) are also prone to confidentiality breaches and other problems.

Since the concerned government authorities have not applied their minds to such possibilities, many unscrupulous vendors are conducting e-tendering with the above methodology. As a result, many hyped e-tendering systems in state governments, DGS&D, NIC, Railways, etc have a high degree of vulnerability.

Also, e-tendering systems which do not have the public online tender opening facility, but allow online bid submission, have immense scope for fraud and corruption.

The display of the results to the bidder on an overhead projection screen cannot in itself be construed public online tender opening, as data could be manipulated behind the scene before it is put up for display.

Over dependence on electronic audit-trail to check misuse would be a mistake. It is not practical to refer to an audit trail for every activity of every tender. Notwithstanding this, an electronic audit trail is a report. It can be tampered with. One must keep in mind that audit trails are useful only as additional supportive evidence when it comes to bid security.

The problem is further compounded by the absence of a proper security culture among end users. Also, in the absence of a security culture and computer-savviness, bids of users are often encrypted (electronically sealed) by the service provider.

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