Content area
Full text
1. Introduction
In recent years, there has been a growing concern about the proper use of taxpayers’ money for public procurement. While private sector’s procurement processes are driven by concern for stakeholder’s wealth maximization, public procurement aims to achieve socio-economic development, provide economical and efficient service to citizens and simultaneously safeguard environmental resources. To achieve these objectives, governments enact legislations, rules or processes to govern public procurement. These rules are equally applicable across procurement of goods, works and services. For example, in India, all public sector enterprises or public enterprises (PEs) are treated as “State” on the matters related to procurement. They are governed by the constitution of India (specifically article 299), General Financial Rules (GFR) 2017 and various Chief Vigilance Commissioner guidelines. Using these guidelines as base documents, PEs further develop their own procurement business rules and processes. These rules assimilate myriad government procurement objectives such as promotion of micro, small and medium enterprises, encouraging entrepreneurs from specific strata of society, and ensuring integrity and transparency in the process. Given the importance of public procurement, various government bodies and PEs have carried out several initiatives such as identifying good practices, better rules, regulations and regulatory frameworks, particularly in the last decade.
Government or public procurement accounts for around one-fifth of the global gross GDP (World Bank Group, 2016). Government departments worldwide procure goods, work and services through numerous methods such as open-cry auctions, competitive bidding through request for quotation (RFQ) and agreement through negotiation (Bergman and Lundberg, 2013). Among these, competitive bidding through RFQ, also known as the two-bid tendering, is the most frequently used method for high value procurement. In this method, the procurement agency publishes notice inviting tender (NIT) to invite sealed technical and financial bids from participating bidders for a given tender. These bids are evaluated for their technical and commercial offers sequentially and a contract is awarded. While the process is quite simple and well defined, various technical and political complexities involved in the process lead to poor performance. Figure 1 shows a typical two-bid tendering process. It starts with NIT and ends with the Award of Contract (AOC) after two-stage bid evaluation.
To make the entire tendering process transparent to citizens and to ensure integrity, e-Procurement systems have been...