Electronic bidding, also known as online bidding, is a rising trend in public and private sectors across the globe. It is the concept wherein an online marketplace or website allows buyers to post their requirements in real time bidding events and potential suppliers and service providers can compete to sell their products or services to the buyer. This has substantially reduced cartels, collusions and riggings among the bidders where public procurement often gets politically influenced and defamed in counties like Nepal. Bidders using goons and acting in close cahoots while submitting tenders are usual stories and sights in Nepal.
Bidders often form a cartel by which they try to manipulate the award decision in favor of one of their members, with or without the involvement of a corrupt inside official. Collusion agreements can include, for example, assigning “turns” among the cartel members for winning public bids, or agreeing to internal compensation payments for submitting high or other “failed” bids. This has become an institutionalized practice in Nepal leading to unscrupulous competition and rise of corruption. A snapshot survey on bidders for supplying rations to security agencies in some districts such as Khotang and Jajarkot revealed that around six to seven bidders took tender forms from each Nepal police, armed police and Nepal army while only three of the suppliers in each organization submitted bids finally. This is more than enough to substantiate a prevalence of cartel and collusion among the bidding suppliers.
Only a few months ago, rations contracting to Nepal police were pulled into controversy as stories of corruption and anomalies hit the headlines. The Commission for the Investigation of Abuse of Authority (CIAA) had to step in to postpone the bidding processes. Granting of ration contracts to private parties in Nepal usually draws controversy and is often a lucrative source of corruption within security agencies. Nepal Police alone spends Rs 2.41billion annually on rations to its 60,000 personnel. Electronic tendering process can save a good deal of this tax-paid money. Charging up to 12 percent of the agreed amount as a commission margin from the suppliers is a common phenomenon among the cops.
Likewise, upon studying tender documents of the three security agencies, Public Procurement Monitoring Office (PPMO) in its 2010 report strongly highlights prevalence of tendency among bidders to work in cahoots while bidding for supply of food and goods to security agencies resulting in limited competition among the bidders. Securities agencies have been accepting tender documents even if the quoted prices are unreasonable. The report, prepared after almost three years of implementation of public procurement law, states that Nepal Police approved tender documents proposing almost equivalent amount against cost estimates while purchasing food in 2007/08.
As rules put it that the cost estimates usually remains high and bidders are expected to compete to bring down the bid amount as low as possible and the bidder quoting the lowest amount is awarded. The government saves money as long as there is a fierce competition in price offered by bidders. But this rosy scenario doesn´t prevail as bidders themselves get involved in forming cartels, collusion and act in cahoots. But, if we initiate and institutionalize e-procurement system in public contracts, such dishonest and unruly practices can be reduced substantially.
Over the last few years, few government agencies have applied automated procurement process. The Department of Roads (DoR) introduced e-tendering in Nepal a couple of years ago. The DoR has been implementing e-tendering in contracts of development projects ranging from Rs 150,000 to Rs 500 million. Last fiscal year alone, the DoR saved Rs 3 billion through electronic tendering out of initially allocated budget for the construction of roads. Introduction of electronic bidding and tendering mechanism has solved more than 80 percent of the problems that usually crop up during submission of tenders manually. The new system has been discouraging non-contractors from getting contracts by force or through political influence. The manual tendering system is a breeding ground for corruption, cartels, nepotism and irregularities.
The Kathmandu Valley Town Development Committee, the Department of Urban Development and Building Construction, The Melamchi Water Supply Development Board and the Department of Water Induced Disaster Prevention have also adopted e-tendering while awarding contracts relating to development and infrastructure projects. The government, in its efforts to institutionalize automated procurement system, has made e-tendering mandatory for contracts and tenders worth more than Rs 20 million from 14 April, 2011. However, the government needs to put in place necessary web-based infrastructure to ensure that e-procurement goes into full swing within the deadline.
Worldwide experiences have already proven that online tendering and bidding process for procurement of goods and services is one of the most important tools in fighting corruption and installing a lawful market mechanism. Online procurement system has enhanced transparency, accountability and predictability of rules and procedures into both the bidding and tendering process in many countries. Thus, adoption and institutionalization of automated procurement system is an urgent need now and can be advantageous in several ways in reducing costs, time, cartels and collusions, and enhancing timely delivery of public goods and services.
BENEFITS OF E-BIDDING
E-bidding provides significant benefits to both government agencies and suppliers. For government agencies, electronic bidding expedites the decision-making process. The selection of suppliers is based on the lowest bid price offered during the set bidding period. The process can be simplified further by auto-filtering in the system. The use of government resources is more efficient as time spent on procurement management administration is optimized, thus allowing the government users to focus on more productive service deliveries.
The government can save cost and time by using e-bidding module. It is assumed that government saves about 20 to 40 per cent of the allocated budget as the price offered reflects actual competitive market price. In addition, e-bidding procurement period is shorter by 20 to 30 days while manual tendering process usually takes five to six months. Because of online processing of information and other operations, e-bidding saves a great deal of time and effort. Unlike manual tender systems, one doesn´t have to individually sort out through applications to choose the right service provider and even suppliers don´t have to send out forms and applications. Automated bidding process makes it easier to submit and review forms easily over the internet.
Since all the proceedings are done online and all the information is stored electronically, there are no hassles about paperwork. The information can be easily and steadily processed and put to further use. Unlike scrapes of paper that needs to be reviewed manually, online data can be processed electronically by automated programs and software. With electronic bidding, government agencies are able to secure quality products and services through standardized technical specifications. E-bidding has also improved service delivery to suppliers and promoted transparency in public procurement activities in many countries. Automated bidding mechanism allows buyers to monitor biddings and compare different bids that are submitted online. After they have reviewed all the bids, they can evaluate potential service providers and choose the best out of the lot.
PHASES OF IMPLEMENATION
There are four main stages involved in the e-bidding process: preparation, pre-qualification, online bidding and order fulfillment. In the preparation stage, government agencies need to determine the required specifications, terms and conditions for pre-qualification and notification criteria. This is to ensure that the electronic tendering and bidding process can be implemented as per the set plan and timeline.
Pre-qualification is a second step where suppliers who wish to participate in the e-bidding will be short listed according to the required technical specifications. Only qualified suppliers will be invited to join the online bidding process. Among the activities carried out at the pre-qualification stage are the issuance of invitation notices, submission of the initial price offer by suppliers, pre-qualification evaluation, validation of short-listed suppliers and invitation to qualified suppliers to participate in the final online bidding.
The qualified suppliers will participate in online bidding on the specified date and period, regardless of location, as long as they have access to a computer and an Internet connection. The bidding result is based on the lowest bid price offered by participating suppliers which reflects the most competitive market price. The process concludes with the issuance of a Letter of Agreement to successful bidders.
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Autor(en)/Author(s): Pranav Bhattarai
Quelle/Source: Republica, 01.03.2011
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