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There is a perpetual tussle between the present government in Tamil Nadu and the Governor or anti-corruption crusader NGOs on some social, economic, or cultural issue. Also, the debate gets interesting since the contentious issue of governance is looked at through the prism of ideology for the growth and development of the state.
While the outcomes of these debates often are not enriched either through sound reasoning or logical conclusions for public policy reforms for priority sectors, the benefits of debate eventually end with much public money being spent, and weak emphasis on elected power, responsibility and accountability, while the opportunity cost of maintaining status quo remains invisible but huge.
It is imperative to have a retrospective assessment of the governance system envisioned by the founding fathers. India became a Republic with a democratic system of governance since independence, effectively guaranteeing the welfare of the people. The elected governments of States and UT are supposed to execute carefully designed welfare and anti-poverty programmes and activities envisaged in the Constitution.
Public procurement by government departments for services, facilities, goods, works, project management, consultancy, etc., is an important activity. It accounts for a substantial amount of resources like taxpayers’ money used for public expenditure. The underlying principle is to procure materials/services of specified quality at the most competitive prices in a transparent and non-arbitrary manner
According to the Father of the Indian Constitution, Dr. B.R. Ambedkar, the primary duty of the Governor of a state/UT was to ensure “good, efficient, honest administration”. The ideal governance system functions as per the letter and spirit of the Constitution to provide the best services and facilities for welfare of all strata.
Public procurement by government departments for services, facilities, goods, works, project management, consultancy, etc., is an important activity. It accounts for a substantial amount of resources like taxpayers’ money used for public expenditure. The underlying principle is to procure materials/services of specified quality at the most competitive prices in a transparent and non-arbitrary manner.
The Union and state governments in India derive their authority to contract Goods and Services from Article 298 of the Constitution of India. The latest Manual for Procurement of Works, (June 2022) was issued by the Union government’s Department of Expenditure. The state governments have been encouraged to incorporate similar provisions in their respective tenders. The states have the power to frame their laws regarding procurement, guided by the General Financial Rules.
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The Union Government’s Economic Survey 2020-21 chapter on “Process Reforms: Enabling decision-making under uncertainty” mentions:
- “The benefits of transparency can be seen from the recent reform in public procurement. The Government in 2016 set up a dedicated e-market known as Government e-Marketplace (GeM) for different goods & services procured or sold by Government/PSUs. Anecdotal evidence suggests that prior to GeM, government procurement prices were much higher than the prices prevailing in the market and there were constant complaints about inefficiency and rent seeking.
- As the GeM website mentions, use of this e-marketplace has resulted in a substantial reduction in prices in comparison to the tender, rate contract and direct purchase rates that were used previously. The average prices on GeM are lower by at least 15-20% than previously, and in some cases even up to 56%.”
The GeM Portal is one of the major reforms undertaken by the Union Government for its department’s procurements from the open market. Several state governments have also taken advantage of the GeM Portal system for procurements of goods and services. However, it is quite strange that the Government of Tamil Nadu has not effectively used reforms like GeM for public procurements from the open market.
Tamil Nadu ranks 10th in the use of the GeM Portal for public procurement of goods and services. But, it is ironic to note that Tamil Nadu was ranked 2nd in the NeSDA 2021 Rankings with compliance of more than 85%.
Tamil Nadu was one of the first States to enact legislation for public procurements and tender process system for public procurements. The three laws governing public procurement through electronic tenders in Tamil Nadu are, Tamil Nadu Transparency in Tender Act (TTA), 1998, Tamil Nadu Transparency in Tender Rules, 2000 and Tamil Nadu Transparency in Tenders (Public Private Partnership Procurement) Rules, 2012. Though, the practice of electronic tenders has several structural flaws, and vested interested groups often misuse the e-tender system almost in every tendering process.
TTA law aimed to ensure open and fair procedures while undertaking construction and during procurement of goods and services by the Government and Governmental organisations. The objectives and aims of TTA laws were defeated by the very state government which got this Act in place. Further, the state Government had amended the provisions of rule 15(2), rule 16(2), and (3) of the Tamil Nadu Transparency in Tenders Rules, 2000 for the implementation of the eTender system. Over the years, both TT Act and TNTT Rules were amended mindlessly. The latest amendment was on 5th December, 2022 covering all three Acts.
Under Tamil Nadu Transparency in Tenders Rules, 2000, Clause 6 mentions that “the tender documents and the contract shall include a clause for payment of liquidated damages and penalty payable by the tenderer in the event of non-fulfillment of any or whole of the contract.” However, these aspects are not followed diligently by the concerned departments/organisations in the state.
Tamil Nadu ranks 10th in the use of the GeM Portal for public procurement of goods and services. But, it is ironic to note that Tamil Nadu was ranked 2nd in the NeSDA 2021 Rankings with compliance of more than 85%
Recently, the Central Vigilance Commission (CVC), Comptroller and Auditor General (CAG), and NITI Aayog raised concerns that the L1 system in the tender system is not the most effective when it comes to selecting bidders for products or services, especially for executing infrastructure projects, which requires a high level of technical expertise. Also, the L1 system could result in compromising the quality of work, delays, and cost overruns, since the bidder is selected based on the lowest cost quoted.
According to a World Bank study (2003), the legislated transparency Acts in Tamil Nadu and Karnataka provide for an appeal procedure, but the appellate authority is the government, which does not provide much credibility. The appellate authority should be totally independent of the government. Also, most contractors allege that the quotations made are at least 20%-30% more than the actual value of the tender called by the government.
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Another World Bank study (2001) found the major shortcomings in tender documents of States like Tamil Nadu include: Time for bid submission is unrealistic, Qualifications for eligible bidders are rarely stated; when stated they are often inappropriate for the works and discriminatory, Technical specifications (for equipment) are skewed, criteria and methodology for evaluation and comparison are rarely disclosed, When disclosed they are often discriminatory, Bid and performance Securities are not always mandated, When mandated they are often ridiculously low for large contracts, The conditions of contract place most of the risks on the supplier/contractor, payment terms are not in line with market practice, and there is no sanction or interest for delay in payments.
The recent CAG Audit (2018) found several violations of tender procedures in the state mainly “excess expenditure due to non-adherence to tender procedure” in Trichy and Coimbatore city corporations. The rampant allegations, arbitrariness, perversity, mala fide intention, and favouritism in the award of government contracts were common practice, as there is no clause for penalising fraudulent and collusive bids under the Tamil Nadu Tender Transparency Act.
These examples of perpetual malpractice reflect the poor governance in the state especially in the quality of services. There are laws governing any misconduct in tenders and procurements that are taken up under the provisions of the Competition Act, 2002, and the Prevention of Corruption Act, 1988 (PCA). Alas, not all misconduct under the tender act is prosecuted under the PCA Act and others like DVAC or CVC, etc.
The way forward for a relatively developed state like Tamil Nadu is to adopt the GeM Portal Model for open market processing with transparency and completely preventing malpractices. Further, the state government should develop a visualisation mechanism to give real-time information on the procurement activities undertaken through the e-procurement portals with the aid of innovative technologies like AI. This mechanism will also allow comparative assessment across the states/departments/procuring entities that will further focus on the best procurement measures with continuous innovation.
The Government of Tamil Nadu should empower the state-level anti-corruption agencies like the Directorate of Vigilance and Anti-Corruption (DVAC) to implement the Public Interest Disclosure and Protection of Informers (PIDPI) provisions implemented by the CVC at the Union government to receive written complaints from the general public on any allegation of corruption and misuse of office by any employee of the State Government or any other Corporation, Company, Society, organisations, etc. owned or controlled by State Government.
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