Wednesday, July 18, 2007

Tricks of the Trade - Government Tendering Process

I have always been of the opinion that the tendering process in government sector is highly flawed. There were several reasons that I had attributed for this opinion. One was that the announcement of the tender seldom reached a large number of players in the market. Government tender announcements are made through newspapers and through direct intimation from the Government office. In offices where I had made some kind of sales or services the officers responsible used to send us request for tenders. I know for sure that there have been a lot more request for tenders than that I have noticed in newspapers or received via mail. In some offices request for tenders are just displayed on notice boards in the respective offices.

The request for tenders that come in newspapers are so badly categorized and tagged that you have to virtually read through the complete list to see if there is any that match your specific area of interest. Additionally they don't appear every day. I believe that there must be some regulation regarding the number of times the intimation has to come in newspapers. Even then it is practically very difficult to get information from the newspapers unless of course you already expect to see a request on a particular date. The requests that go via mail from the government offices go only to agencies they know (or in worser situations - to agencies whom the officials wish to let know). Unless the information is passed on to a large number of possible applicant agencies, market forces will not be able to work properly and the process will be biased against the government.

In either case the tendering process will be assumed to be fair if there are more than three, in normal cases, tender submissions for a given request. This is where the system has its second flaw. This flaw is the most glaring when the tender request is posted only at the office notice board. If there is a corrupt officer at the office with a vested interest in getting the deal through to a specific applicant agency, he/she could easily make sure that the specific agency gets to know about the tender while others possible applicants remain unaware. The said agency, if corrupt himself, can easily call up a couple of other similar corrupt agencies and manipulate the submitted tenders so that a person agreed upon by the three gets the tender with enough and more margin to spare. Through this manipulated process, open tendering process, which is expected to assure the best quality at the lowest price, gets completely derailed. The corrupt agencies would take turns in ripping-off the government in plain day light using a system that was designed to prevent exactly the same thing.

A third flaw in the system is the assumption that the government organization calling for the tenders has the necessary technical capability and expertise to analyze their requirements in the first place and to analyze the quality of the delivered items ultimately. This is definitely not the case of IT software and hardware. The government officials I had talked with had literally no clue as to what they wanted and what they already have. They also (at least from my experience) would not be able to judge thoroughly the quality of software and hardware they buy. This puts them in a position where they have to depend on an agency to form the tender document itself. Usually this would result in the tender request created by the agency itself. I have seen totally absurd requests for tenders - most probably suggested by some crooked agency.

From my short experience of an year till now, I can claim with some reasonable level of confidence, the validity of the above arguments. I however was shocked to hear a fourth and even more damaging way of manipulating the tendering process. I was talking with a marketing executing of a leading brand in the market a couple of days back. We were discussing about a request for tender that I had received. He casually told me that it should be easy to get a couple of 'adjustment' tenders from other hardware dealers to close the deal. When I told him that I don't work with other dealers to get 'adjustment' tenders as it was against my business philosophy, he told me that I don't have to. All I had to do was get three sets of letter-heads and office seals made of other companies in the market. I was stunned when I heard that. He then went on to say that almost all other dealers in Trivandrum does this. No wonder I don't get to hear about any government tenders.

My policy regarding government tenders remains the same. I am going to participate in all government tenders that I come to hear about even if I get rejected on experience counts. I could at least let the deciding body get a feel of the true market cost of items they are purchasing. I still have some faith in the goodness in human beings. Somebody in some deciding bodies would see the rate disparity in tenders and enquire about the irregularities. I would be satisfied that I played my small role in cleaning up a small area of the corrupt systems in our society.

1 comment:

  1. Dear Anoop, I chanced upon your blog from your linkedin invite and I see that you have come a long way in life! I'm proud of my fellow classmate:)