Revamping #publicprocurement

A properly designed and implemented procurement law is long overdue. It can improve financial management, and bring large financial and governance benefits

Finance Minister Arun Jaitley’s 2015-16 budget speech signalled the government’s commitment to formally legalise India’s public procurement system as a part of its continuing reforms in public financial management. Following this, the Ministry of Finance is seeking suggestions to refine the Public Procurement Bill of 2012, introduced by the previous government.

The jurisdiction of the Bill covers any Ministry or Department and any public sector undertaking of the Union government, or any company in which the government has a stake of more than 50 per cent. The procurement processes of the States and the local governments are thus not covered by the Bill.

It is in this context that we focus on three aspects relating to the Bill: its potential benefits, selected design features, and implementation challenges.

Benefits

There are many benefits of a well-designed and well-implemented public procurement policy. These include fiscal savings from annual procurement expenditure; generating much needed fiscal space; and enhanced flexibility to channel government expenditure into growth-enhancing areas. It could also help in a shift towards rule-based institutional procurement.

However, the poor quality of data on procurement expenditure and its major components means that we don’t have a good estimate of potential savings from a better process. The problem needs to be addressed. Our crude estimate of potential savings generated by the revised Bill ranges between 0.6 per cent and 1.2 per cent of GDP, depending on the extent of efficiency achieved. This could assist in addressing the revenue deficit of 2.9 per cent of GDP projected for 2014-15 by the budget.

The savings would be greater if the States, whose expenditure equals that of the Union government, and all the public enterprises, also initiated similar procurement reforms. This task could be entrusted to NITI Aayog.

Several measures may be suggested to improve the design features. In its present form, the Bill’s objective is too complex, which dilutes accountability. Hence, a simpler set of objectives, as is also a global practice, would be desirable. This would also assist in improving the accountability of procuring agencies, and facilitate the task of internal and external auditing agencies.

Second, the Bill’s definition of the ‘procurement process’ implies that post-tendering steps such as contract management, payment, monitoring and so on, after the award of a contract, are excluded from the ‘procurement process’. The definition should be broadened to include the post-tendering procedures.

Third, given judicial delays and the lack of economic literacy often displayed by the judiciary, non-judicial procurement redress committees would be preferable. This needs to be better specified in the Bill to prevent undue discretion by procurement agencies and redress committees.

Fourth, the international practice is to designate a nodal agency for procurement. Hence, we need to clarify whether the proposed Central Purchasing Organisation (CPO) will be such an agency. When a framework for the nodal agency is established, it will need to be reconciled with the decentralised procurement process, which has also been suggested by the two recent committees to the Indian Railways.

Fifth, the Bill is not applicable to procurements for less than Rs. 5 million, emergency procurements made for disaster management, and procurements for the purpose of national security. While excluding the latter two government activities is routine, the basis for discretion for procurements below Rs. 5 million, which is a significant amount, is not defined. The corresponding procedures for such procurements should also be specified.

Sixth, the Bill also permits the procuring entity to limit competition in order to achieve other objectives, as well as exempt certain procurements from any of the provisions in the legislation such as the transparency requirements in “public interest”. However, in case of limited competition, certain other requirements such as reporting requirements, advance contract award notice, risk management techniques should be introduced to ensure that transparency is achieved.

Once a revised Bill is passed by Parliament, the following implementation challenges will need to be addressed.

First, data management capabilities and standardisation must be enhanced. Both bidders and procuring agencies have significant data and information needs to ensure transparency in public procurements. Hence, the new procurement regime needs to be accompanied by streamlined data and information systems for various aspects of public tenders that are put out and the standardisation of information provided in the submitted bids against the tenders.

Second, the 2012 Bill contains more than 20 references to ‘rules’. However, the general principles on which the rules will be based require clarity. Once defined in the Bill, the rules must be coherent and credible, while permitting flexibility.

Third, there is an implementation challenge concerning the skill sets of the officials, who will be at the interface of public procurement. Public procurement should be regarded as a task requiring professional skills. Capacity building in this direction should be undertaken urgently to ensure appropriate skill sets and that an understanding of business practices and logic is inculcated in the officials and in the organisations seeking procurement contracts.

Designing and implementing a strong procurement policy is a long overdue step towards better public financial management, and it has large potential fiscal and governance benefits. Its early passage, therefore, should be a high priority.

Central Board Of Excise and Customs Awarded the Prime Minister’s Award for Excellence in Public Administration for 2012-13

Central Board Of Excise and Customs Awarded the Prime Minister’s Award for Excellence in Public Administration for 2012-13

Minister’s Award for Excellence in Public Administration for the year 2012-13. These awards are given to acknowledge, recognize and reward the extraordinary and innovative work done by officers of the Central and State Governments for outstanding and exemplary performance, initiatives and projects whose qualitative and quantitative outcomes/results are of a very high order, and which have benefited a large number of citizens/stakeholders. Thrust areas for nominations include Introduction and implementation of innovative schemes/projects, bringing perceptible improvements in systems and building up institutions and making public delivery systems efficient and corruption- free.

This award, received by Chairman CBEC Shri Kaushal Srivastava from Prime Minister Shri Narendra Modi, has been given for CBEC’s Information Technology Consolidation Initiative in the category of ‘Organisation’. The Directorate of Systems, CBEC, has implemented a consolidated IT infrastructure which has enabled CBEC to host all its e-services for taxpayers and other external stakeholders across Customs, Central Excise and Service Tax from central data centres. The key outcomes of the project are enhanced service delivery to taxpayers, transparency, increased efficiency and advanced analytics based decision support system through its Enterprise Data Warehouse project.

Using this infrastructure, CBEC on an annual basis gets on an average more than 1 crore Customs documents and thirty five lakh Central Excise and Service Tax returns filed electronically by a registered taxpayer’s base which is more than 25 lakhs. This infrastructure has also enabled stakeholder facilitation services like online Registration, e-payment of duties, reimbursement of drawback claims and document tracking etc. This project, implemented at a cost of approximately Rs. Hundred (100) Crores per year, has enabled CBEC to collect more than Rs. Five (5) Lakh Crores per year in taxes. The same infrastructure hosts CBEC’s e-commerce portals www.icegate.gov.in and www.aces.gov.in as also CBEC’s website www.cbec.gov.in which get a total of about 3 billion hits annually. CBEC has its own email domain webmail.icegate.gov.in which is also hosted on this infrastructure and it supports more than one lakh emails daily for the trade partners and departmental users. CBEC also has a disaster recovery capability for its critical IT services.

This project was certified in 2011 for compliance to the ISO 27001:2005 standard for Information Security by STQC, a body under the Ministry of Information & Communications Technology. 

India ranked 2nd in #cyberattacks through #socialmedia in 2014

At a time when the social media population in India is growing exponentially, the country ranked second on a list of nations that were most targeted for cyber crimes through social media in 2014, following the US.

According to the Internet Security Threat Report (ISTR) released by Nasdaq-listed security solutions provider Symantec, India saw six per cent of the social media scams globally, marginally higher than the UK and Canada.

“Cyber criminals are inherently lazy; they prefer automated tools and the help of unwitting consumers to do their dirty work,” said Tarun Kaura, director (technology sales) atSymantec India. “Last year (2014), India had the second highest number of social media scams globally. Over 80 per cent of these scams were shared manually, as attackers took advantage of people's willingness to trust content shared by their friends.”

CYBER CRIME IN INDIA IN 2014

India ranks 2nd in social media scams India ranked 3rd in Asia for ransomware attacks India is 6th most bot-infected country About 65% of bot infections reported in metros 34% of cyber attacks in India were targeted at small businesses India saw seven ransomware attacks per hour; 170 per day; about 60,000 in 2014 Cyber criminals are using social media, apps Globally, 70% of social media crimes fooled users to manual sharing of scams

While emails are still the more prevalent means of cyber attack, the report said attackers are using social media as a “ready base” for crime as they continue to experiment with new attack methods that reach more people with less effort.

Globally, 70 per cent of the attacks on social media fooled users to manually share scams, followed by fake offerings, hitting the “like” button, commenting or through fake applications.

Separately, the report said, seven internet users in India faced “ransomware” attacks every hour in 2014, in which their devices were restricted by attackers who demanded ransom to remove the restrictions. India saw 170 ransomware attacks a day in 2014, taking the number of such attacks to 60,000 during the full year, the report said.

Ransomware is a type of malware that restricts access to the device that it infects, and demands a ransom paid to the creators of the malware for the restriction to be removed.

“While social media scams can provide cyber criminals with quick cash, some rely on lucrative and aggressive attack methods like ransomware. Last year, ransomware rose 113 per cent globally. India reported the third highest ransomware in Asia, with an average of more than seven attacks every hour,” Symantec said.

Unlike the ransomware attacks in the US where attackers pretended to be law enforcement, seeking a fine for stolen content, the attacks in India were more crypto-ransomware where files, photographs and other content of the user are held hostage without masking the attacker's intention, the report said. As many as 86 per cent of all the ransomware attacks in India were crypto-ransomware, posing a threat to consumers as well as companies.

#Rafale deal - truths beyond rhetoric

The decision to purchase 36 Rafale aircraft outright fromFrance has understandably created a stir. It apparently flies in the face of the "multi vendor, open tender, transparent" approach ongoing for close to 14 years in which this aircraft was first found suitable, then qualified as L1 (lowest tender) and then there were prolonged contract negotiations. The plan to buy 16 planes outright and build the remaining 110 in Hindustan Aeronautics Limited (HAL) through transfer of technology has now collapsed; the latest decision will, inevitably, include an Option Clause for some more outright purchases as the ordered number is clearly not viable.

First, it is true that the negotiations dragged on for too long but not for any fault of HAL. The French manufacturer was refusing to adhere to the terms specified in the Request for Proposals (RFP) sent out to all vendors; it was also not prepared to guarantee performance of aircraft manufactured in India, once again a clear violation of the terms of the RFP. Second, this delay was already beginning to affect the force level of combat aircraft that the Air Forcewas slipping down to; as per its projections the reduced strength could have serious consequences on our fighting readiness and, thereby impact national security. Third, an idea was beginning to get mooted to jettison the Rafale deal and go in for additional Russian-origin SU 30MK1s, already being manufactured by HAL under licence and of which the Air Force had good numbers.

Let us look at some facts. First, the long-delayed LCA, planned replacement for the MiG-21, is now nearing operational status. Does anyone really believe that war or even limited hostilities with China or Pakistan are on the horizon in the immediate future? Provocations and assisted militancy, even insurgency could be a possibility - but outright war, requiring the urgent availability of versatile combat aircraft? So, the warnings put out that the country's security was in jeopardy were clearly hype. This notwithstanding, the falling strength of fighter aircraft is cause for concern and required corrective action.

But the serious issue is different. No military platform of any kind can be developed and built unless there is capability to design it; the ability to manufacture and procure different varieties of equipment often influences this first step but can only follow it. So, putting the drawings, hundreds of them, in place is the first essential prerequisite. If the Navy can happily turn out the most modern destroyers from its shipyards, the latest being Vishakhapatnam, launched last Monday, it is only because right from its earliest years, it has focused on developing design know-how and this has resulted in every ship being more combat worthy than its predecessor with increasing indigenous content both from the public and private sectors. Concurrently, it is necessary to give strong support to the building yards. The closest possible interface is needed between the buyer, the designer and the builder; and, if the four Navy shipyards today have more than 40 ships on order, it is because these three essential requirements are being met.

Interestingly, the Air Force had also embarked on this route early on, and aircraft like the HT-2, HPT-32 and HF-24 bear evidence to this urge. But thereafter the focus shifted to outright purchase with or without manufacture in India under licence - which generates skills in manufacturing techniques, but no benefits in acquiring design know-how.

While the Navy's design-and-build-in-India plans have moved strongly through focused attention those of the Air Force have not. It is true that we are still unable to produce much of the sophisticated equipment that modern fighter aircraft require but these can always be bought and integrated into the platform design. After all, even the latest warship being built at Mazagon DocksLtd in Mumbai has weapons and sensors from different sources including our own, all interfaced into a complete system.

Taking the shelter of national security to force the "outright purchase route" has been the easy way out and over the years, political leaderships of all hues have succumbed to this threat.

The sad reality is that the apparently transparent multi-vendor route for military purchases is wholly unsuited to the Indian way of doing business, literally. Experience shows that where we go the single-vendor governmental route, things move faster and with fewer complications. So, opaque as it may seem, until design capabilities are greatly enhanced, this Hobson's choice appears to be the only route to take.

All this may make for dismal reading. On the one hand, we want to manufacture modern military platforms in India; on the other, the essential capabilities required to do so either do not exist or are deficient.

Sadly, this is not something that can be set right overnight or just by shifting tack from public to private sector. The Army and the Air Force, which do not have in-house design structures, must involve themselves more closely with the know-how already created with DRDO and others, send more people abroad for training and, together, focus on building complex platforms. This process may take several years but there are no short cuts; it has taken the Navy five decades to get here. To think that private companies can start designing and building fighter aircraft when DRDO/HAL, with decades of experience cannot, is to live in a world of make-believe.

The Air Force must also involve itself more closely through greater control of HAL entities just as the Navy has been doing all along for its shipyards. This synergised Plan-Design-Order-Build approach is essential if the other two services are to get anywhere close to where the Navy has reached and, yes, it still has some miles to go.

#ChinPak

Imagine India getting bilateral aid from one country, in one shot, of about $370 billion. That is the equivalent of Chinese President Xi Jinping's $46 billion package of offers to Pakistan, whose economy is one-eighth of India's and whose government budget is smaller than the Chinese package. The figure also exceeds by a mile the total US aid given to Pakistan in the last quarter-century. Still, it is necessary to assess the whole thing with a cool head.

The offer of eight submarines will certainly improve Pakistan's ability to practise sea denial, but will not change the military balance. Two of the submarines will be replacements for ancient boats that hark back to the 1970s, and Pakistan has just three other submarines today. India's submarine fleet, though depleted, is getting refurbished and is likely to be about twice as big at all times. The rest of Pakistan's navy consists primarily of 10 frigates, whereas India has at least 15 ships that are bigger and more capable, in a navy with 45 or 50 major combatant ships. What is politically significant is that China has now become the main supplier to Pakistan's navy, since it has also supplied its most recent frigates, and is already the main supplier of aircraft for its air force. As is well known, China has long been the key supplier for Pakistan's atomic and missile programmes as well. In many ways, Pakistan is on its way to becoming China's client state.

Much of the money mentioned during Mr Xi's visit to Pakistan is to fund electricity projects, in a country that is desperately short of power. The proposed projects, totalling 16,400 MW, will increase the country's power generation capacity by about 75 per cent - but it is less than the capacity that India has added in a year. So, despite the outsize sums involved (in relation to Pakistan's economy), these are not important in and of themselves.

The real significance of the announcements lies in China's success in roping Pakistan into its larger strategic plan for developing a naval base at Gwadar, building a multi-modal transport corridor from Xinjiang all the way to Karachi and Gwadar (through Pakistan-occupied Kashmir), and therefore breaking out of East Asia and becoming a player in West Asia. This is of course easier than it sounds, because the terrain is difficult and Baluchistan is restive; the route for the rail-road-pipeline corridor has already been changed once to avoid tribal hotspots in Pakistan's north-west. Also, as China has learnt to its cost in Myanmar, Sri Lanka and elsewhere (including parts of Africa), overweening reach-out to countries can provoke a political backlash. That may seem unlikely just now, given the "all-weather" relationship between the two countries, but Pakistan is nothing if not an unstable polity.

The lesson for India is that China's superior economic performance over the past quarter-century is the reason for this strategic outreach that is unsettling to India. If India is to deal with the new situation, then it has to start outperforming China - and not for a year or two, but on a sustained basis for the next quarter-century. For that, India needs to keep its focus on the essentials - as China has done since 1978.

Ahmedabad institute’s invention promises sun-like energy

Scientists at the Institute of Plasma Research were successful in confining plasma, the fourth state of matter, similar to creating sun-like energy in a laboratory.

A Gujarat-based research institute has claimed to have made a breakthrough in confining plasma, the fourth state of matter, in a Steady State Super Conducting Tokamak (SST-1).

A Tokamak is a device that uses a magnetic field to confine plasma.

The invention by Institute of Plasma Research will help in boosting energy generation, an official said.

“We have got a breakthrough in confining plasma many times during our experiments. We have produced and confined the high temperature plasma from hydrogen with the help of superconducting magnets inside the machine (Tokamak),” IPR director Dhiraj Bora told PTI.

It is similar to creating sun-like energy inside a laboratory, he said.

The plasma is confined and given heat inside SST-1. The most important source of energy for our earth is the sun which is a perfect spherical ball of hot plasma, the fourth state of matter, with internal convective motion and generates a magnetic field like a dynamo process.

Similar to that, the scientists at IPR, located on the outskirts of Ahmedabad, have conducted a fusion experiment with a Tokamak and got a breakthrough in confining plasma which gives a hope to create a sun-like energy in near future.

“A microwave current is passed to keep the plasma hot and to confine it inside a Tokamak. A current of the order of 70,000 amperes is passed and plasma is heated to 200 to 300 million degrees. In such process, plasma gets confined inside it (device) and through that heat energy can be generated,” Bora said.

“We would like to heat plasma further, then we will be able to confine it for longer period of time. This heat can be extracted in the form of energy and can be connected to turbines,” said Mr. Bora.

Confining plasma is necessary for creating such an environment to simulate conditions for fusion reactions, similar to which takes place inside the sun, he said.

According to Mr. Bora, about 5,000 MW of thermal energy can be produced by using just 50 MW of electricity.

The IPR has been running such experiments for around 25 years with the contribution from nearly 50 scientists.

The IPR is an autonomous physics research institute. It is involved in research in aspects of plasma science, including basic plasma physics, research on magnetically confined hot plasmas and plasma technologies for industrial applications.

New York Times wins #Pulitzer for Ebola coverage

The Pulitzer board described it as 'courageous and vivid journalism that engaged the public and held authorities accountable.'

The New York Times won two prestigious Pulitzer prizes on Monday for coverage of the Ebola outbreak in West Africa, described by the Pulitzer board as courageous and vivid journalism that engaged the public and held authorities accountable.

The Pulitzer for Public Service, announced at Columbia University, went to Charleston, South Carolina's Post and Courier for its series on domestic violence.

The Pulitzers honour extraordinary work in U.S. journalism, literature, drama and other areas and bring welcome attention and recognition to newspapers and websites.

"Till Death Do Us Part" by the Post and Courier probed why South Carolina is among the deadliest states in the country for women. Doug Pardue, one of a four-person team that produced the series, said it pushed the state legislature to pursue greater protection for abused women.

"I'm glad to see that journalism is awarded for this type of reporting," said Pardue. "It's a story that touches so many people."

For its Ebola coverage, The New York Times staff won the prize for international reporting and freelancer Daniel Berehulak won for feature photography.

The St. Louis Post-Dispatch won for photographic coverage of the Ferguson, Missouri, riots. Editor Gilbert Bailon said the staff had suffered emotionally and physically while covering the violence that followed the shooting death of an unarmed black teen by a white police officer.

"It's a very personal story. Some staff faced tear gas directly; some were deeply involved in efforts to get the community to heal," he said.

The Seattle Times staff won for coverage of a deadly landslide, and Washington Post reporter Carol Leonnig won for coverage of security lapses at the Secret Service.

The Wall Street Journal won a prize in investigative reporting for "Medicare Unmasked," the first reporting Pulitzer for the newspaper since 2007, when it was purchased by News Corp.

New York Times reporter Eric Lipton won for investigative reporting on how lobbyists can sway congressional leaders and state attorneys general.

The Pulitzer for explanatory reporting went to Zachary Mider of Bloomberg News for showing how U.S. corporations dodge taxes. It is the first Pulitzer for the New York-based news agency.

Joan Biskupic, Janet Roberts and John Shiffman of Reuters were explanatory reporting finalists for their use of data analysis to illustrate the extraordinary access of an elite group of lawyers to the U.S. Supreme Court.

Ned Parker and a Reuters team of reporters were finalists in international reporting for their work on the disintegration of Iraq and rise of ISIS.

The local reporting prize went to Rob Kuznia, Rebecca Kimitch and Frank Suraci of the Daily Breeze of Torrance, California, for their look at corruption in a small, cash-strapped school district.

The feature writing prize went to Diana Marcum of the Los Angeles Times for drought coverage.

The commentary prize went to Lisa Falkenberg of the Houston Chronicle. Mary McNamara of the Los Angeles Times won for criticism and the editorial writing prize went to Kathleen Kingsbury of The Boston Globe.

The editorial cartooning prize went to Adam Zyglis of The Buffalo News.

The fiction award went to Anthony Doerr for "All the Light We Cannot See," published by Scribner, and the drama prize went to Stephen Adly Guirgis for "Between Riverside and Crazy."

The history prize went to Elizabeth A. Fenn for "Encounters at the Heart of the World: A History of the Mandan People," published by Hill and Wang, and David I. Kertzer won the prize for biography for "The Pope and Mussolini: The Secret History of Pius XI and the Rise of Fascism in Europe," published by Random House.

Gregory Pardio won the prize for poetry for "Digest," Elizabeth Kolbert won in general nonfiction for "The Sixth Extinction: An Unnatural History" and the music prize went to Julia Wolfe for "Anthracite Fields."