Sunday, December 7, 2008

Not so Tender in its present state!!

Involving free market's practices can make tendering better

With the US economy increasingly falling over the Keynesian economic theories to tide over the apocalyptic financial crisis that it has created for itself and the world, many are now propagating that capitalism has finally being forced to bend its knees in front of socialistic ideas, as the concept of more of government spending and intervention to rescue an economy are generally practiced in socialistic states. True, today laissez faire capitalism is on a backfoot and has been forced to anchor in the solace of socialistic practices, but does that mean that socialism as a concept is absolutely foolproof without any flaw that should have been done away with long time back? Well, certainly not.

Take the case of inviting tenders for awarding contracts. One doesn’t need to go too far to find the fallacy and ineffectiveness of this concept. Every year, tenders are invited for refurbishing the city roads. Invariably, the lowest bidder is awarded the majority of the contract. For the sake of getting contracts, most of the time bidders quote abnormally low rates. So much so that the only option that is left for them is to compromise on the quality of work in order to make profit. No wonder, then, that even when crores are spent on roads every year, the condition remains deplorable. And the farther one goes from the metros, the worse it is. Tenders for Indian Railways and Department of Telecom have created a full fledged network mafia. Organised crime found a nice way to earn easy money by involving itself into it. Thus, in most of the government tenders nowadays, good blood has been replaced by bad blood. The results are visible. Even when lakhs of crores are spent on rural development every year, the rural-urban divide continues to increase. The World Bank Health Scam in 2008 literally opened a pandora’s box. Almost 15,000 tenders were allotted to fraudulent and blacklisted companies (even to bogus companies). The bids never materialised and most of the money, a staggering US $565 million, was swindled by intermediaries which never reached the final destination.

If corruption is a worrisome factor, then more worrisome is the sheer amount of time the government takes to award a contract. So much so, that by the time the whole process of tendering has been expedited – albeit at snail’s pace – much of the efficacy of the project gets vapourised. Consider Air India and Indian Airlines. Before the merger, they took nearly 20 years each to decide as to whether they should opt for Boeing-made aircrafts or of Airbus. Contrast this with Kingfisher Airlines, which is just three-years-old and already have more and far better planes than what Air India and Indian Airlines had individually before their merger. And who can ignore the fact that Indian Government took 20 good years to buy Advanced Jet Trainers? Had they been bought earlier, it could have saved the lives of hundreds of rookie pilots who died in air crashes. It is important to learn from the private sector (read capitalism) as to how they negotiate purchase of products from vendors and get the best rates without compromising on quality. Yet, if socialism still insists to carry on the with the concept of inviting tenders, what’s the harm in depending a little more on technology that capitalistic world has to offer? A case in point is Andhra Pradesh Public Health Engineering Department, which has passed 30 contracts worth Rs 900 crores of the JNURM through e-tender system and till date has not reported any case of corruption. Certainly it pays to have a perfect marriage between capitalism and socialism!!


1 comment:

  1. We need ajax based secure tendering portals.