E-procurement at WCL B.S.Nagashetti

CM(MM)I) Introduction:

e-procurement refers to processing of procurement case of goods and services through online, using the web based technology. In this process all the procurement related activities starting from registration of indents, preparation of NIT, hosting the NIT in website for on-line submission of tenders, evaluation and award of supply orders shall be done through on-line using web based technology.

II) Objectives:

1) To automate the entire tendering process in an on-line web-based real time environment to reduce the human intervention in tender evaluation and to

maintain Transparency.2) Uniform standard process3) To reduce lead time of procurement.4) To eliminate cartel/ring tendering5) To increase Bidder base- Tender information automatically goes to all the

registered suppliers.

III) E-procurement relevance and need:

1) Office memorandum of Ministry of Finance Department of expenditure no.8(5)/E.II/2006 dated 5/7/2006 conveyed the direction on the subject

introduction of “Mandatory e-procurement”. One more letter on the subject received from the same department vide reference OM no 8(5)/E.II(A)/2006 dtd 10.01.2006.

2) CVC’s issued number of circulars for using web based technology to maintain transparency.

3) Letter of Ministry of Coal, vide no.38011/13/06-IFD-dated 5/2/07 on National e-governance plan in Ministries (NeGP)-advice for implementation of e-procurement in Ministries/departments

4) CIL concluded R/C for providing e-procurement services applicable to all the subsidiaries in the year 2008.

5) Ministry of Finance Department of expenditure recently issued one more circular in which it is stated that e-procurement shall be made mandatory w.e.f 1-4-2011 and can be implemented in phased manner in all the Govt. Departments, PSU’s and other public institutes,

IV) Initial process of e-procurement

1) CIL earlier concluded R/C dtd.23/04/2008 with M/s MSTC for e-procurement services. On receipt of the above R/C WCL initiated e-procurement action but initial results were not encouraging due to:

a) Lack of knowledge.b) Least support from R/C holder/Service provider.c) Purchase Manual provisions.(existing Purchase Manual was came

into force from the year 2004 when e-tendering was not popular)d) Resistance to change/ adoption of new system.

V) Efforts for implementation of e-procurement.CIL concluded fresh R/C with following:

a) M/s ITI Ltd. Bangalore b) M/s MSTC Ltd. Kolkata c) M/s Mjunction services ltd. Kolkata

Validity of above R/C is up to 22/6/2011 which is further extended up to 31.06.2012

2) In order to implement e-procurement a committee consisting of HOD of MM, E&M, Finance, System department was constituted with competent approval. The objective of the committee was to:-

a) To study the procedures to be adopted based on the R/C concluded by CIL

b) Study the purchase manual clauses and to suggest changes required for implementation of e-procurement.

c) Safety features required and covered in the system and to d) Suggest the modalities for implementation.

VI) Salient features of the R/C for e-procurement.

1) R/Cs provides 4 options to choose for e-procurement. a) e-tendering with e-price bid. b) e-tendering with e-price bid followed by reverse auction c) e-tendering with reverse auction d) Bare reverse auction.

2) R/C holders are responsible to keep and maintain servers.3) Safety features as per IT Act 2000 and subsequent amendments. 4) Service charges payable @ 0.09% of order value. 5) Complete Bid History and audit Trails has to be provided by R/C holder

of e- procurement services.

6) Training for both Purchaser and Suppliers in effective usages of E-procurement system. 7) Transfer of data to WCL after expiry of R/C.

VII) Committee recommendations:-Committee, as constituted for this purpose, after deliberation made the following recommendation so as to adopt e-procurement system for procurement of spares and consumables.

1) Work order to 1st R/C Holder i.e ITI Ltd Bangalore for providing e- procurement services

2) Initially option of e-tendering with e-price bid has to be adopted out of four option provided in the R/C concluded for e-procurement service.

3) Initially e-procurement for bulk consumables items like cables, conveyers belts etc .and once system is established we may switch over to all other items.

4) Complete online tendering including submission of Bid cost (Tender fees) and EMD. Bidders are advised to upload the tender along with scanned copy of all the documents required. No necessity of submission of off-line documents for tender evaluation.

5) In order to ensure safety in data transmission online mandatory Digital signature for uploading of NIT by purchasers and submission by tender by suppliers.

VIII) Basic requirement for commencement of e-procurement

a) PC Connected with internet, preferably with Broadband connection. b) Registration with service provider portal (In present case with M/s ITI

Ltd portal www.itietendering.com/CIL)

c) Class III digital signature certificate.

IX) e-procurement process

With competent approval e-procurement activity in MM Department started from September 2009 and first e-tender was hosted on 11th September, 2009.Important features of e-tendering system adopted at WCL are as below.

1) Role based selective access to the portal.For all users of the e-procurement portal mandatory Digital Signature

certificate (DSC) issued by certifying agencies authorized by CCA (Controller of Certifying authority)

2) On-line Registration of vender in the Service provider portal (M/s ITIs portal)

3) Downloading of tender documents by any prospective bidder.5) On-line submission of cost of tender documents and EMD6) On-line submission of tender by the Bidders with digital signature and get

instant acknowledgment7) On-line opening of the techno-commercial bids .Participated bidders can

view the bids of all the bidders on-line.8) Techno-commercial C/S and price bid can be prepared by System.9) Only documents in respect of qualifying criteria and proveness criteria to

be scrutinized manually10) E-price bid shall be kept in secured electronic locking system with time

lock.11) Price bid of techno-commercially acceptable bidders to be opened on-line.12) Bidders can view the price bid on-line.13) Safety features as per IT Act, 2000 and subsequent amendments/

guidelines

X) Total value of procurement by MM Department (HQ) during 07-10

(Value in Crores) Sl No Group of items 2007-08 2008-09 2009-10

1 Capital Items 141.93 156.29 113.91

2 Spares(HEMM & Mining Spares)

48.88 59.52 62.99

3 Consumables 66.83 81.48 74.61

4 Total 257.64 297.29 251.51

WCL has successfully adopted e-tendering system of procurement. During the year 2009-10 almost all the cases of procurement of consumables and spares are finalized through e-procurement. Month wise e-tendering position is mentioned in the next para.

(P-5)E-procurement status at WCL

Month No of tenders hosted

Estimated tender cost in crores

09/09 to 31.03.2010

45 95.09

April 2010 to march 2011

75 194.84

April 11 to March 2012

123 272.42

XI) Benefits to WCLi. Reduced cycle time (approx 180 days to 90 days).

Ii Increased bidder base. Iii. Complete Transparency in the process. Iv Cost reduction. v. Better MIS vi. Reduction of clerical mistakes vii. User friendly interface viii. Reduction in cost of bidding-time, stationary and manpower ix. Less validity period of bid means better price

x. 1 point search for tenders

XII) Improvement in e-procurement system

WCL successfully implemented e-tendering with e-price bid. To further enhance the effectiveness of e-tendering, the following modifications / improvements are being implementedi. Adoption of e-tendering with e-price-bid followed by reverse auction

wherever it is necessary.ii. Reduction of validity period of the offer from 180 days to 60 daysiii. Time between the date of publication of tender notice and tender opening

date has been reduced from 30/45 days to 15/25 days in case of Indigenous and Global tenders respectively, as information regarding tenders and other related notices shall reach the concerned bidders instantaneously.

iv. Offers will be evaluated by the system itself based on the technical and commercial templates and no any documents will be scrutinized initially.

Only EMD and the tender fee (Cost of tender documents) remittance shall be treated as qualification for price bid opening. The documents uploaded by L-1 bidder only will be scrutinized after opening of the Price bid.

XII) Conclusion

I WCL started taking advantages of web based technology.ii. E-procurement system has been well received and became familiar to

both purchasers and bidders.Iii. Other users departments like Finance, Internal audit, Users departments

started feeling comfortable with system.i. Purchase department initiated action to adopt other options like e-tendering

with e-price bid followed by reverse action.ii. Still there is lot of scope for Improvement

E-procurement at WCL

I) Introduction:e-procurement refers to processing of procurement case of goods and services through online, using the web based technology. In this process all the procurement related activities starting from registration of indents, preparation of NIT, hosting the NIT in website for on-line submission of tenders, evaluation and award of supply orders shall be done through on-line using web based technology.

II) Objectives:

1) To automate the entire tendering process in an on-line web-based real time environment to reduce the human intervention in tender evaluation and to

maintain Transparency.2) Uniform standard process3) To reduce lead time of procurement.4) To eliminate cartel/ring tendering6) To increase Bidder base- Tender information automatically goes to all the

registered suppliers.

III) E-procurement relevance and need:

1) Office memorandum of ministry of Finance Department of expenditure no.8(5)/E.II/2006 dated 5/7/2006 conveyed the direction on the subject

“introduction of “Mandatory e-procurement”. One more letter on the subject received from the same department vide reference OM no 8(5)/E.II(A)/2006 dtd 10.01.2006.

2) CVC’s issued number of circulars for using web based technology to maintain transparency.

3) Letter of Ministry of Coal, vide no.38011/13/06-IFD-dated 5/2/07 on National e-governance plan in Ministries (NeGP)-advice for implementation of e-procurement in Ministries/departments

4) CIL concluded R/C for providing e-procurement services applicable to all the subsidiaries in the year 2008.

IV) Initial process of e-procurement

1) CIL earlier concluded R/C dtd. 23/04/2008 with M/s MSTC for e-procurement services. On receipt of the above R/C WCL initiated e-procurement action but initial results were not encouraging due to:

(P-2)a) Lack of knowledge.b) Least support from R/C holder/Service provider.c) Purchase Manual provisions.(existing Purchase Manual was came

into force from the year 2004 when e-tendering was not popular)d) resistance to change/ adoption of new system.

V) Efforts for implementation of e-procurement.CIL concluded fresh R/C with following:

a) M/s ITI Ltd. Bangalore b) M/s MSTC Ltd. Kolkata c) M/s Mjunction services ltd. Kolkata

Validity of above R/C up to 22/6/2011

2) In order to implement e-procurement a committee consisting of HOD of MM, E&M, Finance, System department was constituted with competent approval. The objective of the committee was to:-

a) to study the procedures to be adopted based on the R/C concluded by CIL

b) study the purchase manual clauses and to suggest changes required for implementation of e-procurement.

c) safety features required and covered in the system and to d) suggest the modalities for implementation.

VI) Salient features of the R/C for e-procurement.

1) R/Cs provides 4 options to chose for e-procurement. a) e-tendering with e-price bid. b) e-tendering with e-price bid followed by reverse auction c) e-tendering with reverse auction d) Bare reverse auction.

2) R/C holders are responsible to keep and maintain servers.3) Safety features as per IT Act 2000 and subsequent amendments. 4) Service charges payable @ 0.09% of order value. 5) Complete Bid History and audit Trails has to be provided by R/C holder

of e- procurement services.6) Training for both Purchaser and Suppliers in effective usages of e-procurement system. 7) Transfer of data to WCL after expiry of R/C

(P-3)

VII) Committee recommendations:-

Committee after deliberation made the following recommendation so as to adopt e-procurement system for procurement of spares and consumables .

1) Work order to 1st R/C Holder i.e ITI Ltd Bangalore for providing e- procurement services

2) Initially option of e-tendering with e-price bid has to be adopted out of four option provided in the R/C concluded for e-procurement service.

3) Initially e-procurement for bulk consumables items like cables, conveyers belts etc .and once system is established we may switchover to all other items.

4) Complete online tendering including submission of Bid cost (Tender fees) and EMD. Bidders are advised to upload the tender along with scanned copy of all the documents required. No necessity of submission of off-line documents for tender evaluation.

5) In order to ensure safety in data transmission online mandatory Digital signature for uploading of NIT by purchasers and submission by tender by suppliers.

VIII) Basic requirement for commencement of e-procurement

a) PC Connected with internet with sufficient speed preferably with Broadband connection.

b) Registration for service provider portal (In present case with M/s IT

Ltd portal www.itietendering.com/CIL) c) Class III digital signature certificate.

IX) e-procurement process

With competent approval e-procurement activity in MM Department started from September,2009 and first e-tender was hosted on 11th September, 2009.Important features of e-tendering system adopted at WCL are as below.

1) Role based selective access to the portal.2) For all users of the e-procurement portal mandatory Digital Signature

certificate(DSC) issued by certifying agencies authorized by CCA (Controller of Certifying authority)

(P-4)

3) On-line Registration of vender in the Service provider portal(M/s ITIs portal.)

4) Downloading of tender documents by any prospective bidder.5) On-line submission of cost of tender documents and EMD6) On-line submission of tender by the Bidders with digital signature and get

instant acknowledgment7) On-line opening of the techno-commercial bids .Participated bidders can

view the bids of all the bidders on-line.8) Techno-commercial C/S and price bid can be prepared by System.9) Only documents in respect of qualifying criteria and proveness criteria to

be scrutinized manually10) E-price bid shall be kept in secured electronic locking system with time

lock.11) Price bid of techno-commercially acceptable bidders to be opened on-line.12) Bidders can view the price bid on-line.13) Safety features as per IT Act, 2000 and subsequent amendments/

guidelines

XI) Total value of procurement by MM Department (HQ) during 07-10

(Value in Crores) Sl No Group of items 2007-08 2008-09 2009-10

1 Capital Items 141.93 156.29 113.91

2 Spares(HEMM & Mining Spares)

48.88 59.52 62.99

3 Consumables 66.83 81.48 74.61

4 Total 257.64 297.29 251.51

WCL has successfully adopted e-tendering system of procurement. During the year 2009-10 almost all the cases of procurement of consumables and spares are finalized through e-procurement. Month wise e-tendering position is mentioned in the next para.

(P-5)E-procurement status at WCL

Month No of tenders hosted

Estimated tender cost in crores

September 09 4 5.13

October 09 5 2.68

November 09 0 0

December 09 19 62.23

January 10 5 11.35

February 10 6 7.47

March 10 4 6.23

April 10 4 6.65

May 10 7 8.6

June 10 3 13.74

July 10 2 1.01

Aug 10 5 4.93

TOTAL 64 130.02

XI) Benefits to WCL

i. Reduced cycle time (approx 180 days to 90 days).ii. Increased bidder base.iii. complete Transparency in the process.iv. Cost reduction. v. Better MISvi. Reduction of clerical mistakesvii. User friendly interface viii. Reduction in cost of bidding-time, stationary and manpowerix. Less validity period of bid means better price

i. 1 point search for tenders

XII) Improvement in e-procurement system

WCL successfully implemented e-tendering with e-price bid. To further enhance the effectiveness of e-tendering, the following modifications / improvements are being implemented

(P-6)

i. Adoption of e-tendering with e-price-bid followed by reverse auction wherever it is necessary.

ii. Reduction of validity period of the offer from 180 days to 60 daysiii. Time between the date of publication of tender notice and tender opening

date has been reduced from 30/45 days to 15/25 days in case of Indigenous and Global tenders respectively, as information regarding tenders and other related notices shall reach the concerned bidders instantaneously.

iv. Offers will be evaluated by the system itself based on the technical and commercial templates and no any documents will be scrutinized initially. Only EMD and the tender fee (Cost of tender documents) remittance shall be treated as qualification for price bid opening. The documents uploaded by L-1 bidder only will be scrutinized after opening of the Price bid.

XII) Conclusion

i. WCL started taking advantages of web based technology.ii. E-procurement system has been well received and became familiar to

both purchasers and bidders.iii. Other users departments like Finance, Internal audit, Users departments

started feeling comfortable with system.iv. Purchase department initiated action to adopt other options like e-

tendering with e-price bid followed by reverse action.v. Still there is lot of scope for Improvement

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