Tender Malpractices
Invitation of tenders (often called tender for short) is a special procedure for generating competing offers from different bidders looking to obtain an award of business activity in works, supply, or service contracts.A buyer which can be either Government or Large Private Company , can float a Tender as and when they need to buy Goods, hire services or construct something. Generally tenders are floated by Government as it is a mandatory requirement for them.
Tenders are open invitation to buy or sell goods/services/contracts. Those who are interested in supplying what has been advertised, can respond to a Tender & submit their best competitive offer. The best competitive offer (Lowest Bidder or L1)is generally selected & the contract is awarded to L1 Bidder.
Tenders are published in newspapers for the following reasons;
- It is a mandatory requirement for Government Organisation form Transparency point of view
- For wider publicity & ensuring better & higher response from bidders from across the world
- To ensure that everyone gets equal opportunity to participate in a tender & transparency is maintained
- As per CVC (Central Vigilance Commission), now tenders can be also published on Websites.
- The cost of publishing Tender in Newspaper is very high, and hence the same is recovered from bidders by means of selling them Tender Documents Fee.
There are various types of Tenders depending on the requirements of the project and the institution which is floating the tender. The main advantage of floating a tender is for generating competing offers and there by completing the floated project with both cost effective and good quality. But currently in india this tender process is lacking transparency which is a major loop hole in this process. With the lack of transparency the choosing of the bidder depends not on the bidding price but rather on power to influence, corruption and even threatening.Transparency is one ingredient totally conspicuous by its absence in the tendering process. Mystery continues to shroud the exercise from the time the tender is floated till the final award is made. This is one of the major reasons for poor quality of services witnessed in works of government and the construction of government projects. The associated malpractices, a natural fallout of these covert exercises, has kept many firms away from bidding for municipal projects or public works department projects.
These tender projects are mainly influenced by political people. Normally MLA's and MP's of the region control the tenders relating to that region. They award tenders to their relatives or known persons and they take a share of some 25% of the money involved in the project. In almost all the cases this 25% of the money is shared between the opposition MLA and the ruling party MLA in the quota of 2:3(respectively) so it doesn't matter whether they loose the election or win the election these politicians get's there share in the projects weakening the project. They control the tenders by threatening the people who try to compete in bidding for the tender and will make sure the tender is awarded to people favoured by them. The downfall here is inorder to win the favour of the politicians they need to pay 25% of the project money which other wise used for project and hence the quality of the project drastically decreases and they easily manipulate the people coming for inspection after the project is built. The result of this is poor roads and bridges....etc .In other cases where MLA is not interested or has no power the main malpractice is all the people who are going for the bidding of the tender will form as a team and will win the tender and will split the work among themselves and again resulting in the patchy and non complete and very poor quality construction in the project. Also, in certain cases the terms of tender are modified to so that a particular company/contractor is selected, in return for bribes. In some cases mafia comes into picture in deciding who gets the tender. People from the underworld and criminals have a major say in some of the tenders being issued. It is the tender mafia which now decides which contractors should get a particular contract. The tender mafia, whose leaders have divided regions into their own separate areas of influence, force the contractor to pay at least 30 per cent of the contract amount to them in lieu of the contract they get, Not much information is available on these practices to speak about specifics, as these are done mostly very closely to the political leaders and criminal hence no much of scope for the information to be leaked.
The proliferation of information technology and in particular the widespread usage of the Internet is thankfully putting an end to this. And what is even more laudable is to see the public sector enterprises taking a lead in putting up tenders online. Indian Oil, BHEL, NTPC and ONGC are some of the popular sites which are frequented by equipment vendors and contractors catering to the new projects. Some companies have even gone one step further by giving the names of the bidders along with the name of the firm to whom the award was made. Justification for awarding the tender is also displayed on the site. Some larger corporations like ONGC with offices at multiple locations may have 100-odd live tenders at any given point of time. Keeping tabs and collating information of awards to all vendors or contractors would be a virtual nightmare. However, displaying successful bidders for contracts over a certain benchmark account could be considered. Transparency and wider dissemination of relevant information will certainly help in mitigating some of unhealthy practices. Wider participation would also ensure if the perception that merit alone would be the sole criteria for pre-qualifying or shortlisting bidders.
Tenders are open invitation to buy or sell goods/services/contracts. Those who are interested in supplying what has been advertised, can respond to a Tender & submit their best competitive offer. The best competitive offer (Lowest Bidder or L1)is generally selected & the contract is awarded to L1 Bidder.
Tenders are published in newspapers for the following reasons;
- It is a mandatory requirement for Government Organisation form Transparency point of view
- For wider publicity & ensuring better & higher response from bidders from across the world
- To ensure that everyone gets equal opportunity to participate in a tender & transparency is maintained
- As per CVC (Central Vigilance Commission), now tenders can be also published on Websites.
- The cost of publishing Tender in Newspaper is very high, and hence the same is recovered from bidders by means of selling them Tender Documents Fee.
There are various types of Tenders depending on the requirements of the project and the institution which is floating the tender. The main advantage of floating a tender is for generating competing offers and there by completing the floated project with both cost effective and good quality. But currently in india this tender process is lacking transparency which is a major loop hole in this process. With the lack of transparency the choosing of the bidder depends not on the bidding price but rather on power to influence, corruption and even threatening.Transparency is one ingredient totally conspicuous by its absence in the tendering process. Mystery continues to shroud the exercise from the time the tender is floated till the final award is made. This is one of the major reasons for poor quality of services witnessed in works of government and the construction of government projects. The associated malpractices, a natural fallout of these covert exercises, has kept many firms away from bidding for municipal projects or public works department projects.
These tender projects are mainly influenced by political people. Normally MLA's and MP's of the region control the tenders relating to that region. They award tenders to their relatives or known persons and they take a share of some 25% of the money involved in the project. In almost all the cases this 25% of the money is shared between the opposition MLA and the ruling party MLA in the quota of 2:3(respectively) so it doesn't matter whether they loose the election or win the election these politicians get's there share in the projects weakening the project. They control the tenders by threatening the people who try to compete in bidding for the tender and will make sure the tender is awarded to people favoured by them. The downfall here is inorder to win the favour of the politicians they need to pay 25% of the project money which other wise used for project and hence the quality of the project drastically decreases and they easily manipulate the people coming for inspection after the project is built. The result of this is poor roads and bridges....etc .In other cases where MLA is not interested or has no power the main malpractice is all the people who are going for the bidding of the tender will form as a team and will win the tender and will split the work among themselves and again resulting in the patchy and non complete and very poor quality construction in the project. Also, in certain cases the terms of tender are modified to so that a particular company/contractor is selected, in return for bribes. In some cases mafia comes into picture in deciding who gets the tender. People from the underworld and criminals have a major say in some of the tenders being issued. It is the tender mafia which now decides which contractors should get a particular contract. The tender mafia, whose leaders have divided regions into their own separate areas of influence, force the contractor to pay at least 30 per cent of the contract amount to them in lieu of the contract they get, Not much information is available on these practices to speak about specifics, as these are done mostly very closely to the political leaders and criminal hence no much of scope for the information to be leaked.
The proliferation of information technology and in particular the widespread usage of the Internet is thankfully putting an end to this. And what is even more laudable is to see the public sector enterprises taking a lead in putting up tenders online. Indian Oil, BHEL, NTPC and ONGC are some of the popular sites which are frequented by equipment vendors and contractors catering to the new projects. Some companies have even gone one step further by giving the names of the bidders along with the name of the firm to whom the award was made. Justification for awarding the tender is also displayed on the site. Some larger corporations like ONGC with offices at multiple locations may have 100-odd live tenders at any given point of time. Keeping tabs and collating information of awards to all vendors or contractors would be a virtual nightmare. However, displaying successful bidders for contracts over a certain benchmark account could be considered. Transparency and wider dissemination of relevant information will certainly help in mitigating some of unhealthy practices. Wider participation would also ensure if the perception that merit alone would be the sole criteria for pre-qualifying or shortlisting bidders.
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