CAG Report Finds TN e-Procurement System Fails in Transparency and Competition

The Comptroller and Auditor General of India (CAG) has highlighted significant issues in Tamil Nadu's e-procurement system. The system, intended to foster competition and transparency, has failed to meet these objectives. The CAG's Performance Audit on the Implementation of the eProcurement system in Tamil Nadu, released on Saturday, revealed patterns of bid rigging and cartelisation.

The audit report identified several concerning patterns. These included bid rotation, bidders with familial ties, bids submitted from procuring entity computers, multiple bids from the same IP address, and coded signals among bidders. These practices suggest collusion and manipulation within the bidding process.

Collusive Bidding Practices

An analysis of 1.34 lakh tenders showed that 444 bids across 208 tenders were submitted by bidders with the same registered address and IP address. This indicates that either bidders from different locations used the same IP address or bids were submitted from departmental premises, suggesting departmental involvement.

The report also pointed out that 74% of procuring entities did not use the eProcurement portal even after 15 years since its inception. This underutilisation hampers the system's effectiveness in promoting transparency and reducing manual record dependence.

Lack of Coordination and Monitoring

The absence of a central body to coordinate and monitor the eProcurement portal's functions was another critical issue. Without a 'Centre of responsibility,' there is no effective oversight to ensure proper functioning and adherence to rules.

Moreover, tender evaluation reports were not uploaded, making the eProcurement system incomplete. This lack of transparency affects the objectivity of the tender process and perpetuates reliance on manual records.

Non-compliance with Prescribed Timelines

Departments did not adhere to the timelines prescribed by the Tamil Nadu Transparency in Tender Rules (TNTIT Rules), 2000. Additionally, the software was not designed to incorporate these timeline-related provisions, further complicating compliance efforts.

These fraudulent practices among bidders and officials have undermined Tamil Nadu's efforts to enhance participation, reduce costs, improve transparency, and streamline procurement processes. The CAG's findings underscore the need for stringent measures to rectify these issues and ensure the eProcurement system achieves its intended goals.

The report calls for immediate action to address these shortcomings and restore integrity to Tamil Nadu's procurement processes.