Governance be Accountable Transparent

What NOTACCOUNTABLE INSTITUTION of Smart Governance \”NISG\” can do in eGovernance of INDIA ?

eGovMUDDLE [ NISG – NASSCOM – C 1 INDIA – Bangalore One – PwC]

Posted by nisg on June 26, 2006

The E-governance Muddle

What was expected to bring transparency in government transactions has got mired in a slew of allegations. Dataquest probes the charges made by an IAS officer against his own clan…
Shubhendu Parth
Friday, September 02, 2005

Power corrupts. Absolute power corrupts absolutely. And if the stakes are as high as the Rs 12,400 crore national e-governance plan, allegations certainly fly thick and fast.

While this reporter, under normal circumstance would not have taken note of the "all and sundry" comments and charges that are levied by the dozen each day, for we Indians are fond of criticizing and mud slinging, Umashankar C is not just an ordinary Indian. Besides being part of the select Indian Administrative Services cadre that is at the helm of the country's e-governance initiatives, he is also the member of DIT's working group for implementation of national e-governance action plan.

Incidentally, the man who presently serves as the commissioner, Tribunal for Disciplinary Proceedings, Salem, was responsible for unearthing high-level scams in Tamil Nadu as the State's Joint Vigilance Commissioner. Prior to his present position he has also worked as DC, Tiruvarur, and joint chief electoral officer for Computerization.

BLOWING THE WHISTLE: For over three months now, the government has neither taken cognizance nor made any attempts to clear the doubts raised in the mail

His allegations against the highest echelons of e-governance found credence, to a certain extent, when Dataquest was able to lay hands on a petition made by the Karnataka State Electronics Development Corporation (KEONICS) chairperson Manjula Nagaraj P to the Andhra Pradesh chief minister Dr YS Rajashekhar Reddy, referring to the possibility of irregularity in the grant of Government of Andhra Pradesh's (GOAP's) e-Procurement project.

While Manjula's letter (Ref: KSDC/CHMN/349/2004-05), dated October 14, 2005, made subtle reference to J Satyanarayana, the present National Institute of Smart Government (NISG) CEO, as "secretary IT&C", Umashankar decided to send him a mail directly seeking clarification on various cases of irregularities within seven days-including that of the GOAP e-Procurement project. The subject of Umashankar's mail, dated April 27 2005, shouted: "Mr J Sathyanarayana of NISG-Are you corrupt?"

According to the copy of the mail, which was marked to the members of the eGovINDIA e-group on Yahoo, Umashankar had alleged an unholy nexus between Satyanatanaraya and PricewaterhouseCoopers (PwC), which warranted a closer look and smelled of the possibilities of corruption in the process of awarding several e-governance consultancy projects.

Dividing Satyanarayana's term as Department of IT & Communications (IT&C) Secretary in GOAP and NISG CEO, Umashankar alleged, "One needs to look closely at the consultancy projects awarded by J Satyanarayana and you will see a pattern emerge. The only company to win most of the contracts was PwC." He further stated that as the Principal Secretary (IT&C) in GOAP for four years from 2000, Satyanarayana awarded consultancy jobs to PwC for five major projects-OLTP, Social Benefits Management System (SBMS), Integrated Financial Information System (IFIS), e-Procurement and Human Resources Management System (HRMS).

where is the report: While the AP chief minister's order was quickly followed, the attempt to avoid making the report public clearly defies the logic of transparency in governance's job for all these projects, according to him, was to prepare the RFP (request for proposal), call for tenders on behalf of GOAP, evaluate the technical bids, qualify final bidders for commercial bid opening, and finally, to recommend and leave the decision to the government to place orders on such party."It may also be interesting to note that in some evaluations, it was just left to PwC to sit through product demonstrations without any participation of the government," he alleged, adding further that during his tenure Satyanarayana had also recommended PwC to the commercial taxes department and the department of municipal administration of the GOAP as a consultant. In fact, delving on Satyanarayna's role as the CEO of NISG, Umashankar has also alleged that the very first project taken up by the institution-e-Biz, for the Department of Industrial Policy and Promotion-was archestrated to enable the selection of PwC.

When contacted, Satyanarayna, PwC, and DIT refuted the allegations made by Umashankar. The CVC, however, did not reply to the Dataquest e-mail that had primarily sought information on whether the Commission had taken any action to determine the veracity of the allegation and whether it had done anything to demonstrate that the allegations were false.

Coincidence Chemistry

Project Client Key Driver Consultant Vendor
OLTP Andhra Pradesh J Satyanarayana, Principal Secretary, IT&C, AP Ram Informatics
SBMS (Social Welfare) Andhra Pradesh J Satyanarayana, Principal Secretary, IT&C, AP PwC Ram Informatics
IFIS (Finance department) Andhra Pradesh J Satyanarayana, Principal Secretary, IT&C, AP PwC TCS
e-Procurement Andhra Pradesh J Satyanarayana, Principal Secretary, IT&C, AP PwC C1 (PwC as partner to the vendor)
HRMS Andhra Pradesh J Satyanarayana, Principal Secretary, IT&C, AP PwC Ramco
e-Biz DIPP* J Satyanarayana, CEO, NISG PwC CDAC-C1-MS (shortlisted)
e-GovWorld DIT J Satyanarayana, CEO, NISG NIIT (shortlisted)
e-Procurement Chattisgarh J Satyanarayana, CEO, NISG PwC Yet to be finalized
e-Procurement Karnataka J Satyanarayana, CEO, NISG PwC Yet to be finalized
Bangalore 1 Karnataka J Satyanarayana, CEO, NISG NISG Ram Informatics/CMS
e-Seva Andhra Pradesh J Satyanarayana, Secretary, IT&C, AP Ram Informatics/CMS
* Department of Industrial Policy and Promotion, Government of India

Terming it as baseless, factually incorrect and highly misleading, Satyanarayna said in a written reply: "I have been dealing with computerization and e-Government projects over the last 18 years. I have been associated directly and indirectly with over 40 such projects. Companies like TCS, PWC, Wipro, Ram Informatics have been awarded two or more projects or assignments during this long period. Does it lead to the inference of 'unholy nexus' with all these companies?"

Neel Ratan, executive director, PwC, on the other hand said, "PricewaterhouseCoopers has played a significant role in the advent of e-governance in the country. Being the thought leader, PwC was the first to set-up large e-governance practice in India and made significant investments to grow its capabilities in this domain. The e-governance projects are awarded on competitive bidding basis as per applicable government guidelines. Accordingly, we won some projects and also lost some."
Replying on behalf of the DIT, the Joint Secretary R Chandrashekhar said that while DIT was not the competent authority to take action on any "allegations" relating to his (Satyanarayna's) tenure with the GOAP, "the facts referred to in the letter relating to his tenure as CEO NISG have already been placed before the Board of NISG and the board has not found any substance in the content of the petition."

Investigations by Dataquest, however, reveal that while PwC was not involved with the GOAP's OLTP project or DIT's eGovWorld project, as claimed by Umashankar in his mail, PwC did win seven out of 11 e-governance consultancy projects that Satyanarayana had been involved in directly or indirectly-either as the secretary-IT&C, GOAP or as the CEO of NISG. Was it a mere coincidence after all?

According to Umashankar, NISG opted for the limited tender route for the e-Biz project and just invited Crimson Logic (a Singapore-based firm), Haselfre, and PwC. While the four-month old Haselfre was disqualified in the pre-bid evaluation, Crimson Logic was disqualified on technical grounds paving way for PwC to corner the contract.

"There are several consulting companies like KPMG, TCS, Wipro, Satyam, Ernst & Young and Microsoft Consulting Services who could manage similar jobs and hence it is difficult to understand why NISG floated limited enquiry only to Crimson logic, Haselfre and PwC," argues Umashankar.

While Satyanarayna's defense that PwC was handling four of the 11 listed projects- SBMS, IFIS, e-Procurement and HRMS-as per the Global Consultant's mandate to handle five core projects does hold ground, his reply that "the technical evaluation of the e-Biz pilot project was done by a committee appointed by the Government of India and headed by Prof Phatak of IIT Mumbai," does not explain the basic question of why no other big player was invited to bid for the same. PwC and DIT, on the other hand, have maintained a silence on this allegation.

That all is not clearly overboard is evident from Manjula's petition pertaining to the GOAP's e-Procurement project. She has alleged that PwC had built the entire tender document in such a way-and again through a limited tender route-that KEONICS was prevented from participating in the process. "We really do not know why a tender of this magnitude was floated through the limited tender process and violated the norms of the GOAP tendering procedures," she remarked in her letter to Dr Reddy.

The petition also alleges that though the secretary, IT&C, GOAP (Satyanarayana in this case) was aware of the irregularities, no action was taken by anybody "to correct the procedure and prevent the losses to the public exchequer." Soon, the GOAP Jt Secretary M Pratap at the behest of the Chief Minister Dr Reddy sent instructions to the then GOAP IT&C Principle Secretary J C Mohanty for an enquiry into the whole episode. Though, according to GOAP officials, a reply was sent to Manjula within 15 days, the copy of the enquiry report was not made available to Dataquest despite several requests. Our Hyderabad reporter was, however, allowed to copy certain portions of the noting-most of which insufficiently answered the KEONICS' chairperson's allegations.

There is another interesting angle to the story as well, the one that defies all logic and raises a pertinent industry question-how vendor-neutral can consultants like PwC remain, when they also partner some of the vendor companies?

And before one jumps to conclusion or starts a counter offensive to this poser, here is another startling fact: While PwC was a consultant for the GOAP e-Procurement project that was bagged by C1 India, the two companies joined hands as partners to bid and bag NIC's e-Procurement project recently. All this, while PwC is still working as the consultant responsible for preparing the RFP for the GOK and GOCG e-Procurement projects! (It's entirely a different matter that Nextender has obtained a stay order at the Delhi High Court against the awarding of the tender till the final decision. Indeed, ITI had at one point of time complained that it was not allowed to bid on the basis of an eligibility criteria that did not exist.)

Needless to say, this is not the desirable situation as the relationship between the two companies may willingly, or unwillingly, have an adverse influence on the RFP for all e-governance projects being prepared by PwC, particularly, the two current consultancy assignments related to e-procurement.

To say that people at the helm of the affairs may not be aware of this or might have missed this, would be worse than saying that we are living in a "fool's paradise".

Shubhendu Parth

COUNTERPOINT: Read response by Srivatsa Krishna, IAS on the report "The Egovernance Muddle" published in Dataquest dated August 31, 2005. Krishna is currently working with the World Bank in Washington, DC.


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