Using the Private Sector Effectively

How should the government involve the private sector in implementing successful e-governance projects under the public-private partnership model

Lately, the government has started using the public-private partnership or the PPP models for implementing e-governance projects. PPP models are nothing new, and have frequently been used by the government to deploy various other types of projects, such as those related to infrastructure development. A PPP project combines the skills and synergies of the government and the private sector to deploy projects successfully and on time. There are many benefits to this approach.

First of all, the government. and private party jointly fund the project. This puts less pressure on the government's treasury. Secondly, the private party is free of all red-tape and bureaucratic hurdles that plague the government. It can therefore work more efficiently and effectively. For instance, even a simple procurement process in the government can take ages because tenders have to be issued, amounts have to be sanctioned, etc, causing inadvertent delays. However, if the private party needs to procure something for the project, it can do so without these hurdles. Thirdly, since the private party puts huge investments into the project, it's more serious about meeting project deadlines. Otherwise, it stands to incur severe financial losses. The end result is that the project gets implemented smoothly, correctly, and on time. While PPP does sound attractive from the benefits we just highlighted, it's not free of risks. A sound model therefore needs to be evolved by the government so that it can be mutually beneficial and successful. 

One of the first things for a successful partnership is political commitment. It shouldn't happen that after a private party has made significant investments into a project that the political scenario changes causing the project work to get affected, and the contract with the party dishonored. Private parties must be taken into confidence with the assurance that this will not happen. In order for that to happen, a PPP committee needs to be setup that's independent of all political interference. The committee should comprise of senior bureaucrats from the government who can influence decisions. It should be responsible for laying down clear guidelines on the PPP model, making it completely transparent and accountable. In addition to this, there should be sub-groups within each government department, which would look after the operations of the e-governance project. They would be responsible for interacting with the private party, and implementing the solutions.

The second point is to have clearly defined goals that the government wants to achieve with the project, and what are the deliverables from the private sector.

Some of the deliverables being considered today include complete handling of all hardware and its maintenance, including replacements and upgrades due to technology changes. The costs for these would all be borne by the private party. It could also involve designing the software solution, its maintenance, and training of the government employees on how to use it. The last key point in the model is an effective delivery structure. Being a long-term project, the exact ROI for the private party must be outlined against the deliverables. This should be a financial model, which details how the returns would flow in to the private party. It should be a sustainable model, with clearly defined timelines and goals. One project that has followed the PPP model is AP Government's e-procurement project. It has already been deployed and the government is reaping tremendous benefits from it. It took three years to roll out, with the objective to centralize the entire procurement process of the Government of AP. An e-procurement portal was therefore set up, with facilities such as electronic tendering, contract management, rate contract based procurement, etc. All the government departments, PSUs, and municipalities in AP were to be serviced by this. This was given to a third party, C1 India, to implement. The entire investment of setting up the required hardware, software and its customization, networking and communications equipment was borne by C1 India. The recovery of this investment was by way of service charges paid by the user departments for transactions carried out on the portal. ¨

Anil Chopra