A Tender Affair

I was surprised by a letter that I got recently from a PSU (Public Sector Unit). It invited offers to develop an MIS system for a medium-sized PSU. The operations were described in two lines and the developer was asked to write software for “data entry, maintenance and report generation”. The essence was that the PSU wanted developers to quote for a system about which no details were furnished.

The software procurement practices of many PSUs are hidebound by rules, which state that they must invite multiple offers and award the contract to the lowest bidder, regardless of the quality of the proposal. The acquisition often gets routed through the purchase department with a materials manager handling the process. Needless to say, the buyer ends up getting what he deserves. The process is riddled with mistakes, some of which are described

below.

Disregard of the systems- analysis concept. Many PSU managers don’t understand the pivotal role that systems analysis plays in the design of a custom system. This leads to a situation where developers are supposed to quote for a system they have not studied in detail. Also, the PSU breaks up the project into two. The first phase calls for studying the system and writing the specifications of the software; the second for inviting offers for the development of the software according to the specification developed in the first phase. The problem is that the award of contract for doing the systems analysis is also done through a tendering process. So the lowest bidder gets to do the specification development, irrespective of his competence.

Inability to gauge the quality of a proposal. Two proposals may be functionally equivalent and yet one may be miles ahead of the other in terms of product quality. Both will produce all the reports defined in the specification but the second will also be able to generate additional reports by the correct specification of parameters. A trained eye can see how much superior the second approach is to the first. Unfortunately this is precisely the facility the officer in charge of tendering lacks. The order has to go to the lowest

tenderer.

Poor contract documentation. Little time is spent on drafting the actual contract. As a result it is poorly structured and lacks many essential clauses. For example, many contracts contain nothing about acceptance testing. What happens is that the developer informs the client that the work is complete and the client does not really know what to do at this juncture. So he takes the easy way out by withholding payment for a while so that he can see the system running. Relations between client and developer turn sour.

Poor implementation planning. A majority of PSU clients do not plan their implementations. I know of a case where the client insisted that a new financial system be implemented in mid March. The system was installed but the organization was busy doing the year closing. So the developer had to repeat the entire effort at the end of April.

The bottomline. The software industry is losing out on a huge client base because of antiquated procedures.

Gautama Ahuja runs a turnkey software company, AHC Infotek