Microsoft finds big flaw in Narendra Modi government’s GeM master plan

Microsoft has written to the union government expressing its concern over the process being followed to establish an online marketplace for government procurement, according to several people aware of the development. The Centre is in the process of inviting bids from private technology companies vying to run the platform.
The US company, which is also a prospective bidder for the Government e-Marketplace (GeM), has written to several government departments including the commerce ministry and the Prime Minister’s Office, saying the process was against stipulated policies and violated procurement norms, multiple sources told ET.
The letters by Microsoft said government departments are being unresponsive to bidders’ queries and are improperly interpreting the cloud and open source software policy defined by the Ministry of Electronics and Information Technology (MeitY), according to an official aware of the development.
Microsoft has also raised concerns about the setting up of a data disaster recovery centre for the project in close proximity, the person told ET.
A senior official of the Directorate General of Supplies and Disposal (DGS&D) — the government arm which handles all government procurement currently — confirmed the receipt of the letter but refuted Microsoft’s allegations.
“Our aim is to give a level playing field. Their point is well taken and we’re clarifying their concerns,” the official told ET.
Microsoft told ET it had “nothing to share on this”.
The GeM portal will manage procurement for ministries and departments for items such as laptops, air conditioners, furniture and items of daily use like stationery at both the state and central level. Services such as taxis and florists also come under the purview of GeM, which was launched in August last year with the main aim of making the process much more efficient.
The contract has drawn the interest of technology companies given that the portal manager could get as much as 0.5 per cent of the total transaction value as commission. Procurement by the central and state governments put together is estimated at Rs 5-7 lakh crore each year.
ET had reported in May that companies like online retailers Amazon, Flipkart, as well as technology companies like Accenture, Wipro and TCS were interested in the contract to manage the marketplace, which spans five years and can be extended by a further two years.
The latest tussle has pushed back project deadlines, with the government expected to release the final request for proposal (RFP) in the next two-three days. The bidding deadline has been extended to June 15 against the earlier June 1.

Emphasis on open source

The DGS&D official cited earlier also dismissed the concerns raised by Microsoft about open source systems. The government has thrown its weight behind the adoption of open source software for all official procurement and all system integrators have agreed to this, said the official.
“Our core system has to be on open source. We can’t go for proprietary software… There has to be some sense of continuity. We are very clear on that,” said the official, who also rejected Microsoft’s contention that DGS&D had violated ministry norms. “A representative of MeitY is also involved in the selection process. How can they violate guidelines?”
Another official confirmed that Microsoft has written to the government and its main areas of concern are open source software and cloud services.On the company’s data centre related concerns, the official said there are no guidelines on data centre or recovery centre and hence, there is no violation.
An executive at a tech company that’s also interested in the project said it had not found anything irregular with the processes followed.
“We had raised some issues in the prebid conference and officers have taken cognisance of it. We hope they are in the process of being addressed,” the official said.
The government official said that barring two-three queries which the department is studying, most responses have been sent to all bidders.
On the contrary, DGS&D has questioned the confidence of bidders as they have sought guarantees on the percentage of procurement that would take place through the portal.
“Bidders are becoming more aggressive in legal and financial matters. Some companies wanted comfort on what would happen if the government changes its mind,” the official said.
Further, some companies have also sought to reduce the limited liability and cap it to a modest amount in case the system fails. Vendors have asked for more time for software development, seeking 18 months compared with the 10 months stipulated earlier, the official added.
“They want to see the government’s seriousness and want payments to be expedited and terms of payment to be eased,” said official cited above.
In a move to allay bidders’ concerns, DGS&D plans to issue a revised RFP this week through which it would address most of the concerns flagged by prospective vendors, the official said.