Privatization gone sour, EPFO turns to NIC for modernisation

March 9th, 2008 - 12:40 pm ICT by admin  

By Devirupa Mitra
New Delhi, March 9 (IANS) The modernization of the Employees Provident Fund, which has 40 million subscribers across the country, is now back in the hands of a government body - after Rs.60 million and seven years spent on a private consultant. ‘Reinventing EPF’ was launched in 2001 as a way to modernize one of the world’s largest social security organisations to manage its corpus of over Rs.2 trillion through computerisation of records, distribution of smart cards and access to online accounts, as well as faster processing of withdrawal claims.

EPF Organisation (EPFO) has nearly 40 million subscribers and the cost of the entire project for implementation in 120 sites is estimated at Rs.9 billion. Siemens Information Systems Limited (SISL) bagged the contract for executing the project at six sites for Rs.60 million.

This project, as a model for e-governance, was a top priority with its launch and progress mentioned in two Independence Day speeches by two separate prime ministers in 2001 and 2004.

Seven years on, SISL was ‘fired’ by the EPFO Central Board of Trustees on Jan 24 for failing to implement the project. A few days later, on Feb 8, Labour Minister Oscar Fernandes wrote to Information Technology Minister D. Raja asking the National Informatics Centre to take over the project.

In the letter, Fernandes said that the reason for the delay had been the “inability of SSIL to provide a workable application software for the redesigned process”. He added the application software, designed by SISL, was marked by “severe design rigidness” which “would not result in workable solution”.

According to ministry officials, the developed software did not allow for any change after input of account information. “For example, if we typed in the date of birth incorrectly, we would not have the ability to correct this later,” he said.

The minister further wrote the “unrealistic assumption and design flaws brought into question the professional competence of SISL to deliver the results”.

“The efforts of EPFO to effect the minimum changes required for a workable software and to scientifically address the chain management issue for a mutually agreed effort and cost estimation have been stonewalled by SSIL with their unprofessional attitude and contractually unreasonable and untenable demand,” said Fernandes in his letter.

The reference to “demand” was the additional penalty of Rs.215 million claimed by SISL from the government for delaying the implementation.

The decision of the EPFO was based on a sub-committee formed in 2007 to provide review and suggest future direction to the project.

The labour ministry has asked the National Informatics Centre to set up a team dedicated to the project, which will now start the software application from scratch.

When IANS contacted the SISL office in Mumbai, it was informed that after a revised proposal was submitted to the ministry, there had been no communication despite several reminders.

Rothin Bhattacharya, SISL’s executive vice president, communication group, said that the software developed according to specifications of EPFO was handed over in June 2006 to “go live”.

“EPFO attempted ‘go live’ a few times, but EPFO’s data was not ready for migration to facilitate the implementation,” he said. One pilot site at Indore had been ready in June 2007, which was documented by an external committee appointed by the labour ministry. “Since then the site has been awaiting ‘go live’,” said Bhattacharya.

He noted that the labour ministry had requested a modification of the software “to enable EPFO to start using the software and consolidate or correct their data, and once the data was completed, the original software would be rolled back”.

“Based on this approach, SISL had submitted a revised proposal in December 2007 and is still awaiting their response to the same,” Bhattacharya told IANS.

Meanwhile, a small committee consisting of NIC and EPFO officials has been set up and it has been given two weeks to draw up a time table for implementing the project through in-house manpower capacity.

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