1. Two cover tender system – Safe Guards to be adopted 1. Rationale of the two cover systems: a) Technical Aspects b) Price Quotations 2. Delay in opening the second cover. 3. Risk of properly safe guarding the second cover.  Safe guards to be adopted. a. All the second covers containing price quotations be placed in a larger cover and securely sealed in the presence of the tenderers or their representatives. b. Opening of the large cover on a predetermined time and date. c. Evaluation of the technical aspects contained in the first cover within a reasonable period but not later than 45 days. Extension of time up to 60 days with the approval of the concerned secretary to government / MD of the Corporation. d. If no evaluation is done within 60 days tenders shall be reinvited. e. The qualification criteria and technical requirement should not be restrictive / discriminatory. Specification of equipments should be broad based and functional.

2. Procurement of Essential Materials for day today operations and maintenance Issues: Issues: 1. Direct Procurement against rate contracts by SPD KSIMC and from Janata Bazar not available. 2. Limited item on DGS&D rate contracts. DGS&D suppliers not interested in small procurements. 3. Quotations and tenders for each and every requirement and avoidable paper work by each procurement entity. 4. Different specifications and varying rates for items procured by different procurement entities at the same place - Audit Objections. 5. To avoid piece meal purchases the Procurement entities resort to procure large quantities. Heavy inventories and blocking of funds. 6. No reference rates for preparation of estimates.

3. Important Irregularities Noticed CAG report for 2002. I. Para 4.1 – Working of PWD 1. Splitting up of Purchases. Between April 1999 to 2002 – SE/CE accorded 466 sanction for materials valued at Rs.1.13 crores. Between April 1999 to 2002 – SE/CE accorded 466 sanction for materials valued at Rs.1.13 crores. 2. Bijapur and Gadag divisions – Rs.20.42 Lakhs materials purchased without requirement. 3. Bangalore, Kolar, Tumkur divisions – Shortage of Rs.53 lakhs worth of stores from 1994 - 1995 to 2000 – 2001. II. Para 5.2. Loss of Rs.65.43 lakhs due to purchase of MS gates, Sponge, rubber and transformer oil at arbitrary rates. MS GatesMI DivisionSPD Rate 350 x 350 mmRs.2450 at Rs.910 Rs.98 per Kg atRs.36.40 450 x 600mmRs.16900 atRs.1824 Rs.352 per Kg atRs.38 Sponge RubberKPTCL Rate 800 RmtrRs.535Rs.475 Transformer oilRs.90 Per LiterRs.65.50 Per Liter

4. Para 5.3 Materials worth Rs.99.83 lakhs kept outside Stock Account. Rs.73.9 lakhs declared surplus and Rs.21.58 lakhs became unsalable. CAG Report March 2003. Para 4.1.1 1. Irregular expenditure in MI division, Belgaum on purchases worth Rs.2.43 crores. (Road delineators, office furnishings, fire extinguishers charged to MI Construction works. Excess payment of Rs.66.24 Lakhs) 2. PWD Bidar: Injudicious and irregular purchases: Unaccounted stocks of Rs.61.57 lakhs and surplus stock of Rs.26.69 lakhs. Injudicious and irregular purchases: Unaccounted stocks of Rs.61.57 lakhs and surplus stock of Rs.26.69 lakhs.

5. Audit Report (Civil) for the year ended 31 March 2003 Appendix 4.1 Statement showing the purchases made at exorbitant rates (Reference Para 4.1.1, Page 111) ( Amount in Rupees ) Sl. No Item purchasedQuantity Rate paid per unit Rate payable Excess paid Authority for rate payable RateAmount 1 Steel Guage Plates of one metre length for monitoring water level 396 Nos. 6750 per metre 1,000 per metre 5,750.0022,77,000 Approved rate of Rs.1,000 by SE, TCC Circle, Yermarus for a similar item during 1998-99 2 Pressure Relief Valves (75 mm) 4,856 Nos.505 each 147.37 each 357.6317,36,651 Approved rate of Rs.113.36 each by CE, Irrigation (South),Mysore (for 75 mm PR valves) plus an addition of 30 per cent over the approved rate towards transportation and fixing charges. 3Transformer Oil3,320 liters 72 (500 ltrs) 144 (1,200 ltrs) 68 (1,620 ltrs) 30 per litre 42.00 114.00 38.00 21,000 1,36,800 61,560 Approved rate of Rs.25.70 per litre as per DSR of KPTCL plus Rs.4.30 per litre for extra rate for retail purchases 4Power Shunt Capacitors 1,166 Nos. (1 KVAR Capacity) 509 (457 Nos.) 656 (95 Nos.) 1500 (614 Nos.) 250 each 259.00 406.00 1,250.00 1,18,363 38,570 7,67,500 As per DSR of PWD, Gulbarga Circle for 1999-2000( R s. 170 per number for supply and Rs.55 for fixing. Add another Rs. 25 for transportation)

6. 5 Providing and fixing 250 watts High Pressure Sodium Vapour Street Light fitting with all accessories 32 Nos. 14,750 each 7,655 each 7,095.002,27,040 Approved rate (Rs.6,379) DSR of PWD, Gulbarga (Elect) for 1999-00 plus an addition of 20 per cent for transportation and fixing. 6 Providing and fixing:- (a) MS Outlet Gates (By weight) (1’ x 1’) 28,091.27 kgs 90 (24,381.27 kgs) 63.60 (3710 kgs) 50.02 per kg per kg9.9813.582,43,32550,382 SPD rate of Rs.37 per kg plus 4 per cent ST and an addition of 30 per cent for transportation and fixing charges. (b) MS Outlet Gates (By number) (1’ x 1’) 744 Nos. (each weighing 33 kg) 2,900 per gate 1,651 1,249.009,29,256 SPD R ate of R s.38.48 per kg plus an addition of 30 per cent towards transportation and fixing charges. 2 Nos. 9,8001,651 per gate 8,149.0016,298 TOTAL66,23,745

7. Recommended Procedure: 1. Annual Supply rate contact system: a) Deputy Commissioner in the District:-Office furniture, materials and equipments required for normal office functioning, hospital supplies (other than drugs) and other allied supplies. b) Chief Engineers in PWD/ID:-District wise annual supply rate contracts for Cement, Steel, RCC spun pipes, Sanitary and Plumbing materials and Paints. c) Electricity supply undertakings:-Area wise annual supply rate contract for all minor electrical materials, other supplies needed for day to day maintenance. 2. The annual supply rate contracts shall be for the financial year. Provision for revision in the rate contract when warranted. 3. The Annual supply rate contracts for non-plan works, emergency repairs works and small requirements of capital works. Limited purchase annually up to Rs.1.00 Lakh by a procurement entity. Separate tenders in all other cases

8. 4. The rates in the annual supply rate contracts – Uniform base rates for preparation of estimates. 5. For specialised items required by a department or agency separate annual rate contacts. 6. Standardisation of Specifications.