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35 th Review Meeting of State Finance Controllers GOA Monitoring of Procurement Technical Support Group, SSA.

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Presentation on theme: "35 th Review Meeting of State Finance Controllers GOA Monitoring of Procurement Technical Support Group, SSA."— Presentation transcript:

1 35 th Review Meeting of State Finance Controllers GOA Monitoring of Procurement Technical Support Group, SSA

2 2 Why is Procurement Important? In procurement terms inputs are generally grouped into three categories: (i)Civil Works – School Infrastructure and facilities like New PS, UPS, Residential Schools, Hostel, ACR, HM Room, BRC/URC, CRC, Drinking water, Toilets, Girls Toilet, Ramps, Handrail, Electrification, Retro-fitting, Boundary wall/ fencing, Major Repairs, etc. (ii)Goods -Typically equipment, computers, furniture, textbooks, library books, uniforms, TLE, TLM, other materials, supplies, commodities, etc. (iii)Services – Hiring of services including academic, technical and resource support provided by institutions/organizations in all areas, research studies, third party quality evaluation of civil works, auditors etc. The quality, timeliness, local appropriateness and affordability of those procured inputs can largely determine whether the public investments will succeed or fail.

3 3 Effective Procurement ObjectivesObjectives Right Quality product Right quantities Lowest possible price Meeting recognized standards Timely Delivery as per schedule Reliable suppliers

4 4 PROCUREMENT IN SSA Strictly follow procurement procedure prescribed in Chapter IX of the Manual on Financial Management and Procurement (FM&P). Mandatory to follow the Manual provisions for all procurements under SSA. Follow States’ financial ceilings except when not prescribed by MHRD. Strictly follow MHRD’s financial ceilings whenever prescribed for various method of procurement which shall prevail on States’ ceilings.

5 5 Identification of Needs. Ensure availability of specific budget provision. Assessment of bulk requirement at the beginning of the financial year. Computer, equipment, furniture, books etc in economic lots as per annual need. Procure miscellaneous items of stores not covered by bulk requirement as per actual need. Make all purchases to the best advantage after comparison of competitive prices. Strictly follow the level of procurement prescribed in the Manual Encourage decentralized procurement Avoid centralized procurement of items prescribed at lower level Points to be kept in view

6 6 PROCUREMENT  Strictly follow the levels of procurement provided in Para 112 of the Manual on FM&P Levels of procurement School/Community/ KGBVCRC / BRCDistrictState

7 7 Method of Procurement Method of Procurement Procurement Open Tender Open Tender Limited Tender Single Tender Procurement without tender / quotation Procurement through communities

8 8 Monitoring of Procurement Monitoring of Procurement under SSA is carried out as under:  Preparation of Annual Procurement Plan  Monitoring the progress of procurement of open tender contracts of above Rs. 10 lakh through software  Post Review by IPAI Team, Development Partners and TSG Consultants  Post Audit by Internal Auditors, Statutory Auditors and AG concerned.

9 9 Monitoring of Procurement Annual Procurement Plan Prepare the Procurement Plan every year and upload on SSA’s website as envisaged in Para 113 of the Manual.Procurement Plan Strictly follow financial ceiling prescribed for each method. MHRD requested the States on 3 rd April 2012 to prepare the annual procurement plan for 2012-13 and upload the same on the web site. Uploaded by 13 States of Andhra Pradesh, Chandigarh, Dadra & Nagar Haveli, Gujarat, HP, Karnataka, MP, Maharashtra, Rajasthan, Tripura, UP, Uttarakhand and West Bengal. Not prepared by 22 States, despite the issue of reminders on 29 th August 2012 and 19 th October 2012. These States are requested to prepare the same and upload on their websites.

10 10 Monitoring of Procurement Common errors noticed: Footnotes of the Performa prescribe various stages of contracts, which are not being followed correctly. While six stages are prescribed for goods, nine stages are prescribed for civil works as indicated below: GoodsCivil Works 1.Preparation of specifications and bids document. 2.Issue of Invitation to bid. 3.Open bids 4.Evaluation 5.Award Contracts 6.Delivery 1.Preparation of specifications and bids document. 2.Issue of Invitation to bid. 3.Open bids 4.Evaluation of bids 5.Award of contracts 6.Construction 25% complete 7.Construction 50% complete 8.Construction 75% complete 9.Construction 100% complete

11 11 Monitoring of Procurement Common errors noticed: Some States have prepared Procurement Plan partially and not covering the entire outlay approved by the PAB for the State Component and all the Districts. The Procurement Plan needs to be complete in all respects taking into account the outlay approved by the PAB for each activity. Various methods of Procurement proposed to be followed during the year need to be indicated in the plan. Civil Works either through community or through contractors have not been provided in the plan by some States. The complete stages for each contract have not been indicated in the plan by some States.

12 12 Monitoring of Procurement On-line Software to monitor progress of Procurement MHRD developed an on-line software to monitor progress of procurement of open tender contracts above Rs. 10 lakh and hosted through an internet service provider. The dedicated web-site is available at http://www.rte-ssaprocurement.com http://www.rte-ssaprocurement.com The User’s Manual developed by MHRD for the guidance of User’s at State and District level is also uploaded on the same web-site and available in the first screen of the website. The login-id and password for the User’s at State and District level were also shared with the State. States are requested to use this software extensively and monitor the progress of procurement.

13 Common Observations of Procurement Procedural lapses Non-issue of written requests to the vendors for obtaining quotations. Obtained Quotations by hand by visiting the premises of the vendors or request made through telephone. Three Quotations obtained from one vendor instead of obtaining it from different vendors. Notice inviting quotations were put on the notice boards of SSA offices instead of seeking it in writing. Documents relating to seeking quotations, comparative statement of quotations etc. are not available on record. Engagement of contractors for construction of civil works without obtaining the prior approval of PAB. Non-observance of the time limit of 30 days for submission of bids.

14 14 Common Observations of Procurement Procedural lapses Entire procurement processes under limited tender completed within 2 days. Invoice date is prior to the purchase order date. Cheques drawn prior to the issue of purchase order. Cheques/DD drawn on 31 st March but not delivered to the supplier for a considerable period resulting in loss of interest in the case of DD. Splitting of orders to bring it within the financial ceiling. Contract amount exceeded without issue of repeat orders or revision of contract agreement. Not indicated Bid validity period in the bid documents.

15 15 Common Observations of Procurement Procedural lapses Procured goods not taken in the fixed asset register. Procured goods not found at site during visit. Followed single tender instead of limited tender. Followed limited tender instead of open tender. Not taken Earnest money deposit from prospective bidder. Not indicated validity period of the earnest money deposit in the tender documents. Delay in delivery period stipulated in the PAB. Made payment based on provisional bill. The date issued for work order and the delivery/invoice/payment dates on the same day.

16 16 Procedural lapses Not obtained Security deposit/performance guarantee from selected bidders even though provided in the bid documents. Not included clauses for liquidated damages, security deposits, retention money, delivery schedule and payment schedule in Work Orders. Not charged Liquidated damages though stipulated in the purchase order. Open tender valuing more than Rs. 20 lakh not advertised in national news paper. Not clearly specified Technical specifications, delivery period, payment terms etc in the tender documents. Common Observations of Procurement

17 17 Irregularities in Procurement Andaman & Nicobar Islands Procurement of 123 computers with 45 Laser jet Printers at DGS & D rate contract from one local vendor having no DGS & D rate contract. Andhra Pradesh Computer procurement through APTS needs review in view of delays in supplies, non-receipt of accounts, non- functioning of equipment etc. Not followed transparent procedure for the appointment of internal auditors and statutory auditors IPAI 3 rd Phase - Observations on Procurement

18 18 Irregularities in Procurement Arunachal Pradesh Not followed the procurement procedure of SSA Manual for procurement of materials and services. Government decision was not conducive to financial interest of SSA. Not followed open tender method for procurement of materials of high financial magnitude (Rs.20 crore and above for purchase of radio sets, goods and services) Assam Violation of established procurement procedures resulted in extra and avoidable expenditure of Rs.85.45 lakh to SSA. IPAI 3 rd Phase - Observations on Procurement

19 19 Irregularities in Procurement Assam (Cont’d/-) Construction material for civil works like ACR, repair and renovation, toilets etc., were being purchased by the SMC without obtaining any quotation to judge competitive and reasonable price. The materials so purchased had not been recorded in any site account and or in any stock register. Utilization of materials purchased for the works concerned was not monitored. Large payments for construction materials were in cash instead of cheques. Final payments were made without any completion certificate. IPAI 3 rd Phase - Observations on Procurement

20 20 Irregularities in Procurement Bihar Schools purchased science and math kits at exceedingly high rates of Rs 11000 and Rs 10000 per kit (science and math kits) against the price of Rs 5,720 per kit prescribed by the NCERT. Schools purchased fire extinguishers, involving several crores of Rupees at high rates without observing codal formalities and norms of economy. IPAI 3 rd Phase - Observations on Procurement

21 21 Irregularities in Procurement Chandigarh Not levied penalty of Rs.2.91 lakh for delayed supply of uniforms in 2009-10. Late distribution of Jerseys for the winter season of 2009- 10 and 2010-11 to the children. 752 under and oversize pairs of shoes were lying in the store without any use for the children. Issued Books to the schools in excess of their requirements which were later returned by the schools resulting in payment of carriage charges twice. Purchased 8,000 books in 2009-10 for AIE Centres out of which only 1658 books were issued. IPAI 3 rd Phase - Observations on Procurement

22 22 Irregularities in Procurement Dadra & Nagar Haveli Under Computer Aided Programme, 39 schools were supplied 196 computers. However, they are lying idle for want of computer trained teachers, non-installation and procurement of computer furniture etc. This intervention was a total failure. Daman & Diu Procurement procedures in the districts did not follow the Manual procedures and norms. Procured Work books worth Rs 7.62 lakh in 2011-12 without approval of the competent Authority IPAI 3 rd Phase - Observations on Procurement

23 23 Irregularities in Procurement Daman & Diu (Cont’d/-) Appointed a Chartered Accountant firm as statutory auditor for the fifth consecutive year in contravention of provision in the Manual though the IPAI Team had earlier pointed out erroneous appointment for the fourth year in its earlier report. Procured Work books valued at Rs 4.92 lakh in October 2009 without inviting limited tenders as required under the provisions of the Manual. IPAI 3 rd Phase - Observations on Procurement

24 24 Irregularities in Procurement Goa Expensive equipments (LCD TV/ Monitor) were repeatedly procured by the SPD in non-transparent manner as the technical members of the Purchase Committee were not associated with the purchase. Procurement of text books involved significant amounts of recurrent nature need better insight and coordination in SSA. CAL was a nonstarter due to delay in supply of computers, shortages of class rooms, non-availability of trained teachers. Record related to number of students/teachers to whom training was given is not maintained. IPAI 3 rd Phase - Observations on Procurement

25 25 Irregularities in Procurement Gujarat Noticed fradulent purchases amounting to Rs. 32.06 lakh during 2008-09 in purchase of charts, booklets, CDs etc., in DPO, Surendranagar for which a FIR was filed on 02- 03-2010. 168 out of 264 computers purchased under Computer Aided Learning Programme, 15 under NPEGEL and 30 under BRCs/CRCs were non-functional. A BRC Bhavan constructed at Palsana (Surat district) in 2009-10 at a cost of Rs. 6 lakh was handed over to judiciary for use as a civil court on a request received from Legal Department IPAI 3 rd Phase - Observations on Procurement

26 26 Irregularities in Procurement Haryana Not observed procurement procedure laid down in the Manual for purchase of material. Purchased Colour pencils worth Rs.507.61 lakh without inviting open tenders. The Society suffered a direct loss of Rs.50.76 lakh on account of discount. Delay in supply of computers and other related equipment by HARTRON resulted in loss of interest of Rs.119 lakh. Implementation of CAL programme also received a setback due to this delay IPAI 3 rd Phase - Observations on Procurement

27 27 Irregularities in Procurement Himachal Pradesh Made Payments to the suppliers without proper scrutiny and recording pass order on the bills. Assessment of textbooks/workbooks was on the high side as compared to actual requirements. Incurred overpayment of Rs. 432 lakh to the Printers on procurement of workbooks under “Aadhar” Programme. J&K Procurement procedure followed did not comply with the provisions of the SSA Manual. Not followed competitive bidding for procurement of computers and accessories and orders were placed on DGS&D instead of in house procurement at economical rates. IPAI 3 rd Phase - Observations on Procurement

28 28 Irregularities in Procurement Jharkhand Major procurement actions with regard to goods and services are consistently disregarding the SSA procedures. Award of work for printing, purchase of ladies bicycles and furniture and computers were made without inviting tenders. The distribution of books in the schools at the beginning of the academic year was repeatedly delayed. Equipments procured for handicapped children were not put to use. The ladies bicycles procured by SIS remained unused as these were not distributed among the girls enrolled in NPEGEL. IPAI 3 rd Phase - Observations on Procurement

29 29 Irregularities in Procurement Karnataka One case of misappropriation of Rs.10.39 lakhs sanctioned for construction in a school by its Head Master was reported; the irregularity could be perpetrated due to laxity in following established procedures / oversight by those responsible. Kerala The quantity of items purchased and debited to MIS and LEP was not documented. Disregarding the SSA procedures on major procurements consistently resulted in excess expenditure. Noticed unauthorized purchases, purchase from second lowest tenderer, surrender of funds due to indecision, non utilization of items purchased, etc. IPAI 3 rd Phase - Observations on Procurement

30 30 Irregularities in Procurement Madhya Pradesh Major procurement actions in MP are disregarding the SSA procedures and causing loss and excess expenditure for the programme. Rs. 13.26 crore was unjustifiably advanced to the editor for subscription to Devputra magazine for 15 years without following due process. SSA programe itself is yet to be approved for such a long period. Rs. 1 crore in interest was lost due to hasty drawl of funds to pay the advance. Purchase of computers and UPS without following the prescribed procedures resulted in avoidable expenditure of Rs. 28.68 lakh and loss of interest of Rs. 9.63 lakh. Computers and UPS valuing Rs. 63.89 lakh are lying unutilised in Morena district since June 2010. IPAI 3 rd Phase - Observations on Procurement

31 31 Irregularities in Procurement Maharashtra SPO made large procurements (such as purchase of text books, teachers’ handbooks, self learning cards, computers and accessories) in violation of SSA rules and best practices. Discounts were not obtained in procurements made from RC firms selected without tender. SPO made no efforts to reconcile, regulate and verify supply of huge quantity of text books purchased each year. Large excess payments on this account cannot be ruled out. SSA funds of Rs 30 lakh meant for girls and SC/ST students were irregularly spent for purchase of books and book cases for BRCs under the orders of the State Government. This amount should be refunded to SSA by the State Government. IPAI 3 rd Phase - Observations on Procurement

32 32 Irregularities in Procurement Manipur SSA is resorting to centralized procurement in disregard of GOI directions for decentralized planning and procurement and involvement of communities in procurement process so as to achieve transparency in procurement procedure. Procurement of ECEE-kits and educational-kits to girls for very large amounts were purchased centrally. Due to lack of planning substantial quantity of items like computer, Solar Power Plants valuing crores are presently left unsecured while funds were drawn far in advance of requirement to consume the budget. School uniforms, school bags worth several crores were procured centrally for distribution causing discontentment among the students and poor quality of the stitched uniforms. IPAI 3 rd Phase - Observations on Procurement

33 33 Irregularities in Procurement Manipur (cont’d/-) Rs. 54.51 lakh was unnecessary drawn for payment of VAT, though it was not payable in Manipur for interstate trade. As the amount is payable to none, holding of such large amount is fraught with risk of embezzlement and misappropriation. Meghalaya CAL programme was implemented in an ill planned manner and one third of the computers were lying idle for 3 years due to shortage of classrooms, unavailability of trained teachers, lack of electricity. IPAI 3 rd Phase - Observations on Procurement

34 34 Irregularities in Procurement Mizoram Not produced important records and documents for procurement of computers. SPD consistently made selection of vendors without following due process and followed arbitrary procedures in payment of their bills. The Finance and Accounts Officer was bypassed in processing the payment of bills in SPO. Concerned section directly put up bills to Addl. SPD/SPD for payment. IPAI 3 rd Phase - Observations on Procurement

35 35 Irregularities in Procurement Mizoram (cont’d/-) The possibility of collusion and other malpractice in payment of bills cannot be ruled out in these cases. CAL was entrusted to ACES Info Tech (Pvt.) Ltd. Kolkata and its performance is very poor. The same firm has been allotted order repeatedly in disregard of its poor performance and SSA failed to initiate any penal action against the firm in terms of agreement. Proper investigation is needed in this connection. IPAI 3 rd Phase - Observations on Procurement

36 36 Irregularities in Procurement Nagaland No transparency in major procurement cases in SMA. Noticed ample evidence of arbitrary award of contract to sole source vendors based on their unsolicited offers, uneconomic rates, unsubstantiated reimbursement of payment of VAT and centralized procurement in the HQ for decentralized items that facilitated the arbitrary selection of a vendor to procure the items from a preferred firm. As a result, SSA funds were not properly utilised in these purchases. Irregularities in the following cases would call for investigation by competent authority: IPAI 3 rd Phase - Observations on Procurement

37 37 Irregularities in Procurement Nagaland (cont’d/-) (i)Contract of Rs.205.67lakhs (TLE goods) was awarded to M/s N.R.Enterprise based on firm’s own request as well as at the behest and influence of Minister, school education without observance of procurement formalities laid down in Para-115.3 of MOFM&P. (ii) VAT of Rs.7.91 lakhs and Rs.1.49 lakhs were reimbursed without production of payment certificate from VAT Authority. (iii)Disregarding Purchase Committee’s recommendations and subsequent recorded approval from higher authority, Rs.12.72 lakh was paid as excess freight charge to the supplier. IPAI 3 rd Phase - Observations on Procurement

38 38 Irregularities in Procurement Nagaland (cont’d/-) (iv) CAL programme with a contract value of Rs 966.47 lakh + Rs. 642.25 lakh was finalized based on limited tenders of some selected firms at the suggestion of Vice Chairman, Executive Committee instead of open tenders as prescribed in FM&P Manual. (v) Procured reading and writing materials for Rs 307.51 lakh from two firms on the basis of quotation without floating of tender in violation of procurement procedures and formalities. (vi)Made Payment of VAT of Rs12.17 lakh to them without production of Certificate of Payment from tax authority. (vii)Diverted Rs.74.80 lakh from the approved budget for child tracking towards procurement of sport goods without approval of PAB. IPAI 3 rd Phase - Observations on Procurement

39 39 Irregularities in Procurement Nagaland (cont’d/-) (viii) Supply order for approximately Rs 1.5 crore was awarded to a supplier at the instance of high officials disregarding the procurement procedures laid down in the Manual. (ix) Reimbursed VAT amounting to Rs. 5.88 lakh to the supplier without having any proof of payment actually made to VAT Authority. (x) Incurred excess expenditure of Rs. 8.21 lakh due to excess procurement of class mate pencils and non-dust aspire. The cases revealed other serious irregularities like non invitation of tenders, acceptance of rates offered by single /lone supplier on unsolicited offer, utilization of budget to avoid surrender/ lapse etc. IPAI 3 rd Phase - Observations on Procurement

40 40 Irregularities in Procurement Odisha Not followed prescribed procedures of calling of tenders/quotations. Undue financial favour to Odisha Computer Application Centre (OCAC) in purchasing computers by placing huge funds of Rs. 5.92 Crore Rs. 33.82 lakh was deposited with NCERT on 25-9-2010 for the supply of 316 upper primary science kits (UPSK) and 316 upper primary mathematics kits (UPMK) during 2010-11 but the supply has not yet been made. Puducherry Not followed the prescribed tendering procedure for the procurement of play systems valued at Rs. 28.50 lakh. IPAI 3 rd Phase - Observations on Procurement

41 41 Irregularities in Procurement Sikkim Significant amounts are spent on procurement of materials/stores by SPO and DPOs without following the norms prescribed in SSA Manual or in State Finance Rule. Open tenders were not invited for purchases and Annual purchase plan and list of contractors /suppliers approved by the State Government was not prepared. Transparency and economy in procurement need be improved by strict compliance with SSA norms. CAL Programme is a non-starter. Though 826 computers were installed in the Upper Primary Schools, the programme is non-functional for want of trainers and instructors and the apathy of the computer trained teacher. IPAI 3 rd Phase - Observations on Procurement

42 42 Irregularities in Procurement Sikkim (Cont’d/-) SPO procured books valued Rs.10.64 lakh for higher classes students (IX, X, XI, XII) though SSA programe was meant for students of elementary level students (class I to VIII). Delayed Payment of Cost of School uniforms resulted in loss of cash discount of Rs.3.35 lakh. Printing and publication of inappropriate books for class-I students led to unfruitful expenditure of Rs.12.41 lakh besides non-utilization of the same. Preparation of useless Vision Documents by a NGO led to wasteful expenditure of Rs.17.32 lakh. IPAI 3 rd Phase - Observations on Procurement

43 43 Irregularities in Procurement Tamil Nadu Lack of transparency in Civil Works at VECs Level – Purchases and execution need to be systematized. Instructions issued should be regularly followed up. Maintenance of Works Card not being done in spite of instructions. Purchase of computers 2008-09 Settlement of account with ELCOT by districts to be followed up by HQs. Purchase of computers 2009-10 Anomalies to be looked into Payment of Value Added Tax on books, educational charts exempted - not payable under Value Added Tax Act but paid - Rs. 4.3 crores Reduction in CST Rate from 4% to 2% not applied to the purchases made in 2009-10, resulting in excess payment of Rs. 17517/-. IPAI 3 rd Phase - Observations on Procurement

44 44 Irregularities in Procurement Tripura Procurement procedures prescribed in the Manual were subverted for printing of text books. Two ineligible firms were given orders for huge printing work. Printing of text books in excess of requirements during 2009-11 resulted in an extra expenditure of Rs 53.50 lakh. For printing of text books, an undue favour was extended to two firms one of whose tender was rejected and the other did not participate in the tender. SSA fund of Rs 127.40 lakh earmarked for construction of 7 additional hostel buildings of KGBV for accommodation of 50 girl students in each of such hostel was being utilized improperly since each such hostel would accommodate only 20 to 25 girl students. IPAI 3 rd Phase - Observations on Procurement

45 45 Irregularities in Procurement Uttar Pradesh Free text books were not given to all eligible children. There was delay in distribution of books. Computers were lying uninstalled, in the absence of required infrastructure. The computer teachers were imparted only 10 days training which was inadequate to enable them to teach the students. IPAI 3 rd Phase - Observations on Procurement

46 46 Irregularities in Procurement Uttarakhand Actual requirement of free text books was not properly assessed nor supplied timely. The books purchased from NCERT for the library in April 2009 are yet to be distributed to schools. Noticed several deficiencies in the procurement of Computers. The computers which were procured could not be put to use in large number of cases as training of teachers in computers did not take place. IPAI 3 rd Phase - Observations on Procurement

47 47 Irregularities in Procurement Uttarakhand (Cont’d/-) The NIT and Bid documents contained serious omissions, like quantity for each item of work/supplies to be executed; period of contract and approximate value, thereby depriving the benefits of competitive bids in a high value contract. The delay in finalization of tender has not only blocked Rs.169.72 lakh spent on furnishing of school rooms for CAL during 2009-10 for over one year but also deprived large number of students from the benefits of the programme consecutively for two years ie. 2009-10 and 2010-11. Due to delay in procurement of computers in 2008-09, children were deprived of the benefits for one year. IPAI 3 rd Phase - Observations on Procurement

48 48 Irregularities in Procurement West Bengal Procurement plans for purchases in bulk quantities were not prepared at SPO or district level. Tender Committees for bulk procurement was constituted as and when required without having any procedural guidelines. IPAI 3 rd Phase - Observations on Procurement

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