1. PROCUREMENT POST REVIEW OF WORLD BANK FINANCED PROJECTS IN INDIA October 11, 2007

2. Contents Significant Findings General Observations Possible deviations in Contracts not reviewed Recommendations for Projects

3. Significant Findings Technical Education Quality Improvement Project- TEQIP [7 states] Risk Rating: MediumContracts with substantial deviations: 87 out of 259  Incorrect method of procurement Bypassing of procurement guidelines:  One civil works contract split into 7 contracts to avoid NCB procedures.  One contract split into 2 contracts to remain within limits of DC  Purchase of computers split into 8 different contracts (out of which 3 reviewed by us), to avoid NCB procedures Contract awarded without receipt of a minimum of 3 quotations (55 contracts) Procurement made through DC; conditions for DC under para 3.7 of the guidelines not fulfilled (8 contracts) NS followed for contract above USD 50,000 instead of NCB (1 contract) Civil works procured through DC, which is not allowed as per the terms of the agreement (2 contracts) DC followed instead of NS (4 contracts)

4. Significant Findings Technical Education Quality Improvement Project- TEQIP (contd.) Risk Rating: MediumContracts with substantial deviations: 87 out of 259 Fixed Budget method used for selection of auditor, which is allowed only for institutional development sub-projects as per the project agreement (1 contract) Selection of individual consultant made on single-source basis, which is not allowed as per the Project Agreement (1 contract) Approval not taken from WB for DC, as required by project agreement (32 contracts) Certain goods like ACs, LCD Projector, Motorized screen, etc. supplied under Works contract (2 contracts)  Others First NCB not referred to WB for prior review (5 contracts) Additional work undertaken/ additional items purchased than initially estimated/ required as per the RFQ (6 contracts)

5. Significant Findings Technical Education III Project [7 states] Risk Rating: HighContracts with substantial deviations: 47 out of 72  Incorrect method of procurement NS followed for contracts above USD 50,000 instead of NCB (4 contracts) Single procurement split into multiple contracts to avoid applying NCB procedures (9 contracts through NS & 7 contracts through DC) Purchase of furniture based on bids obtained for an earlier contract six months old, without inviting fresh bids (1 contract) Procurement made on the basis of DC though the same does not fall under any of the criteria specified in the Project Agreement for DC (6 contracts) Contract awarded without receipt of minimum of 3 quotations (1 contract) State tendering procedures adopted instead of NCB procedures, resulting in restriction in competition to within the state. Further, bid evaluation criteria not mentioned in bidding documents. (3 contracts)

6. Significant Findings Technical Education III Project (contd.) Risk Rating: HighContracts with substantial deviations: 47 out of 72  Quality of quotations not appropriate Similar handwriting in different bids (5 contracts) Signature of same person different on invoice and quotation (1 contract) Format/language/description of goods in different quotations exactly same (8 contracts) Same telephone no. in different quotations (2 contracts) Alterations in the quotations (1 contract) Computer generated quotations without complete addresses, telephone numbers, sales tax/ VAT registrations, etc. (4 contracts) Common spelling/ other mistakes in all quotations received (5 contracts)

7. Significant Findings Technical Education III Project (contd.) Risk Rating: HighContracts with substantial deviations: 47 out of 72  Discrepancies in evaluation Bids of the bidders’ rejected on grounds of non submission of authorization letters whereas selected supplier had also not submitted the same for all items (1 NCB contract) Bids rejected as non-responsive due to non-submission of ISO certificate) even though the bidder had subsequently (prior to evaluation) provided the same (3 contracts)  Others Earlier bids rejected on grounds of non-responsiveness and fresh bids invited without WB’s prior approval. During re-bid, modifications in technical specifications not sent to each bidder resulting in receipt of a single bid (under NCB), which was accepted without ensuring price reasonability. (1 contract) Negotiations held with the selected bidder (1 NCB contract)

8. General Observations  Cost estimate not prepared for consultancy/NCB  Inadequate publicity of tender (NCB)  RFQs not sent in writing  Bid validity period not mentioned in RFQ/ quotation  Deadline for submission of bids not mentioned in advertisement/ RFQ  Basis of evaluation of bids not specified in RFQ  Opening of bids after a time gap of receipt of quotations  Bid security not sufficient  Evaluation report not in specified format  PO issued/ contract awarded after expiry of bid validity period  PO does not contain all terms and conditions of the contract  Delays in delivery of goods/services  Delays in payments  Asset identification numbers not assigned to the assets  Assets not being used for the project

9. Recommendations for Projects  General Project Officials should apprise themselves of the World Bank procurement guidelines and thresholds applicable to their project. State level offices should take the lead in educating the district level project staff. If limits/thresholds for procurement not practicable, the same should be highlighted to bank for revision/approval  Publicity Adequate publicity of the procurement notice should be made to ensure wider participation from prospective bidders (NCB)  Evaluation Complete documentation should be done for the procurement procedures adopted and decisions taken during evaluation Quality of bids/quotations received should be reviewed/assessed appropriately before considering them as responsive

10. Recommendations for Projects (contd.)  Contracting Purchase Order should mention all important terms and conditions of the award of contract Purchase Order should be issued within the bid validity period The timelines for delivery specified in the supply orders should be realistic, considering the geographical location of the project and nature of items procured. Efforts should be made to ensure adherence to these timelines by the vendors.  Asset Records Proper asset register with all relevant details of the assets purchased under the project should be maintained and kept updated All assets purchased from project funds should be assigned an identification number, which should be marked on the asset

11. THANK YOU