1. Key Observations of the Post Review of Procurement carried out by Development Partners and TSG Consultants 24 th Review Meeting of State FCs- Delhi (3 rd - 4 th.02.2010) Annexure-S

2. 2 Development Partners Carried out in 8 States of Bihar, Chhattisgarh, Gujarat, Kerala, Orissa, Punjab, Tamil Nadu & West Bengal Shared the Reports with the States and received the response from all except West Bengal. The Key Observations are being shared with all States to take remedial measures to avoid recurrence of such irregularities in future. Key Observations of the Post Review of Procurement

3. 3 Development Partners Review revealed : - need for tightening of procurement system especially on procedural lapses - incomplete documentations - irregularities - diversions of funds - lack of monitoring the progress Key Observations of the Post Review of Procurement

4. 4 Development Partners (Cont’d..) Procedural lapses Not issued solicitation letters to the vendors for obtaining quotations. obtained Quotations by hand by visiting the premises of the vendors. In some cases, notice inviting quotations being put on the notice boards of SSA offices. No formal agreement had been signed for procurement at State level. Key Observations of the Post Review of Procurement

5. 5 Development Partners (Cont’d..) Procedural lapses Engagement of contractors for construction of additional class rooms without obtaining the prior approval of PAB. Non observance of the time limit of 30 days for submission of bids. Letter of award issued within 20 days, even though 30 days time limit was allowed for submission of bids. Key Observations of the Post Review of Procurement

6. 6 Development Partners (Cont’d..) Procedural lapses Not indicated Bid validity period in the bid documents. Not taken Earnest money deposit from prospective bidder. Absence of social audit at VEC level. Followed Single tender method of procurement particularly at VEC school level in majority of cases without inviting any quotations. Key Observations of the Post Review of Procurement

7. 7 Development Partners (Cont’d..) Procedural lapses Not indicated validity period of the earnest money deposit in the tender documents. Not obtained Security deposit/performance guarantee from selected bidders. Not contain clauses for liquidated damages, security deposits, retention money, delivery schedule and payment schedule in Work Orders. Key Observations of the Post Review of Procurement

8. 8 Development Partners (Cont’d..) Procedural lapses Not published advertisement in national news paper for open tender valuing more than Rs. 20 lakh. Not clearly specified Technical specifications, delivery period, payment terms etc in the tender documents. Key Observations of the Post Review of Procurement

9. 9 Development Partners (Cont’d..) Non-availability of records Not maintained stock register and asset register. Incomplete documentation of procurement. Refusal to show civil works documents by Headmaster Not maintained any register or record for the receipt of earnest money deposit. Key Observations of the Post Review of Procurement

10. 10 Development Partners (Cont’d..) Not kept relevant vouchers relating to procurement in school at the time of review. Lack of training on Procurement Not provided procurement capacity building to sub-district level staff. Inadequate technical capacity of procurement staff which needs strengthening. Key Observations of the Post Review of Procurement

11. 11 Development Partners (Cont’d..) The Head Masters were not aware of the prescribed procurement procedures under SSA. Poor understanding of procurement procedures at State and district level. Delay in installation Not installed Computers purchased or not in working condition. Key Observations of the Post Review of Procurement

12. 12 Development Partners (Cont’d..) Irregularities in Procurement Dates of all bids received were overwritten except the winning bidder. Vehicle providers had formed a cartel in the award of contracts for hiring of vehicle. Not selected Lowest bidder in a limited tender for construction of additional class room on the ground of his inability to handle the construction involving negotiation with second lowest bidder. Key Observations of the Post Review of Procurement

13. 13 Development Partners (Cont’d..) Irregularities in Procurement Selected same contractor on single source basis in two schools. Purchased Computers from agencies not on authorized DGS&D or State Government Rate contract entities. Assets procured were not available for physical verification. Key Observations of the Post Review of Procurement

14. 14 Development Partners (Cont’d..) Irregularities in Procurement Absence of concerned staff during the course of review despite prior notification of the visit. Diversion of funds Used ACR fund for the construction of library Monitoring the progress of the Procurement No MIS for monitoring progress of procurement at State and district level. Key Observations of the Post Review of Procurement

15. 15 TSG Consultants Undertaken Post review of 5 States of Assam, Delhi, Madhya Pradesh, Maharashtra and Manipur during 2009-10. Key observations relate to: - procedural lapses - irregularities Key Observations of the Post Review of Procurement

16. 16 TSG Consultants (Cont’d..) Procedure Lapses Not prepared the list of major contracts above Rs.5 lakh Not prepared procurement plan annually Not followed the level of procurement prescribed in Para 107 of the Manual Procured many items centrally. Key Observations of the Post Review of Procurement

17. 17 TSG Consultants (Cont’d..) Procedure Lapses Printers were empanelled for 3 years for undertaking printing work and whenever printing work was to undertake, quotations obtained from these printers only which defeated the purpose of open tender method. Not made available bid documents till the previous date for submission of bids. Key Observations of the Post Review of Procurement

18. 18 TSG Consultants (Cont’d..) Procedure Lapses Not opened bids promptly from the time of its last receipt (Delayed by 3.30 hrs) Allowed Bid validity period of 1 year instead of the normal 90 days. Sought Expression of Interest and Request for proposal together in one advertisement for Service Contract for third party evaluation of civil works. Key Observations of the Post Review of Procurement

19. 19 TSG Consultants (Cont’d..) Procedure Lapses Not followed the procedure of short listing of eligible firms first and issuing RPF to the short listed firms. Procurement mainly on single tender method at VEC/School level. Non observance of the time limit of 30 days for submission of bids. Key Observations of the Post Review of Procurement

20. 20 TSG Consultants (Cont’d..) Procedure Lapses Held negotiation with all responsive bidders instead of with L-1 in exceptional cases. Not prepared cost estimates before procurement. Published advertisement seeking expression of interest for service contract only in regional newspapers and not in National newspapers. Key Observations of the Post Review of Procurement

21. 21 TSG Consultants (Cont’d..) Procedure Lapses Adopted single envelope system for seeking technical proposal and financial proposal for service contract instead of two envelope system. Same committee evaluated both technical and financial bid instead of two separate evaluation committees. Key Observations of the Post Review of Procurement

22. 22 TSG Consultants (Cont’d..) Irregularities in Procurement Exceeded the financial ceiling prescribed for printing of self learning cards, English Language Kit and Maths Kits through open tender for Class I to IV. Not provided class-wise & subject-wise schedule/package. Approved outlay exceeded considerably in some cases. Key Observations of the Post Review of Procurement

23. 23 TSG Consultants (Cont’d..) Irregularities in Procurement While placing orders for additional quantity, variable rates approved were not considered, resulting in excess payment to suppliers. Not charged liquidated damages even though provision exists in the contract agreement Key Observations of the Post Review of Procurement