Procurement Procedure and Preparation of Procurement Plan

30th Review Meeting of State FCs- Delhi (4th - 5th August 2011)

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PROCUREMENT

• Strictly follow procurement procedure prescribed in Chapter IX of the revised Manual on FM&P.

• Manual provisions mandatory for all procurements.• Follow State's financial ceilings except when not

prescribed by MHRD.• MHRD prescribed ceiling on 17-09-2008• MHRD’s ceilings extended up to 30-9-2012 vide letter

dated 2-7-2010.• Shall prevail on State ceilings.

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Main Considerations

Economy

Efficiency

Equal Opportuni

ty

Transparency

PROCUREMENT

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PROCUREMENT

• Identification of Needs.• Requisition from users. • Exists 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.• All purchases be made to the best

advantage after comparison of competitive prices.

Points to be kept in view

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PROCUREMENT

• Strictly follow the levels of procurement provided in Para 112 of FM&PSchool/Community/ KGBVCRC / BRC District State

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School/KGBV level All civil works, except buildings for BRCs, SIEMAT,

Residential Schools/Hostels and KGBV. Furniture to Govt. UPS School library Teaching Learning Material School grant. Maintenance grant.

Teaching Learning EquipmentREMSLearning Enhancement Programme (LEP).Items required for KGBV.Uniform

EGS/AIE/Special Training related items TLM, Contingency etc.

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CRC/BRC level

Furniture/equipment/computer etc. Office contingencies Teaching Learning Material Teacher Training Community Training Civil works for construction of BRC,

augmentation of BRC and CRC Maintenance of BRC and CRC Printing work REMS

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District level Office equipment for DPO Office furniture for DPO Textbooks/other books/supplementary materials Computers and accessories Aids and appliances for CWSN Office contingencies Hiring of vehicles Maintenance of equipment and vehicles District level training and workshops Printing work REMS ECCE Kit Educational Kits for girls Learning Enhancement Programme (LEP) Construction of Residential Schools/Hostel and KGBV

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State level Textbooks Computers and its accessories Office equipment for SPO Office furniture for SPO Equipment for distance education Aids and appliances for CWSN Office contingencies Hiring of vehicles Maintenance of equipment and vehicles State level training and workshops Printing work Engagement of consultancy firms (service contract) Engagement of Auditors for external and internal audit Engagement of experts/resource persons Engagement of NGOs REMS Learning Enhancement Programme (LEP).

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PROCUREMENT• Prepare the Procurement Plan every year and upload on SSA’s

website as envisaged in Para 113 of the Manual.• Strictly follow financial ceiling prescribed for each method. • Urged the States on 16th June 2011 to prepare the annual

procurement plan for 2011-12 and upload the same on the web site.

• Information received from 6 States of Chandigarh, HP, Maharashtra, Meghalaya, Rajasthan and Uttarakhand.

• Remaining States yet to prepare the plan. Accord priority.• Linkage of all procurements with plan will be looked in audits,

post review and concurrent review.

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1. Open Tender (Para 115-117 of the Manual)2. Limited Tender (Para 118 of the Manual)3. Single Tender (Para 119 of the Manual) 4. Procurement without tender / quotation (Para 120 of

the Manual)5. Procurement through communities (Para 121 of the

Manual)

Method of Procurement

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Financial ceiling for each contract

Category Open Tender Limited Tender

Single Tender

Community

Goods >50,000<3000,000

< 50,000 <30,000

Works >40,000<300,000

<50,000 <40,000 <40,000

Text books Upto 1 million <500.000

SIEMAT Upto 800,000

Information Technology equipment

>50,000 <4 million

<50,000

Books, Teaching materials school facility improvement, hiring of vehicles of equipment

<30,000

Service Contract <200,000

• Any contract in excess of the maximum limit indicated above shall not be procured using SSA funds.

(In US $ equivalent)

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OPEN TENDER Items covered: Civil works construction of BRC,

Residential schools/Hostel, KGBV, SIEMAT and goods. Steps

Preparation of tender documents Notification / Advertisement; Issue of tender documents; Pre-bid Conference Submission of tender documents; Public opening of tender; Evaluation; Selection of lowest evaluated responsive tender

based on post qualification; Negotiation with L-1 (if necessary) Contract award; and Contract performance

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Prescribe bidding documents covering :

Documents user friendly, self contained, comprehensive, unambiguous and relevant to the objective of purchase.

Schedule of requirements Bid form and price schedule Technical specifications Post qualification criteria Validity period Earnest money Signing of bids Pre-bid conference Submission of bids Opening of bids Evaluation criteria

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Negotiation with L1 Award of contract Signing of agreement/contract Security deposit Retention money Payment terms Liquidated damages

Repeat Orders Quantity as per State procedure Place order within one month from the date of last supply Prices have since not reduced Purchases not made on urgent basis

Rejection of all bids Lack of competition Tenders not substantially responsive Obtain the approval of competent authority

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LIMITED TENDER

Items covered: goods including books, uniforms teaching learning materials, school equipment, hiring of vehicles, and operation and maintenance of equipment

Invitation for quotations – • Based on comparing price quotations obtained from

several suppliers, usually at least 3 to ensure competitive prices.

• Issue a letter to the supplier to furnish the quotations for the required goods/equipment.

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LIMITED TENDER

Invitation for quotations – No need of publication of notification in the

newspaper/website. Issue the request letters to suppliers on the approved

list. The request letter should indicate description,

specifications and quantity of the goods as well as desired delivery time and place.

Only one quotation by each supplier.

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LIMITED TENDER

Bid Price Quote for the full quantity as described in the

invitation letter. Corrections, if any, made by crossing out, dated

initialing and re-writing. Include all duties, taxes and other levies payable by

the Vendor/Supplier in the total price. The rates quoted by the Vendor/Supplier be fixed for

the duration of the contract and not subject to adjustment on any account.

The prices are quoted in Indian Rupee.

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LIMITED TENDER

Steps Identifying items; Laying down specifications; Estimating total numbers and costs of items; Need not notify in newspaper/website Identifying likely agencies borne on the approved

list of contractors/ suppliers; (minimum 3, 8-10 for more competitive rates)

Obtaining approvals of competent authority; Issuing letters of invitation; Processing quotations received;

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Obtaining orders of competent authority for placing orders for supply;

Issuing letters placing orders for supply and delivery period;

Quoted price shall include all duties, taxes and other levies;

Rates quoted be fixed and not subject to adjustment;

Ensuring inspection; Ensuring timely supply: and Making payments after delivery in satisfactory

condition. The financial ceiling prescribed for limited tender

shall be applicable for Rate contracts of DGS & D and Rate contracts of State Governments.

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SINGLE TENDERFollowed in the case of articles specifically certified as of propriety nature; or manufactured by a particular firm; goods including books; teaching materials; school grant; hiring of vehicles; and operation and maintenance of equipment etcAppropriate for Extension of existing contracts Standard equipment/spare parts for existing equipments

from original supplier. Items obtainable from one source Early delivery In exceptional cases such as natural disaster.

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WITHOUT TENDER / QUOTATION

Procurement of goods or group of goods estimated to cost the equivalent of the ceiling of State Govt.

Issue suitable guidelines by the SIS

THROUGH COMMUNITIES

Construction of all civil works except, BRC, Hostel, KGBV and SIEMAT

BRC construction if the community is technically capable

Purchase of materials as per ISI certification, if available;

SPD may provide simple procurement guidelines

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Identify the committee locally operating in the area. Keep the following points in view:

Active involvement of community in planning and implementation;

Who will procure the materials or goods used in works;

Goods / works have to be executed as per approved plans and specifications

The name and designation of the Engineer for technical supervision and certification.

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Suggested advance payments based on the certificate issued by the Supervising Engineer

Advance (mobilisation advanceupon start up of the work andon reaching lintel level) : 75% of total cost

Plastering and completion of work : 25% of total costSchool toilet and other repair works

Advance (mobilisation advance upon start up of the work) cost : 75% of total

Plastering and completion of work cost : 25% of total

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Procurement of major items

Textbooks – Single Tender (Textbooks Corporation, NCERT etc) and Open Tender

IT Equipment – Limited Tender (State approved vendors)State Electronic Corporation/IT Deptt/other State agencies provided they follow State procedure and Manual provisionsOpen Tender and e-procurement

Printing work – Rate Contract approved by State Government, Limited Tender and Open Tender

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Service Contract Preparation of Terms of Reference Preparation of Cost Estimate and Budget Advertising Preparation of short list of consultants Receipt of proposals Formation of Evaluation Committee Evaluation of Technical and Financial proposals Final discussions including negotiations and award of

the contract

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Non-Government Organizations

Preparation of Terms of Reference Advertising Formation of Evaluation Committee Selection of NGOs Approval by Grant-in-Aid Committee

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Post Review by Government of India Mis-procurement Complaint Handling Mechanism

PROCUREMENT

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Key Observations of Post review of ProcurementReview revealed :• need for tightening of procurement system

especially on procedural lapses• incomplete documentations• irregularities• diversions of fundsProcedural 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.• In some cases, L1, L2 and L3 share the same

address and telephone number.

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Key Observations of Post review of ProcurementProcedural lapses• 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. • Letter of award issued within 20 days, even though 30

days time limit was allowed for submission of bids. • Entire procurement cycle completed within 2 days.• Invoice date is prior to the purchase order date.• Cheques drawn prior to the issue of purchase order.• 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.

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Key Observations of Post review of ProcurementProcedural 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. Not obtained Security deposit/performance guarantee

from selected bidders. 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.

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Key Observations of Post review of Procurement

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 .

Not charged Liquidated damages though stipulated in the purchase order.

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.

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Key Observations of Post review of Procurement

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.

Lack of training on Procurement The Head Masters were not aware of the prescribed procurement

procedures under SSA. Poor understanding of procurement procedures at State and

district level.

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Key Observations of Post review of Procurement

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. 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

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