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WELCOME CVOS ANNUAL ZONAL REVIEW MEETING SOUTH ZONE(I)

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welcome cvos annual zonal review meeting south zone(i) presentation by cte s organisation central vigilance commission 22/01/2009 status of qprs qprs for september ... – PowerPoint PPT presentation

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Title: WELCOME CVOS ANNUAL ZONAL REVIEW MEETING SOUTH ZONE(I)


1
WELCOME CVOS ANNUAL ZONAL REVIEW MEETING SOUTH
ZONE(I)
  • PRESENTATION
  • BY
  • CTES ORGANISATION
  • CENTRAL VIGILANCE COMMISSION
  • 22/01/2009

2
Status of QPRs
  • QPRs for September 2008 not received
  • National Insurance Co. Ltd.
  • General Insurance Co. Ltd.
  • United India Insurance Co. Ltd.
  • QPRs for September 2008 received late
  • Indian Overseas Bank.
  • New India Assurance Co. Ltd.
  • LIC of India Ltd.

3
Status of CTE Inspections
Organizations 2006 2007 2008
D/o Financial Services (Banking)
Andhra Bank
Canara Bank
Corporation Bank
Indian Overseas Bank
Indian Bank
Syndicate Bank
Vijaya Bank
National Insurance Co. Ltd.
New India Assurance Co. Ltd.
Oriental Insurance Co. Ltd.
General Insurance Co. Ltd.
United India Insurance Co. Ltd.
LIC of India Ltd.
4
The above table shows that CTEO is able to
inspect very few works and many organizations
have not been inspected at all. These
organizations are executing lower value works.
Therefore, there is a strong need for CVOs to
conduct CTE type inspections of contracts in
their organizations.
5
Case Study 1
  • CTE Inspection
  • Inspection Report sent in March 2008.
  • First reply received after 5 months.
  • Further details awaited even after 4 months.
  • Work awarded to a PSU on nomination.
  • Bank did not inspect work during execution.
  • Poor quality of work but no action by bank
  • Work delayed (60 months against 27 months)
  • Liquidated damages not levied.
  • Buildings lying un-occupied gt 2 years.
  • Bank continues to pay lease rent.

6
Case Study 2
  • CTE Inspection March 2005
  • 3 paras referred to CVO - July 2007.
  • Report received - May 2008.
  • Confirmation of recoveries still awaited.
  • Abnormal delay in submission of investigation
    reports by CVO.
  • Slackness in enforcing recoveries.

7
Check points for CVOs
  • Publicity of tender on web-site.
  • Contractors are qualified strictly as per PQ
    criteria.
  • Tenders are opened in presence of bidders.
  • Decision on tenders within original validity
    period.
  • Verification of Bank Guarantees.

8
  • No change in tender conditions after receipt of
    bids.
  • Tenders are sealed and page numbered.
  • Deployment of technical staff by bidder as per
    contract conditions.
  • Proper Insurance Policies.
  • General workmanship and quality of work with
    reference to line, level etc.

9
MAJOR DEFICIENCIES OBSERVED DETAILED PROJECT
REPORT (DPR)
  • DPR NOT PREPARED AS PER SITE EQUIREMENT.
  • IFLATED ESTIMATE.
  • INCOMPLETE DETAILS PROVIDED IN THE DPR LEADING TO
    DISPUTE AT EXECUTION STAGE.

10
MAJOR DEFICIENCIES OBSERVED CONSULTANCY
  • APPOINTMENT OF CONSULTANT IN A NON-TRANSPARENT
    WAY.
  • SCOPE OF SERVICES NOT DEFINED CLEARLY.
  • UPPER CEILING FOR CONSULTANCY FEE NOT FIXED.
  • PAYMENT RELEASED WITHOUT AVAILING FULL SERVICES
    FROM THE CONSULTANT.
  • OVER-PAYMENT MADE TO THE CONSULTANT.
  • PROFESSIONAL LIABILITY INSURANCE NOT TAKEN BY THE
    CONSULTANT.
  • TECHNICAL MAN-POWER NOT DEPLOYED BY THE
    CONSULTANCY FIRM AS PER THE CONTRACT PROVISION.

11
MAJOR DEFICIENCIES OBSERVED CONSULTANCY
  • TECHNICAL STAFF CHANGED FEEQUENTLY.
  • AS PROJECT MANAGEMENT CONSULTANT(PMC)-
  • ALLOWED USE OF MATERIALS FROM UN-APPROVED
    SOURCES.
  • ALLOWED EXECUTION OF SUB-STANDARD WORK.
  • CLEARED SUB-STANDARD WORK FOR PAYMENT.
  • PROPER MEASUREMENT NOT RECORDED.
  • QUALITY TESTS NOT CONDUCTED AS PER CONTRACT/CODAL
    PROVISION.

12
DEFICIENCIES OBSERVED TENDER DOCUMENTS
  • CONTRADICTORY AND AMBIGUOUS PROVISIONS MADE IN
    THE TENDER DOCUMENT.
  • PROVISION IN THE TENDER DOCUMENT NOT AS PER
    POLICY GUIDELINES.
  • DRAFT TENDER DOCUMENT NOT APPROVED BY COMPETENT
    AUTHORITY.
  • CLAUSES TO DEAL WITH AMBIGUITIES NOT PROVIDED IN
    THE TENDER DOCUMENT.
  • NON-RELEVANT DOCUMENTS AND PROVISIONS PROVIDED IN
    THE TENDER DOCUMENT.

13
DEFICIENCIES OBSERVED PRE-QUALIFICATION
  • PRE-QUALIFICATION CRITERIA MADE UNDULY STRINGENT
    AND THEN RELAXED DURING PQ EVALUATION, SINCE VERY
    FEW BIDDERS WERE MEETING THE NOTIFIED CRITERIA.
  • PQ CRITERIA FIXED AFTER OPENING OF THE PQ OFFERS.
  • PQ CRITERIA NOT APPLIED UNIFORMLY TO ALL THE
    OFFERS.
  • PQ CRITERIA MADE TO SUIT THE PARTICULAR FIRM(S).

14
DEFICIENCIES OBSERVED INVITATION OF BIDS
  • TENDERS INVITED IN A NON-TRANSPARENT MANNER
    WITHOUT PROPER PUBLICITY.
  • TENDER NOTICE AND COMPLETE TENDER DOCUMENT IN THE
    DOWNLOADABLE FORM NOT UPLOADED IN THE WEB-SITE.
  • SHORT NOTICE TENDERS INVITED WITHOUT ANY REAL
    URGENCY.
  • BID INVITED ON NOMINATION BASIS EVEN THOUGH THERE
    IS NO URGENCY AND NUMBER OF POTENTIAL BIDDERS ARE
    AVAILABLE.
  • LIMITED TENDERS INVITED FROM OLD PANEL.
  • AUTHORITY TO RECEIVE THE BIDS AND PLACE NOT
    NOTIFIED PROPERLY.

15
CHECK POINTS IN EXECUTION STAGE
  • AGREEMENT IS AS PER THE BID ACCEPTED.
  • AGREEMENT IS SIGNED SEALED PROPERLY.
  • BANK GUARANTEES ARE VERIFIED AND TIMELY RENEWED.
  • CONDITIONS REGARDING INSURANCE POLICIES,
    PERFORMANCE GUARANTEES, LABOUR LICENCE etc. ARE
    COMPLIED.
  • NO UNWARRANTED DEVIATIONS DONE.
  • VARIOUS RECOVERIES ARE MADE AS PER CONTRACT.
  • PROPER RECORD OF HINDRANCE MAINTAINED.
  • TECHNICAL STAFF DEPLOYED AS PER CONTRACT
    PROVISION.
  • MANDATORY TESTS CARRIED OUT.

16
DEFICIENCIES OBSERVED EVALUATION OF BIDS AND
AWARD OF CONTRACT
  • UNDUE DELAY IN EVALUATION OF THE BIDS AND AWARD
    OF THE CONTRACT.
  • AMBIGUITY IN THE BID NOT DEALT AS PER PROVISION
    IN THE TENDER DOCUMENT AND UNDUE FINANCIAL
    BENEFIT RUNNING INTO CRORES OF RUPEES EXTENDED TO
    THE LOWEST BIDDER.
  • CURRENT MARKET RATE ANALYSIS OF THE RATE NOT DONE
    TO ASSESS THE REASONABLENESS OF THE LOWEST BID.
  • WORK AWARDED AT MUCH HIGHER COST THAN WHAT COULD
    BE JUSTIFIED BASED ON THE CURRENT MARKET RATES.

17
DEFICIENCIES OBSERVED COMPLIANCE OF THE CONTRACT
CONDITIONS
  • CONTRACT DOCUMENT MADE AT VARIANCE WITH THE
    TENDER DOCUMENTS, RESULTING INTO UNDUE FINANCIAL
    BENEFIT TO THE CONTRACTOR.
  • IN DESIGN AND CONSTRUCT CONTRACT, PROFESSIONAL
    INDEMNITY INSURANCE NOT TAKEN BY THE CONTRACTOR,
    RESULTING IN UNDUE FINANCIAL BENEFIT TO THE
    CONTRACTOR BY WAY OF SAVING OF PREMIUM AMOUNT
    BESIDES DISADVANTAGE TO THE ORGANIZATION.
  • VARIOUS OTHER INSURANCE POLICIES SUCH AS
    CONTRACTORS ALL RISK POLICY, THIRD PARTY
    INSURANCE, PLANT AND MACHINERY INSURANCE,
    WORKMANS COMPENSATION POLICY ETC. NOT TAKEN BY
    THE CONTRACTORS.
  • BANK GUARANTEES SUBMITTED BY THE CONTRACTORS NOT
    VERIFIED INDEPENDENTLY FROM THE ISSUING BANK.
  • WORK DELAYED UNDULY AND NO ACTION TAKEN AGAINST
    THE CONTRACTOR.

18
DEFICIENCIES OBSERVED QUALITY
  • CONTRACT PROVIDED FOR DESIGN MIX CONCRETE,
    WHEREAS AT SITE BATCHING PLANT OR OTHER WEIGHING
    MECHANISM NOT INSTALLED AT SITE, RESULTING IN
    POOR QUALITY OF CONCRETE.
  • SUB-STANDARD MATERIALS USED IN THE WORK.
  • POOR QUALITY OF SHUTTERING USED RESULTING IN
    BULGING ETC. IN THE CONCRETE STRUCTURES.
  • CONCRETE PLACEMENT AND COMPACTION NOT DONE
    PROPERLY RESULTING INTO HONEYCOMBING IN THE
    CONCRETE STRUCTURE.
  • REINFORCEMENT NOT PLACED PROPERLY.
  • MATERIAL FOR UNAPPROVED SOURCES USED IN THE WORK.

19
CHECK POINTS FOR PRE-TENDER STAGE
  1. FEASIBILITY STUDY IS DONE.
  2. PROJECT IS DULY SANCTIONED.
  3. DETAILED PROJECT REPORT(DPR)/ESTIMATE IS VETTED
    AT APPROPRIATE LEVEL.
  4. CONSULTANTS ARE APPOINTED IN A TRANSPARENT
    MANNER.
  5. DRAFT TENDER DOCUMENT IS VETTED AT APPROPRIATE
    LEVEL.

20
CHECK POINTS FOR TENDER STAGE
  • 1. TRANSPARENT PRE-QUALIFICATION CRITERIA AND
    EVALUATION AS PER NOTIFIED CRITERIA.
  • 2. PQ EVALUATION IS BASED ON DOCUMENTARY PROOF.
  • 3. MODE OF TENDER(OPEN,LIMITED OR NOMINATION
    BASIS) AS PER ORGANISATIONs POLICY.
  • 4. TRANSPARENCY IN PREPARATION OF PANEL REGULAR
    IN CASE OF LIMITED TENDERS.
  • 5. ADEQUATE / WIDE / WEB PUBLICITY.
  • 6. OPENING OF TENDERS IN PRESENCE OF BIDDERS.
  • 7. BIDS OPENED ARE SIGNED BY ALL THE MEMBERS OF
    TENDER COMMITTEE AND ALL THE CORRECTIONS IN THE
    BIDS ARE ATTESTED SUMMARISED BY TENDER
    COMMITTEE.
  • 8. BIDS EVALUATED PROPERLY AND AMBIGUITIES ARE
    DEALT AS PER PROVISION IN THE TENDER DOCUMENT.
  • 9. ON THE SPOT SUMMARY OF BIDS.
  • 10. CONDITIONS OF THE TENDER ARE NOT ALTERED
    AFTER OPENING OF PRICE BIDS

21
  • Continued----
  • CTE(VR)

22
  • WELCOME

23
South Zone (22.01.2009)
  • A Bank has awarded a contract in 2006 to vendor
    M/s X, at a cost of Rs.8.70 crores for supply,
    installation commissioning of three numbers
    each of SUN Fire E 6900 Servers and SUN StorEdge
    3510 FC arrays and related hardware and software
    at its Data Centre and Disaster Recovery (DR)
    Site. The case was intensively examined during
    Aug 2008.

24
South Zone (22.01.2009)
  • In this case, Bank involved as many as four
    Consultants.
  • While the appointment of M/s C-DAC was through a
    process of competitive bidding, the other three
    consultants were engaged after having direct
    discussions with them.
  • Selection process by nomination without a tender
    process, lacks transparency, and could encourage
    unacceptable practices.

25
South Zone (22.01.2009)
  • In the case of appointment of M/s C-DAC, Bank had
    floated a limited tender enquiry to five
    organizations out of which, Bank got three
    offers. Out of these three offers, two offers
    were disqualified for not meeting the tender
    eligibility criteria.
  • Apparently, the Bank had not verified the
    credentials of the prospective bidders before
    issuing limited tender. Instead of inviting bids
    through open tendering, a limited tender enquiry
    was issued to the firms who did not have the
    requisite experience and other eligibility
    conditions, mentioned in the tender.

26
South Zone (22.01.2009)
  • In the 1st tender, though the qualification
    criteria was specified and apparently, all the 4
    bidders met with these qualifying conditions,
    this tender was discharged as
  • i) demand drafts towards the cost of tender
    documents and EMD, submitted by two of the
    bidders, M/s A and M/s B, had consecutive serial
    numbers issued by CITI Bank on ING Vysya Bank and
    ii) the track record of all the vendors except
    M/s W did not show any experience in installing
    servers of equivalent capacity.

27
South Zone (22.01.2009)
  • Cancellation of 1st tender for submission of
    demand drafts bearing consecutive serial numbers
    by two bidders is not enough justification. It
    was done without giving any opportunity to these
    two bidders to explain / clarify the position.
  • The second reason for cancellation, that except
    M/s W, no other bidder had any experience in
    installing servers of equivalent capacity, is
    also not acceptable, because this was not a
    criterion to determine the eligibility of a
    vendor, as per tender.

28
South Zone (22.01.2009)
  • If experience in installing Servers of
    equivalent capacity was essential for award of
    contract, Bank could have modified the qualifying
    criteria accordingly in the fresh tender issued,
    after cancellation of the 1st tender.
  • No such condition was incorporated in the 2nd
    tender issued in March 2006.
  • The qualifying conditions in the 2nd tender
    remained the same as specified in the 1st tender.

29
South Zone (22.01.2009)
  • Again in the 2nd tender, though the offer of M/s
    B was meeting the qualifying criteria as
    specified in the tender documents, this offer was
    rejected stating that the firm had no track
    record of past installations of similar Servers.
    M/s B it was stated, also did not have Service
    Support Centers of their own.
  • These two conditions were not stipulated in the
    tender documents and thus the offer of the firm
    was rejected on the basis of unspecified criteria.

30
South Zone (22.01.2009)
  • The Bank in its internal noting has given
    reference to an informal discussion with the
    concerned authority in the office of CVC on
    25.1.2006, and recorded that the clarity that
    emerged at the discussion was that in the facts
    and circumstances of the case, it would be in
    order for the Bank to procure the hardware in
    question by entering into direct negotiations
    with M/s Sun Microsystems who are the original
    equipment manufacturers and getting supplies
    through their partners after ensuring that the
    commercials offered for supply, installation and
    commissioning are reasonable.
  • Bank is not expected to record the informal
    advice given by an officer in his individual
    capacity in their Internal Notes.

31
South Zone (22.01.2009)
  • As far as
  • Informal discussions with the concerned
    authority in the office of Central Vigilance
    Commission is concerned,
  • Commission does not approve of taking cognizance
    of such informal discussions unless the same are
    confirmed in writing by the Commission.

32
South Zone (22.01.2009)
  • Tender was issued for Sun specific products
    inviting bids from the authorized dealers of Sun
    Microsystems, as Sun does not directly sell their
    products, but sell through their partners who
    have professionals trained on SUN Systems.
  • Open tender was issued to get multiple bids for
    the purpose of price comparison. However, only
    two weeks time was given for submission of bids
    and copy of tender notice was not sent to known
    vendors as advance intimation. This, perhaps was
    one of the reasons for getting only two offers in
    the 2nd tender.

33
South Zone (22.01.2009)
  • Further, out of these two offers, the offer of
    one firm, M/s B was rejected on the basis of
    unspecified criteria. Bank was left with only one
    offer and hence, there was no competition. Lack
    of advance intimation to the prospective bidders
    and insufficient time for submission of bids,
    defeated the whole purpose of open tendering.
  • Bank also could not establish the reasonableness
    of the price. Bank should have compared the
    prices of Sun products, with the products of
    other manufacturers on the basis of some standard
    benchmarks like transaction processing ratings
    done by third party benchmarking agencies.

34
South Zone (22.01.2009)
  • As per tender and the purchase order, the Systems
    to be supplied were to be insured by the vendor
    against all risks of loss or damage from the date
    of shipment, till such time it is delivered at
    the Bank site.
  • Apparently, the details of insurance taken by
    the firm M/s W were not checked / verified by the
    Bank at the time of taking delivery of the
    consignment and / or making payment.

35
South Zone (22.01.2009)
  • A Bank has awarded a contract in June 2008, to
    M/s W at a cost of Rs.21.49 crores for the
    supply, installation, commissioning of hardware
    software and administration, maintenance
    support, for implementation of an End to End
    Enterprise Data Warehouse and Business
    Intelligence Solution. The case was intensively
    examined during Oct-Nov 2008.

36
South Zone (22.01.2009)
  • Offers of some firms were rejected as their names
    were not indicated as vendor/SI (system
    integrator) /consortium partner, in the
    references given by them. The name of M/s W,
    the successful bidder, was also not indicated in
    the references given by them. Another reference
    of LIC given by M/s W considered, was also not
    meeting the eligibility conditions fully.

37
South Zone (22.01.2009)
  • M/s T, another technically qualified bidder, had
    given references that were also not meeting the
    eligibility conditions fully.
  • Offer of M/s H was rejected after presentation,
    since analytical CRM quoted by the vendor was not
    implemented in any Bank in India.
  • The offer of M/s H should have been rejected at
    the initial stage itself and firm should not have
    been called for presentation, if the analytical
    CRM offered by M/s H was not acceptable.
  • Further, various parameters that were to be
    considered for evaluation during presentation,
    were not specified in the RFP document.

38
South Zone (22.01.2009)
  • 80 payment amounting to Rs.4.31crore, was
    released without any inspection.
  • As per Purchase Order terms, it was to be
    released only upon delivery and submission of
    various documents including inspection
    certificate issued by the nominated inspection
    agency and the Supplier's factory inspection
    report.
  • (i.e. - Contract terms were not followed,
    vendor benefited by early release of payment)

39
South Zone (22.01.2009)
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