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CAG: no transparency in Space Department purchase

NEW DELHI: The Comptroller and Auditor-General of India has come down on the Department of Space (DoS) for “lacking in transparency, accountability, fairness and competitiveness” in purchase of equipment and materials. Procurements accounted for around 56 per cent of its overall budget.

In a report tabled in Parliament on Friday, the CAG said there was excessive use of the exceptional modes of proprietary/single tendering and limited tendering even for routine purchases such as furniture.

In several cases orders were placed with firms which were not technically suitable even when there were qualified competitors. Many instances of changes in techno-commercial bids subsequent to bid evaluation were observed during a performance audit.

Giving examples of the lacunae in the procurement system, the report said the Space Application Centre (SAC) in Ahmedabad had raised a limited tender indent for supply and installation of furniture. Six firms responded and after due process Sudama Furniture was selected as its offer was the lowest.

But subsequently the decision to place orders with that company was dropped and another indent raised, this time on a proprietary basis in favour of Godrej and Boyce, even though it participated in the earlier tender and its offer was rejected on technical grounds. The furniture was bought from Godrej and Boyce at a cost of Rs. 79.88 lakh, which was Rs. 16.62 lakh more than the price offered by the firm selected in the first round.

Lack of fairness and objectiveness in selection of vendors, and award of contracts to those other than the lowest bidders led to irregular placement of purchase orders amounting to Rs. 44.58 crore and an extra expenditure of Rs. 3.42 crore.

“Undue favours” by way of awarding contracts to suppliers who were not technically suitable or through change of the techno-commercial terms of bids subsequent to their evaluation, in turn, accounted for Rs. 14.26 crore. In addition, an expenditure of Rs. 2.7 crore was incurred due to delay and “inefficiency” in processing and finalising tenders.

Moreover, there were “serious deficiencies” in procurement planning and management. Non-consolidation of similar purchases resulted in uneconomical purchases and an extra expenditure of Rs. 93.95 lakh.

“The DoS failed to monitor adjustment of advances, given to suppliers, worth Rs. 437.73 crore in 1,177 cases, which were outstanding for periods up to more than 15 years. Further, 147 bank guarantees worth Rs. 83.65 crore furnished by suppliers were not renewed.”

The CAG pulled up the department for not revising its procurement policy for electronic, electrical and electrochemical components since the last decade and for not taking up regular physical verification of stores. The audit found an overstock of such components worth Rs. 75.02 crore, “resulting in infructuous expenditure due to obsolescence.”

The audit was conducted over one year, between July 2006 and November 2007, and covered procurements made between 2001-02 and 2006-07 in four out of the nine centres of the department. Apart from the SAC, the ISRO Satellite Centre, the ISRO Telemetry Tracking and Command Network and the Liquid Propulsions System Centre were selected for the audit.

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