WORKSHOP ON PROCUREMENT NATIONAL AGRICULTURE HIGHER EDUCATION PROJECT

WORKSHOP ON PROCUREMENT NATIONAL AGRICULTURE HIGHER EDUCATION PROJECT July 16, 2020 (virtual) Official

This project was approved by Bank Board on August 3, 2017 with closing date of November 30, 2022. The Project is being implemented by 61 agencies (universities) in several states. The Project Agreement require that the PMU engage a Procurement consultant to carry out procurement review. The selection process has been initiated and we expect ICAR will have a consultant onboard within next couple of months . In FY 19, over 427 contracts were awarded ( as per STEP DATA)and to ensure compliance the Bank team sampled 12% contracts for PPR. A number of non -compliances have been identified in the PPR. All the IA must note that these possible noncompliance can lead to declaration of mis procurement. Official NAHEP

Number of Procurement plans in STEP : 61 STEP STATUS July 15, 2020 Completed : $ 10 Million Signed : $9. 6 Million Pending for Initiation : $16. 70 Million Under Implementation: $8. 00 Million Official

NAHEP Applicable Guidelines of The World Bank Official – “Procurement Guidelines” means the “Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers” dated January 2011 (revised July 2014). -Consultant Guidelines” means the “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers” dated January 2011 (revised July 2014).

Prior Review Thresholds Category Works Goods Consulting firms Individual consultants Official Prior Review threshold in US$ 10, 000 2, 000 1, 000 300, 000

PROCUREMENT PRINCIPLE : Need for economy and efficiency in the execution of the project. (Encourage open competition). All eligible bidders to get equal opportunity to compete. Make the procurement process transparent. BANK GUIDELINE REQUIRES THAT HIGHEST STANDARD OF ETHICS ARE OBSERVED DURING THE PROCUREMENT AND EXECUTION. CONSIDERATIONS THAT GUIDE PROCUREMENT IN BANK FINANCED PROJECTS Official F&C DEFINITIONS: § “CORRUPT PRACTICE” – OFFERING, GIVING, RECEIVING, SOLICITING ANYTHING OF VALUE TO INFLUENCE A PUBLIC OFFICIAL IN THE PROCUREMENT PROCESS OR CONTRACT EXECUTION. § “FRAUDULENT PRACTICE” – MISREPRESENTATION OR OMISSION OF FACTS IN ORDER TO INFLUENCE A PROCUREMENT PROCESS OR CONTRACT EXECUTION. § “COLLUSIVE PRACTICE” – ARRANGEMENT BETWEEN BIDDERS IN ORDER TO ESTABLISH BID PRICES AT ARTIFICIAL NON-COMPETITIVE LEVELS. § “COERCIVE PRACTICE” – HARMING OR THREATENING TO HARM PERSONS TO INFLUENCE THEIR PARTICIPATION IN A PROCUREMENT PROCESS OR AFFECT THE EXECUTION OF A CONTRACT § ‘OBSTRUCTIVE PRACTICE ‘-DELIBERATELY DESTROYING FALSIFYING ALTERING OR CONCEALING OF EVIDENCEMATERIAL TO THE INVESTIGATION OR MAKING FALSE STATEMEMT TO INVESTIGATORS TO MATERIALLY IMPEDE BANK INVESTIGATION INTO CORRUPT, FRAUDULENT, COERCIVE, COLLUSIVE PRACTICE 6

TYPES OF PROCUREMENT Official PROCUREMEN T OF CONSULTANT SERVICES “CONSULTANT SERVICES” INCLUDE SERVICES OF AN INTELLECTUAL AND ADVISORY NATURE (SUCH AS POLICY ADVISE, INSTITUTIONAL REFORMS ADVICE, SOCIAL AND ENVIRONMENTAL STUDIES, TECHNICAL ASSISTANCE– ENGINEERING SERVICES AND CONSTRUCTION SUPERVISION, FINANCIAL SERVICES PROCUREMEN T OF GOODS “GOODS” INCLUDE: COMMODITIES, RAW MATERIAL, MACHINERY, EQUIPMENT AND INDUSTRIAL PLANT. PROCUREMEN T OF WORKS “WORKS” INCLUDE SERVICES WHICH ARE BID AND CONTRACTED ON THE BASIS OF PERFORMANCE OF A MEASURABLE PHYSICAL OUTPUT (SUCH AS CONSTRUCTION OF WORKS, MANUFACTURE OF GOODS, OPERATION AND MAINTENANCE OF FACILITIES OR PLANTS, DRILLING, MAPPING A. S. O. )

Prior Agreed Procurement Plan to be the basis for any procurement under the project. FACTORS : What? (Contract packages) PROCUREME NT PLANNING- TAKE THE FIRST STEP What Price ? ($) How? (Strategy) Who? (Organization) When? (Scheduling & Monitoring) Official

PROCUREMENT CYCLE-Goods &Works 9 Steps to follow Contract performance Prepare Bidding document Advertising in National press Contract award Bid evaluation and selection Issue Bidding Documents Pre Bid conference (if required) Bids Received BID OPENING Official

Consultant Selection Cycle 10 Contract Performance General Procurement Notice Contract Award Short-listing Financial Evaluation Issue of RFP Documents Tech. Evaluation Official Adv. for EOI with TOR Tech. Proposal Opening Pre-proposal Conference

MISPROCUREMEN T THE BANK DOES NOT FINANCE EXPENDITURE FOR CONSULTANT SERVICES, GOODS AND WORKS WHICH HAVE NOT BEEN PROCURED IN ACCORDANCE WITH AGREED PROCEDURES IN THE LOAN AGREEMENT IN CASE OF MISPROCUREMENT, IT IS THE BANK POLICY TO CANCEL THAT PORTION OF THE LOAN ALLOCATED TO SERVICES, GOODS OR WORKS THAT HAVE BEEN MISPROCURED Official

Goods & WORKS Some Aspects 12 ADVERTISE BIDDING PERIOD MINIMUM BIDDERS Bidding Document Threshold Official ICB NCB UNDB/National and international Newspapers ICB SHOPPING National Newspaper and FREELY ACCESSIBLE website DIRECT CONTRACTING NA NA Appx 45 days from date of availability of document Minimum 30 days 7 -14 days NA 1 1 3 1 SBD of WB Country specific as agreed with Government Model RFQ Same as ICB/NCB/Shopping Ø $3 million for goods > $40 million for works < $3 million for Goods <$40 million for works < $100, 000 As per the provision of the regulations

Procurement system risk Organization/Staffing: Organization of the procurement unit and allocation of functions; quality and adequacy of procurement staff. Controls/Manuals: complaints handling, existence of dispute resolution systems, internal procedural manuals and instructions, oversight and auditing practices, and code of professional behavior and ethics. Record-keeping: Availability, quality, security, and completeness of procurement records and files. Procurement process risk RISK & Required SYSTEMS Procurement Planning: adherence to the Procurement Plan, including any /updates. Publications: adhere to advertising and contract award publication requirements for applicable contracts. Bidding: adhere to requirements for bidding documents, including RFPs, LOIs, shortlists, terms of reference, invoices, and other applicable documents. Evaluation: adhere to bid evaluation requirements/criteria, including draft contracts, technical and financial evaluation reports, and any bid amendments. Awards: adhere to contract award requirements, including complaints handling, amendments, variation orders, and extensions Implementation: adhere to contract implementation criteria, including results of physical inspections. Contract Administration risk Official Payments: adhere to contract payment schedules, including timeliness of payments to contractors. Compliance: adhere to all contractual provisions; adherence to all related anticorruption practices. Disputes: promptness and equity in resolving contractual disputes

SOME PPR OBSERVATIONS Supply Order and payment detail not available in the system. Delay in contract completion by 3 weeks for which no amendment issued. RFQ does not have provision for splitting of contract while the contract has been awarded to two bidders for the two items. Delay in supply. The item approved in PP and actual procured are different. The Quotation request is undated. No last date for submission mentioned. Comparison based on model /Brand which is not an acceptable method as per Bank norms. The dates of quotation request and the roadmap dates do not match as the activity had been updated in the system after the same was carried out (contract /Work order issued) prior to the plan being cleared by the Bank. There is huge variation in estimated price and most of the bids that have been received for which no reason is amplified in the comparative statement to establish that the lowest bidder meets the technical requirement and the reason for such large variations. While the completion period was three months, the contractor has been able to complete the same not before 8 months for which no extension / amendments has been carried out. No Work Order/Contract Agreement available in STEP There is no contract issued to the individual except for the draft Negotiated Contract. The value of contract captured in the system mention Rs 1 lac without specifying the unit or period of contract which should be the complete period. No amendments issued Official

SOME PPR OBSERVATION From the document uploaded in STEP, AU has mentioned value which is inconsistent with the contract value ( with GST/without GST) Supply order is issued beyond the quotation validity period No communication to the supplier on contract termination available in STEP. Not clear if any payment has been made against this contract. The relevant documents not available in STEP Delay in supply of materials for which there is no amendment or extension carried out. ( Eg. EM) Two contracts awarded while this should have been awarded on single responsibility basis While the chosen method is Single Stage- Single Envelope, the evaluation is based on two envelope. BER does not have the complete information of the tender value. RFQ was for larger number while the actual contract was awarded for lower numbers for which no prior indication was made in RFQ. (FQ and the final contract needs to be aligned. At the time of RFQ is 25 Nos. while contract is for only 10 nos) There is a contract Agreement which has been drawn on the letter head of SUPPLIER There appears to be a complaint which is not properly captured in the system which needs to be updated. Quotation received from an agent while the SO is placed on a foreign supplier. (No authorization document is in STEP) Against requirement of 3 Quotation only one quotation received There is no contract issued to the individual except for the draft Negotiated Contract. The value of contract captured in the system mention Rs 1 lac without specifying the unit or period of contract which should be the complete period. No amendments issued The PP approved is for a lumpsum consultancy the contract signed is a time-Based consultancy. Official

Procurement compliance & Review – Way Forward-I Official Incorporating wrong methods /estimates/specs can lead to avoidable delays and transactions. Prior to arriving at method and estimate in STEP do a market survey. The process as mentioned in STEP to be adhered to and documents to be promptly uploaded at each stage. The contract value and value updated in STEP should be consistent. Do not skip steps in STEP. Minimum three quotations are required for RFQ method of procurement. RFQ needs to carry complete information in regard to date of submission; required specification, quantity, quantity variation, if contracting will be based on individual items or all evaluated together only, payment terms, delivery period, guarantee warrant requirements etc. Do not proceed with award before the last date of submission as mentioned in RFQ. Comparative should be based on the invited RFQ. For RFB procurement use standard BER format and duly upload it in STEP. No change in specification and terms can be made at the contract award stage. The RFQ and contract to be consistent. All Contract should be awarded within the bid validity period. Civil work contracts to be awarded on single responsibility basis. Contract terms, contract amount and contract period are important aspects which need to be captured in the contract. Cannot change method after the contract is signed. Payments to be made as per contract terms

No retendering if responsive bids have been received. For retendering provide appropriate justification (refer to the guideline) and upload in STEP. All complaints need to be updated in STEP and upon resolution should be closed with all documentation fully uploaded else PMU should review the complaints and escalate it, as appropriate. Procurement compliance & Review – Way Forward-II If the contract is likely to be delayed then issue EOT before contract expiry with justification in files. Upload the addendum with justification note in STEP If item in the RFQ is to be evaluated separately then same to be stated in RFQ upfront. If there are delays in supplies (even if procured thru e. Gem) then either issue an amendment or terminate the contract (record the justification in both instances ). Timely amendment to be issued If the items need to be changed then update STEP before proceeding with the activity. Use generic specification. Wherever unavoidable please add ‘or equivalent’ Backdated document not to be uploaded unless agreed with Bank Official

e. Gem in Lieu of RFQ e. Gem only for RFQ method i. e upto $100, 000. Not to be used for procurement above $100, 000 (RFB) up to INR 50, 000 in catalog mode (viz. any available item could be selected by IA without further competition), provided selected Item/Supplier meeting the requisite quality, specification and delivery period. up to INR 3 Million from the Supplier having lowest price amongst at least three Suppliers meeting the requisite quality, specification and delivery period. The tools for online bidding and online reverse auction available on Ge. M may be used by the Purchaser. up to INR equivalent of US$ 100, 000 from the Supplier having lowest price and meeting the requisite quality, specification and delivery period after mandatorily obtaining bids from at least three Suppliers, using online bidding or reverse auction tool provided on Ge. M. ” Official

PREPARE Good Estimates Cost & time overruns can be arrested simply by making good estimates. Estimates should be proposed after proper ground survey and market rates. variations during execution reflects poor quality of estimation. VERIFY Documents REMEMBER Due diligence in checking Documents such as completion certificates for past experience, Bank Guarantees etc should be done independently to ensure authenticity. EXAMINE Quality Some times forged records of testing are created. This results in execution of sub-standard quality of works, which adversely affects the performance and life of the projects besides undue benefit to the contractor. Third part inspection gives an unbiased confirmation on the quality. KEEP Records Official Records authenticate quality and quantity audits conducted by field staff and regulate mandatory requirements. These become handy for fixing accountability also. Thus record generation, safe custody and authenticity of records need attention and verification by Sr Officers.

ACTION TO BE TAKEN : WAY FORWARD Official PMU and IA to propose actions to minimize these occurrences. PMU and each AU must prepare a kit of most critical document which includes but not limited to – Applicable Guidelines , Project Procurement manual, Model Bid document, Formats for evaluation , contract format and PPR format and upload on website for easy access. Each IA shall have designated procurement person who have received training at ASCI Hyderabad or held by PMU to carry out procurement. The names of officers to be shared with the PMU and Frequent change in the procurement personnel to be avoided as it is an impediment in smooth functionality. Should that be necessitated then ensure proper handover is done. PMU shall prepare an annual calendar of Regular clinics and workshops and disseminate to all AU’s and ensure that each university has more than one official who is trained and familiar with Bank procurement requirements. to disseminate the procurement guidance and findings and get commitment from implementing agencies and PMU on actions that will be taken to mitigate these issues. An independent consultant to be onboarded without further delay for conducting regular procurement review and sharing the report ever six months PMU to proactively disseminate regularly norms which are commonly applicable for all AU’s , Provide an update PMU to proactively disseminate regularly norms which are commonly applicable for all AU’s , in regard to FAQ, specific observations, guidance , training material from time to time. All complaints to be closely monitored by PMU and ensure that they are duly addressed and closed in an amicable manner. Bank standard/Model documents as agreed with Bank shall be used consistently across board. All agencies need to ensure compliance to the agreed procedures and processes All IA must ensure that all the documents are uploaded in STEP in a timely manner. Regular internal Quality assurance by the AU’s and PMU by reviewing if the documents are uploaded in STEP and if the procurement process are being correctly and consistently followed. Ensure procurement MIS is developed and information is updated on real time basis. Action to be initiated for large number of activities cleared in STEP. This will require proactive review and engagement by PMU. Action plan should be updated by PMU and agreed with Bank in addition to the PPR report response.

THANK YOU Official