Sub : Allotment of different folio no for items of same specifications for one or two years and subsequent changes

in folio numbers resulting in defunct/nil LPR and abnormally high cost of procurement. Red Flags indicating corruption. Ref : O.L. No. 09 dated 14.09.2009. The audit observation raised under OL No 9 is general in nature and the main focus/premises are not substantiated by any documentary evidence regarding same material having different folio numbers. The diversified product profile requires different polythene bags/ corrugated boxes for their packing and dispatch. The packing material is also an integral part of the governing specification of any end product and in most of the cases the AHSP i.e CQA(T&C) Kanpur is the final authority for framing the specification. As such the remark made by the Audit, Fy has been discontinuing the procurement of a particular polythene bag after every two years is not convincing. The various different specifications for packing materials for different garments cater their requirement differently. As such there are several polythene bag/corrugated box are there confirming to different specifications. There are some instances where the sizes of polythene bag are same however their governing specifications are altogether different, therefore, a cursory look always gives an impression of same item though it belongs to different category classified on the basis of size, type( i.e. self sealing, self adhesive), polybag or poly pouch, density i.e. HDorLD and thickness. The detailed list of all the polythene bags vis a vis their end uses is appended is enclosed as Annexure A. An illustration is appended below to show that different folios are allotted to different polythenes due to change in specification according to indentors requirements. Nomenclature Poly Bag 320mmX135mm Self sealing Poly Bag 320mmX135mm Self sealing Self sealing poly bag 45mmX35mX.04mm Self sealing poly bag 45mmX35mX.04mm Specification IS:2508 CQAGS/US/434(a ) IS:10889 CQAGS/US/434(a ) End use Socks OG Date of opening of item code Woollen 03.10.07

Socks Woollen 31.03.09 Darker OG Trouser Combat 11.11.94 Dis Cap Glacier 22.01.05

Apparently the nomenclature alone does not depict a true picture unless viewed with the governing specification. It is once again vouched for the unique folio no for different stores and no item having same specification bears different folio nos. Further more the other points raised in the OL are also elaborated as per detail given below: 1) LPR received in competitive biding is being taken as a bench mark in each and every case 2) Regarding Estimated cost of the items it is intimated that manufacturing of various kinds of Polythene bags is not the core competence of OCFS. In the case of competitive tendering where two or more vendors are competing independently to secure a contact, the competitive bid forms the basis of pricing. OFB MM & PM para 6.18 is relevant. The reasonability of rates is always recorded in their respective TPC. 3) DPM para 13.3 and 13.5.1 supports the action taken by the respective CFA by stating that all valid quotes have to be ranked as per the criteria of TE to ensure that all offers are compared to provide them a level playing field and thereafter in case of multi vendor situations once L1 is identified the contract should be concluded on him and there would be no need for any further price negotiation 4) The audit point raised in last para regarding some of the cases where abnormally high rates are received is also not substantiated with proper justification. The details of these all supply orders are as under: i) SO No 2008000159 dated 29.09.08 for procurement of self sealing poly bag 65X50 cm 0.08 mm The LPR was Rs 5.60 pertaining to 12/2002. The material management manual MM & PM para 6.18.1 F clearly stipulates that in case LPR is more than three years old it can not be taken as real scale for comparison. All other reasons regarding higher prices of petroleum products has been vividly recorded in TPC minutes, copy enclosed. SO No 2009000106 dated 11.08.09 for procurement of self sealing poly bag 65X50 cm 0.08 mm The LPR was Rs 7.59 which was approximately one year old. The L1 rate received was Rs 7.69 which was got reduced to 7.40 after negotiation. The finalized rate was only 1.3% higher than LPR. SO No 2009000124 dated 05.09.09 for procurement of polythene film

ii)

iii)

iv)

The LPR was Rs 5.20 of 8/2007 that was approx. two and half years old, the L1 rate was received as Rs 6.30. The order was finalized at the rate of Rs 6.06 which was higher than 18% of two and half year old LPR SO NO 2008000191 Dated 25.10.08 for procurement of Polybag 60X40 cm The L1 rate was equal to LPR SO NO 2008000191 Dated 25.10.08 for procurement of Polybag 250 gsm 80cmX50 cm This OTE was floated to break the suspected cartel in LTE after dropping the same. Though the LPR was Rs 2.62 of 5/2007 the order was placed L1 firm @ Rs 4.06 received in competitive biding in an open tender enquiry. The minutes are enclosed for further elaboration. SO No 2007000071 dated 29.05.07 for procurement of Polybag 250 gsm 80cmX50 cm LPR was Rs 2.49 of 6/2005 and order was placed on L1 firm @ Rs 2.64 which was 6% higher than LPR of 2 years old SO No 2009000110 dated 12.08.09 for procurement of Polybag 95cmX70 cm L1 rate was 11% lower than LPR SO No 2007000467 dated 19.03.08 for procurement of Polybag 95cmX70 cm This TE was issued to 13 firms. 6 firms participated in this TE and this store was first time procured for packing of Blanket Air Force Blue. As such no LPR was available the order was finalized on the L1 firm @ Rs 3.94 received in competitive bidding SO No 2009000110 dated 12.08.09 for procurement of Polybag with self sealing 320cmX135 cmX.04cm L1 rate was lower than assessed rate. SO No 2006000416 dated 13.02.07 for procurement of Polybag 50cmX35 cmX.08cm This TE was issued to 12 established vendors. 11 firms participated and order was placed on L1 firms @ Rs 1.96 against LPR of Rs 1.58 of 2006.

v)

vi)

vii) viii)

ix)

x)

In view of above explained position it is clearly brought out that in neither case two folio nos were allotted to a unique specification. As such the arbitrarily raised point with out substantiating any specific case may be withdrawn. In all the cases the decision of the TPC was

based on extant rules and regulation enumerated in MM & PM various paras as mentioned above to ascertain the reasonability of price. In view of above it is requested to settle the OL please.