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TRANSPARENCY

PARTNERSHIP FOR
TRANSPARENCY FUND

INTERNATIONAL INDIA
the coalition against corruption

Process

Rights

Obligations

Monitoring

Sanctions

ASSESSMENT OF
INTEGRITY PACT (IP)
IN IP COMPLIANT
PUBLIC SECTOR
UNDERTAKINGS

A TRANSPARENCY INTERNATIONAL INDIA REPORT

Transparency International India (TII) is the accredited India chapter of Transparency International, an international civil society organisation based at
Berlin that has turned the fight against corruption into a worldwide movement. Transparency International challenges the inevitability of corruption,
and offers hope to its victims. Since its founding in 1993, TI has played a lead role in improving the lives of millions around the world by building
momentum for the anti-corruption movement. TI raises awareness and diminishes apathy and tolerance of corruption, and devises and implements
practical actions to address it.
Transparency International India is part of global network including more than 100 locally established national chapters and chapters-in-formation. TII
is a non-government, non-party and not-for-profit organisation of Indian citizens with professional, social, industrial or academic experience seeking
to promote transparent and ethical governance and to eradicate corruption.

Publisher : Transparency International India


First Edition: January, 2012
Authors : Ashutosh Kr. Mishra and Nakul Gupta
Editor : Dr. S. K. Agarwal
ISBN : 978-81-909418-4-6
ISBN 819094184-4

9 788190 941846

2012 Transparency International India. All rights reserved.


Reproduction in whole or in parts is permitted, providing that full credit is given to Transparency International India and provided that any such
reproduction, whether in whole or in parts, is not sold unless incorporated in other works.
Disclaimer
Every effort has been made to verify the accuracy of the information contained in this Report as of October 2011, including comments made by different
stakeholders. Nevertheless, Transparency International India or authors of the Report are not responsible for its correctness or in other contexts. Policy
recommendations reflect only Transparency International India's opinion. They should not be taken to represent the views of those quoted or
interviewed unless specifically stated.
All legal issues are subject to Delhi Courts' Jurisdiction.

TABLE OF CONTENTS

ACKNOWLEDGEMENTS
FOREWORD
MESSAGE

ABOUT THE AUTHORS

ABBREVIATIONS AND ACRONYMS

EXECUTIVE SUMMARY
INTRODUCTION

01

INTEGRITY PACT

WHAT IS INTEGRITY PACT?

INTEGRITY PACTS RELEVANCE IN INDIA

WHY SHOULD A COMPANY SIGN INTEGRITY PACT?

EXPERIENCES OF INTEGRITY PACT IMPLEMENTATION

ROLE OF CENTRAL VIGILANCE COMMISSION

IMPLEMENTATION OF INTEGRITY PACT IN INDIA

03

FEATURES OF INTEGRITY PACT

WORKING OF INTEGRITY PACT

METHODOLOGY AND SCOPE OF THIS STUDY

FACTS, FIGURES AND ANALYSIS

CONCEPTUAL FRAMEWORK

02

QUANTITATIVE ANALYSIS

04
06

FEEDBACK FROM STAKEHOLDERS

07

ACTION POINT FOR STAKEHOLDERS

16

INTRODUCTION OF INTEGRITY PACT IN PRIVATE SECTOR

19

GENERAL OBSERVATIONS AND SUGGESTIONS


INTEGRITY PACT IN DEFENCE PROCUREMENT
CASE STUDIES FROM IP COMPLIANT PSUs

Case Study I

Case Study II

GAS AUTHORITY OF INDIA LIMITED : SAVINGS

CENTRAL COALFIELDS LIMITED: ROLE OF IEM IN


GRIEVANCE REDRESSAL

15
18

20

Case Study III

Case Study IV

Case Study V

Case Study VI

Case Study VII :

Annexure 1

Annexure 2

Annexure 3

Annexure 4

Annexure 5

Annexure 7

Annexure 6

BHARAT PETROLEUM CORPORATION LIMITED : GRIEVANCE REDRESSAL

NATIONAL MINERAL DEVELOPMENT CORPORATION: GRIEVANCE REDRESSAL

SHIPPING CORPORATION OF INDIA : GRIEVANCE REDRESSAL

SOUTH EASTERN COAL FIELDS LIMITED : GRIEVANCE REDRESSAL

COLLUSION BETWEEN PRIVATE & PUBLIC SECTOR


UNDERTAKING (PSU)

ANNEXURES

INFORMATION ABOUT IP AND EJPROCUREMENT ON IPJCOMPLIANT


PSUs WEBSITE

29

CIRCULAR ISSUED BY MINISTRY OF FINANCE, DEPT. OF EXPENDITURE


DATED 20 JULY 2011

39

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

41

STANDARD OPERATING PROCEDURE ISSUED BY CENTRAL


VIGILANCE COMMISSION

CIRCULAR ISSUED BY MINISTRY OF HEAVY INDUSTRY & PUBLIC


ENTERPRISES, DEPT. OF PUBLIC ENTERPRISES DATED 9 SEP. 2011
LIST OF BIDDERS INCLUDING MNCS HAVING RESERVATION
ABOUT SIGNING IP

STATUS OF INTEGRITY PACT IMPLEMENTATION, QUALITATIVE ANALYSIS

OIL AND NATURAL GAS CORPORATION LTD.

RASHTRIYA ISPAT NIGAM LTD.

33

44

46

48

HINDUSTAN PETROLEUM CORPORATION LTD.

49

COAL INDIA LTD.

55

GAS AUTHORITY OF INDIA LTD.

HINDUSTAN STEELWORKS CONSTRUCTION LTD.


MECON LTD.

METAL SCRAP TRADING CORPORATION LTD.

NATIONAL MINERAL DEVELOPMENT CORPORATION LTD.


FERRO SCRAP NIGAM LTD.

STEEL AUTHORITY OF INDIA LTD.


KIOCL LTD.

MANGANESE ORE INDIA LTD.

51
56

57

58
59
61

62

64

66

OIL INDIA LTD.

CONTAINER CORPORATION OF INDIA LTD.

69

BHARAT PETROLEUM CORPORATION LTD.

73

AIRPORT AUTHORITY OF INDIA LTD.

76

NEYVELI LIGNITE CORPORATION LTD.

INDIAN OIL CORPORATION LTD.

MAHANAGAR TELEPHONE NIGAM LTD.

81

WESTERN COALFIELDS LTD.

82

83

TELECOMMUNICATIONS CONSULTANTS INDIA LTD.

86

CENTRAL MINES PLANNING & DESIGN INSTITUTE

HINDUSTAN COPPER LTD.

80

CENTRAL COALFIELDS LTD.

78

MAHANADI COALFIELDS LTD.

75

79

SOUTH EASTERN COALFIELDS LTD.

71

NORTHERN COALFIELDS LTD.

66

BHARAT HEAVY ELECTRICALS LTD.

85
88

88

NATIONAL THERMAL POWER CORPORATION LTD.

91

BHARAT SANCHAR NIGAM LTD.

94

EASTERN COALFIELDS LTD.

BHARAT COKING COAL LTD.

95

CHENNAI PETROLEUM CORPORATION LTD.

97

RAIL INDIA TECHNICAL AND ECONOMIC SERVICES LTD.

SHIPPING CORPORATION OF INDIA LTD.

93

96
99

NATIONAL HYDRO POWER CORPORATION LTD.

102

SATLUJ JAL VIDYUT NIGAM LIMITED (SJVNL)

105

POWER GRID CORPORATION OF INDIA LTD.

Annexure 8

Annexure 9

EXPERIENCES OF THE INDIAN OIL CORPORATION LTD.

SAMPLE NON-DISCLOSURE AGREEMENT FOR IEMs

103

106
109

ACKNOWLEDGEMENTS
We would like to thank all those who contributed towards Integrity Pact survey and prepara6on of this
report, in par6cular - Nodal ocers of the PSUs, Independent External Monitors (IEMs), Chief Vigilance
Ocers (CVOs) and Bidders of the IP Compliant PSUs.

Our sincere gra6tude goes to Shri K. Vidyasagar (Principal Secretary Health, Medical Educa6on &
Family Welfare - Jharkhand and Former-CVO-RINL), Shri M. N.Buch (Retd. IAS), Prof. M. P. Jaiswal
(MDI, Gurgaon), Shri B. B. Tandon (Former Chief Elec6on Commissioner), Shri Kanwarjit Singh
(IEM-BHEL), Shri N.R. Banerjee (IEM-CCL) Shri Arun Singhal (CVO-GAIL), Shri M.B.Sagar (CVO-SCI), Shri
S.M.Mishra (CVO-HPCL), Shri Shiv Raj Singh (CVO-HSCL), Ms Vismita Tej (CVO-CCL), Shri S.K.Gupta
(CVO-WCL), Shri B. Pradhan(CVO-AAI), Shri K.S. Balasubramanian (CVO-NLCL), Ms Madhumita Basu
(CVO-MSTC), Shri S. Galgali (CVO-KIOCL),P. S. N. Murty (RINL), Shri Paul Thomas (SAIL), Shri S. K. Singh
(Nodal Ocer - OIL), Shri P. Balasubramanian (BPCL) Shri Selvakumar (CVO-TCIL), Shri B. B. N. Subudhi
(NHPC), Shri Kanwar Singh (NHPC), Shri K. K. Basu (NMDC), Shri K.Kannaiyan (CPCL) Shri Shankar Bha7
(SCI), Shri D. Ghosh (SCI), Shri Reteesh (SCI), Shri K. R. M. Rao (GAIL), Shri V. Bobraj Jeyaharan (KIOCL),
Shri Alok Kumar (CONCOR), Shri P. K. Singh (Wipro Technologies ) and Shri S. K. Mehta (BCCL).
We are thankful to Dr. S. K. Agarwal (Vice ChairTII) for the edi6ng and proof reading of the report,
without his support it would have been impossible to complete this task, Shri A. C. Talwani (Vice Chair
-TII) , Shri S. C. Bahri, Col. K. R. Dhramadhikary (Board Member-TII) and Shri R. Sampat (Ac6ve
Member-TII) for their valuable insights and support. We sincerely thank Shri U. S. Pandey for his
experienced insights and guidance in proof reading of the rst dra&. We also thank Shri P.S. Bawa
(Chair-TII), Ms. Anupama Jha (ED- TII) and Shri Sanjeev, Anshul Jain, Ajay , Vinod, Ms. Sangita and
Vipin (colleagues at the TII Secretariat) for their assistance in this report.
We also sincerely thank Shri Rama Nath Jha, Director (ALAC-TII) for his input and proof reading.

We would like to acknowledge contribu6ons of interns Ms. Vasudha Thirani, Shri Mayank Goel,
Shri Dhirendra, Shri Akhil Khurana and Shri Karunesh Rai for assis6ng us in carrying out the herculean
task of interviewing various stakeholders.
Our Special thanks go to Shri Dheeraj Kumar Jha, a mining engineer with Rio Tinto, who in his
brief s6nt with TII, assisted us in taking feedback from various IP stakeholders and also helped us in
systema6cally compila6on of the inputs received from various stakeholders.

We are extremely grateful to Shri Vinay Bhargav (Former Director, World Bank, Chief Technical
Advisor, Partnership for Transparency Funds) and his organiza6on for funding this Integrity Pact Survey
and its publica6on.

Last but not the least, our thanks and sincere gra6tude to Admiral (Retd.) R. H. Tahiliani, Mentor
TII, who has been pioneer and great promoter of TIIs Mission and Vision.

FOREWORD

Integrity Pact (IP) is one of the cri6cal and important tools


of Transparency Interna6onal that has been consciously
and conscien6ously adopted by 44 public sector
undertakings so far. The adop6on of the tool was supported
by the Central Vigilance Commission, the Department of
Personnel & Training, the Second Administra6ve Reforms
Commission report, the Ministry of Company Aairs,
besides the Ministry of Defense that has incorporated its
s6pula6ons in their procurement manual.

Shri P. S. Bawa
Chairman
Transparency Interna6onal India.

The uniqueness of the Pact lies in the fact it is a voluntary acceptance by the top management
that acknowledges the fact that the behemoth organiza6ons handle public money and therefore
they are responsible and accountable to the people through the civil society organiza6on, mediated
by Independent External Monitors from outside their systems who can observe their func6oning and
resolve situa6ons of conict. It is therefore a moral commitment and, at the same 6me, a willingness
of management to expose itself to outside scru6ny by experts having administra6ve experience and
domain knowledge.

The IP has been accepted by a wide range of companies from oil, gas, minerals including coal, iron
ore, manganese, copper, airport, and steel, to telecommunica6ons, shipping, hydro electric projects,
and reneries. This demonstrates the robustness of the tool that has a7racted them to adopt the tool
in order to work transparently and in the interest of bo7om line by saving costs, and shadow
overheads.

It was thus considered that there ought to be an evalua6on of the func6oning of the tool by an
expert in management who could give it a 360 degree focus. The object was to assess u6lity of the
tool and its impact. A feedback is necessary both to learn from mistakes and inspire condence, if the
tool is found useful.

The task has been ably supervised by Dr. M.P. Jaiswal, currently Professor in Informa6on Systems
and Dean (2009-11), Management Development Ins6tute, Gurgaon, one of the highly-rated
management schools in the country. He, being an expert in areas of administra6ve innova6on,
process re-engineering, and e-governance implementa6on models, is highly suited to guide the
research conducted by Shri Ashutosh Kr. Mishra, Director, IP Project, TI India, and Shri Nakul Gupta,
a Research Scholar with the MDI. This work is the result of indefa6gable eorts in formula6ng
ques6onnaires for dierent stakeholders like the management, the vigilance department, the IEMs,
and the vendors so that a comprehensive view could be available. Seeking replies was a herculean
eort. Both young researchers have shown commitment, hard work, concerted eort and hot pursuit.

We hope to be guided by the ndings that would help us in further chiseling and rening the
tool. We are grateful to Partnership for Transparency Fund who has provided nancial support and
encouragement for us to undertake such a review. Special thanks are for Mr. Vinay Bhargav who has
been constantly interested in seeing that the tools has added value to the organiza6ons that have
adopted it. Both for him and us, it is happy moment to share the ndings of the study.

January 1, 2012
New Delhi

P.S. Bawa
Chairman,
Transparency Interna6onal India

MESSAGE

(Dr.) M. P. Jaiswal is currently Professor in


Informa3on Systems and Dean (2009-11) at the
Management Development Ins3tute, Gurgaon. He
has been a Visi3ng Professor-cum-Sr. Fulbright
Fellow at Carnegie Mellon University, USA during
2004-05. His area of research, consultancy and
teaching includes Administra3ve Process
Innova3on and Reengineering, ERP and
e-Government Implementa3on Models.)

It gives me immense pleasure that Transparency Interna6onal India is coming out with a special
report on Assessment of Impact of Integrity Pact. Ethical governance, par6cipa6ve ac6on and
transparency in opera6ons are the core value on which every company and every organiza6on
should func6on. It is a ma7er of great pride for me to be associated with Transparency Interna6onal
India - an organiza6on which is commi7ed to transparency, accountability and integrity.

The launching of the report on Assessment of the Integrity Pact is a welcome step toward
quan6ca6on of the ecacy of the ac6vi6es undertaken by Transparency Interna6onal India. I
wholeheartedly congratulate the Chairman-TII, his team and the authors of the report for this
ini6a6ve. I am par6cularly happy to know that this special report is just a start of eorts that TII has
taken to ensure transparency in the procurement process. The ini6a6ve started with public sector
and is now all set to include private sector as well.

I urge upon all the ocers & sta of public and private sector undertakings to par6cipate
wholeheartedly in the ac6vi6es during of Transparency Interna6onal India and be a part of the
launch of the Report on The Assessment of the Impact of the Integrity Pact on 16th January 2011
- thereby making Transparency a way of life and Integrity Pact a great success.

M. P. Jaiswal

AUTHORS

Ashutosh Kumar Mishra


Director (Integrity Pact and Corporate Support Forum)
Transparency Interna6onal India
Ashutosh Kumar Mishra holds a bachelors degree in Mineral
Engineering from Indian School of Mines ,Dhanbad. He holds
cer6cate degree in Cyber Laws from The India Law Ins6tute,
Delhi. Before joining Transparency Interna6onal India , he has
worked in mining and power sector and has experience in the
area of handling issues related to benecia6on of high ash coal ,
beach sand minerals and clean coal technologies.

Nakul Gupta

Nakul holds a bachelors degree in Electronics and


Communica6ons Engineering and is currently pursuing his
doctoral degree in Informa6on Management from Management
Development Ins6tute, India. He has several na6onal and
interna6onal publica6ons in the elds of renewable energy,
electronics engineering, open source so&ware, e-learning,
e-governance and innova6on in pedagogy along with accolades
such as Interna6onal Climate Champion 2009 and Brightest Young
Climate Leader 2010 in his basket of achievements. He is a
member of Interna6onal Society for Technology in Educa6on and
was also selected for Stanfords Summer Ins6tute of
Entrepreneurship in the year 2011.

ABBREVIATIONS AND ACRONYMS


TII
TI
ONGC
RINL/VIZAG
HPCL

:
:
:
:
:

GAIL
CIL
HSCL

:
:
:

MSTC
NMDC

:
:

FSNL
SAIL
KIOCL
MOIL
Oil
CONCOR
NLCL
BPCL
IOCL
AAI
MTNL

:
:
:
:
:
:
:
:
:
:
:

NCL
SECL
MCL
WCL
RITES

:
:
:
:
:

MECON

MoU

Transparency Interna6onal India


Transparency Interna6onal
Oil & Natural Gas Corpora6on
Rashtriya Ispat Nigam Ltd.
Hindustan Petroleum Corpora6on
Ltd.
Gas Authority of India Ltd.
Coal India Ltd.
Hindustan Steelworks Construc6on
Ltd.
Metal Scrap Trading Corpora6on
Na6onal Mineral Development
Corpora6on
Ferro Scrap Nigam Ltd.
Steel Authority of India Ltd.
Kudremukh Iron Ore Company Ltd.
Manganese Ore (India) Ltd.
Oil India Ltd.
Container Corp. of India
Neyveli Lignite Corpora6on Ltd
Bharat Petroleum Corpora6on Ltd.
Indian Oil Corpora6on Ltd.
Airports Authority of India
Mahanagar Telephone Nigam
Ltd.
Northern Coalelds Ltd.
South Eastern Coalelds Ltd.
Mahanadi Coalelds Ltd.
Western Coalelds Ltd.
Rail India Technical & Economic
Services Ltd.
Metallurgical Engg. Consultants
India Ltd.
Memorandum of Understanding

ANNEX : Annexure
CCL
: Central Coalelds Ltd.
CMPDI : Central Mine Planning Design &
Ins6tute Ltd.
TCIL
: Telecommunica6on Consultants
India Ltd.
HCL
: Hindustan Copper Ltd.
BHEL
: Bharat Heavy Electrical Ltd.
NTPC : Na6onal Thermal Power
Corpora6on
ECL
: Eastern Coaleld Ltd.
BSNL
: Bharat Sanchar Nigam Ltd.
BCCL
: Bharat Coking Coal Ltd.
CPCL
: Chennai Petroleum Corpora6on
Ltd.
SCI
: Shipping Corpora6on of India Ltd.
NHPC : Na6onal Hydro-Electric Power
Corpn Ltd.
PGCIL : Power Grid Corpora6on of India
Ltd.
SJVNL : Satluj Jal Vidyut Nigam Ltd.
NRL
: Numaligarh Renery Ltd.
EIL
: Engineers India Ltd.
OPGC : Odisha Power Genera6on
Corpora6on
CVC
: Central Vigilance Commission
CMD
: Chairman-cum-Managing Director
PSE
: Public Sector Enterprises
IEM
: Independent External Monitor
CVO
: Chief Vigilence Ocer
OECD : The Organiza6on for Economic
Coopera6on and Development
PSU
: Public Sector Undertaking
SOP
: Standard Opera6ng Procedure

EXECUTIVE SUMMARY

Integrity Pact (IP), a tool devised by Transparency Interna6onal to curb corrup6on in public procurement
and was rst implemented in mid 1990s in Germany during the construc6on of Berlin Airport. ONGC was
the rst PSU which implemented IP in India by entering into a MoU with Transparency Interna6onal India
(TII) in 2006. Since then, almost a&er ve years, IP is now being implemented by 44 PSUs in India. As such,
a lot of work has been done for the IP implementa6on but the assessment of IPs ecacy remained an
unexplored area un6l now. Various stakeholders have also requested for its impact assessment to know
whether IP has achieved its primary objec6ve of making procurement process more transparent or not.
Consequently, TII with the support from Partnership for Transparency Fund (PTF) has undertaken this
task. The process started in the month of January 2011. TII representa6ves interviewed various
stakeholders through personal interviews, telephonic talks, e-mails and by post. A7empts have been made
to compile gains, success stories supported by case studies from various PSUs, as well as to highlight grey
areas in IPs implementa6on and possible recommenda6ons to make it an eec6ve tool. Almost all IP
compliant PSUs, IEMs and substan6al number of bidders feel that IP has helped in making procurement
process more transparent but there have also been certain non-responsive cases as well. Implementa6on
of IP in coal PSUs is a ma7er of concern for all stakeholders.
Private sector is considered to be an ac6ve par6cipant in corrup6on, and hence it is impera6ve that it
adopts IP. In no other 6me in history entrepreneurship, private economic ac6vity and markets have been
more important and intertwined with the economic prosperity, poli6cal stability and environmental
sustainability than they are at present. The nancial crisis and the economic turmoil that this crisis has
triggered have thrown this insight into sharp relief. The private sector can be a source of dynamic
innova6on and growth. It is not ironic that mul6na6onals are more aware of provisions of IP, as compared
to Indian companies. During the assessment process, it was found that the general awareness of IP among
bidders is low and the IP compliant PSUs are the ones that need to share a blame for this. Hence, there
is a need to widen the level of awareness among bidders by organizing more Focus Group Discussions
(FGDs), workshops etc.
Proper selec6on of IEMs is an important task for eec6ve implementa6on of IP. Individuals with
impeccable integrity and credible records should be appointed as IEMs. They should be selected from
diverse elds having the knowledge of the relevant domain and the selec6on procedure should not be
limited to re6red bureaucrats only.
Unlike in other countries, where IP is being implemented on a project-to-project basis, in India it has been
adopted by the companies in all the projects above the specied threshold value. Nevertheless, there
has also been a demand from various quarters to implement IP on a project-to-project basis, so that
according to projects the IEM can be appointed. But several PSU ocials feel that if IP is implemented in
such a way then they could lose exper6se of already appointed IEMs who render their advice on other
issues also. Hence while deciding this issue, these considera6ons have to be kept in mind before making
any shi& and adop6ng project specic strategy.
While quan6fying feedback from stakeholders, we have kept 50% sa6sfac6on as bench mark, anything
below 50% was treated as below average, 50-75% as average and above 75% as above average.
Amidst clouds of corrup6on, there have been quite a few silver linings as well. Most important is
quan6fying gains from IP, as done by Gas authority of India Limited (GAIL), case studies from GAIL, Central
Coalelds Limited (CCL), South Eastern Coalelds Limited (SECL), Na6onal Mineral Development
Corpora6on (NMDC), Bharat Petroleum Corpora6on Limited (BPCL). We especially laud eorts of Chief
Vigilance Ocer (CVO) of Shipping Corpora6on of India (SCI), who took ac6on against ocials for viola6on
of IP provisions.

INTEGRITY PACT

INTRODUCTION

The concepts of transparency and accountability are nowhere more signicant in public administra6on than in public
procurement and contract management. Yet while these a7ributes are paramount as in regards to good governance, they do
not on their own dis6nguish procurement from many other ac6vi6es of public process. Public procurement is inherently a
poli6cally sensi6ve ac6vity, not the least because it involves signicant amounts of public money even within the context of a
na6onal economy.1

The signicance of public procurement reform for developing countries is increasingly being appreciated by development
agencies globally, recognizing that the social and economic costs2 of the weaknesses in public procurement governance are
compounded with increase in sovereign risk that represents for foreign investment3. However, even amongst the reformists in
this area there are common misunderstandings and a lack of consensus about this ac6vity, for example, many perceive it as a
regulatory problem and others as a mainstream management func6on. These problems are by no means limited to developing
countries4. Even in those jurisdic6ons with stronger administra6ons the issues are poorly appreciated and suscep6ble to
systemic failure of accountability -- o&en because the agents of accountability themselves have at best a weak apprecia6on of
the issues5. Cases have involved, for example, failures to understand when contractual rela6onships exist; or when the passing
of informa6on on the process cons6tutes breaches of conden6ality6. Even where these weaknesses are exposed, it will
commonly be on an occasional and excep6ons basis despite the problems some6mes being ongoing and endemic.
WHAT IS INTEGRITY PACT?

The Integrity Pact (IP) is a tool developed in 1990s by Transparency Interna6onal (TI) to help governments, businesses and
civil society to ght corrup6on in public contrac6ng and procurements. It establishes mutual contractual rights and obliga6ons
to reduce the high cost and eects of corrup6on. It covers all contract-related ac6vi6es from pre-selec6on of bidders, bidding,
contrac6ng, implementa6on, comple6on and opera6on. Thus, IP is intended to make public contrac6ng and procurement
transparent by binding all to ethical conduct. It also envisages a monitoring role for the civil society which is the ul6mate
beneciary of such ac6on.
The IP consists of a process of signing an agreement between the government or a government department and bidders for a
public sector contract. It contains commitment to the eect that neither side will pay, oer, demand or accept bribes, or collude
with compe6tors to obtain the contract, or while carrying it out. Besides, bidders will disclose all commissions and similar
payments made by them to anybody in connec6on with the contract. Sanc6ons will apply in case of viola6ons occur. IP also
introduces a monitoring system that provides for independent oversight and accountability.

WHY SHOULD A COMPANY SIGN IP?

The IP is a model for transparency in public procurement and contracts. It helps enhance public trust in government contrac6ng
and hence contributes to improving credibility of contrac6ng procedures and administra6on in general. It enables companies
to abstain from bribing by providing assurances to them that
(a) Their compe6tors will also refrain from bribing

(b) Government bidding system and procurement will be absolutely transparent

(c) Government will not only prevent corrup6on but also extor6on by their ocials, and follow transparent procedures.

(d) It helps Government and companies to reduce high cost and maintain quality control.

(e) It creates condence and trust in decision making process, a more hospitable investment climate, and public support
in the country.
1 The Organiza3on for Economic Co-Opera3on and Development (OECD)s Development Assistance Commi4ee (DAC) es3mated the volume of global public
sector procurement at 8% (US$3.2 trillion) of the worldwide GDP of US$40 trillion.
2 Schapper, P. R. & Veiga Malta, J. (2004). Cmo Hacer para que el Estado Compre Mejor. Gobierno Digital, 3: 6-29.
3 Jones, D. S. (2002). Procurement Prac3ces in the Singapore Civil Service: Balancing Control and Delega3on. Journal of Public Procurement, 2 (1): 29-53.
4 Hunja, R. (2003). Obstacles to Public Procurement Reform in Developing Countries. WTO-World Bank Regional Workshop on Procurement Reforms and
Transparency in Public Procurement for Anglophone African Countries, Tanzania. Available at www.worldbank.org. Nagle, F. J. (1992). A History of
Government Contrac3ng. Washington, DC: George Washington University.
5 Peachment, A. (1992). The Execu3ve State: WA Inc and the Cons3tu3on. Perth, Australia: Cons3tu3onal Press
6 Finn, J. (1997, July 2). Major Changes in Tendering Law the Hughes Case. Legal Brieng No. 33. [On-line]. Available at
h4p://www.ags.gov.au/publica3ons/agspubs/legalpubs/legalbriengs/br33.htm

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

INTEGRITY PACTS RELEVANCE IN INDIA

(a) India is perceived to be one of the corrupt na6ons and ranks 95th among 183 countries in Transparency Interna6onal's
Corrup6on Percep6on Index (CPI) 2011.

(b) Corrup6on hurts poorest the most.

(c) Most people believe that corrup6on is rising at an alarming rate.

(d) Frequent scandals and delays plague Government contracts and other procurement.

(e) Such delays increase costs of procurement, works and public projects and drains public exchequer.
(f) Exis6ng an6-corrup6on organiza6ons have had limited success in gh6ng corrup6on.

(g) If IP is implemented sincerely, it will be helpful as an eec6ve tool in dealing with mal-prac6ces in procurement/works
contracts.

EXPERIENCES OF IP IMPLEMENTATION
Integrity Pact ensures:

(a) Greater transparency and integrity between Principal and Counter Party.

(b) Elimina6on of external interven6ons in ma7ers of contracts and tenders.


(c) Improved sense of ethics in companies and among the bidders.

(d) Reduc6on in representa6ons/complaints from any bidder or contractor for review.

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(e) Improvement in the bo7om line.

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

IMPLEMENTATION OF INTEGRITY PACT IN INDIA

The IP was introduced in India in 2006 with the ini6a6ve of (Late) Shri Subir Raha, the then
CMD of Oil & Natural Commission (ONGC). Then the Second Administra6ve Reforms
Commission (ARC) in its IV Report on Ethics in Governance made the recommenda6on for
IPs adop6on in order to make contrac6ng process more transparent. But it got the real
boost due to the support of Central Vigilance Commission (CVC) which issued its rst circular
on Dec. 4, 2007 recommending the adop6on of Integrity Pact in all major procurements of
central PSUs. The Prime Minister in his address on August 26, 2009 to CBI and State
An6-corrup6on Bureaux also men6oned IP as a tool to curb corrup6on. As a result, so far
44 PSUs (Annex 1) have adopted IP since 2006.
ROLE OF CENTRAL VIGILANCE COMMISSION (CVC)

(a) Extending full support to the concept, the CVC issued circulars on Dec. 4, 2007, May
19 & Aug 5, 2008 and May 18, 2009 recommending the adop6on of Integrity Pact
in all major procurements of Central PSUs. (Annex 2)
(b) Appointment of Independent External Monitors (IEMs) is approved by CVC.

(c) Periodical monitoring of IP

In accordance with CVCs circulars, the Department of Personnel & Training had also issued
a circular on June 16, 2009 recommending IP for State PSUs. Similarly, the Dep7. of
Expenditure, Ministry of Finance issued an oce Memorandum No. 14 (12) 2008 E-II (A)
on 20th July 2011 (Annex 3) for using the Integrity Pact in Govt. Ministries / Departments.
As its follow up, the Dep7. of Public Enterprises of the Ministry of Heavy Industry & PE issued
an oce Memorandum No. DPE/13(12)/II-Fin on September 9, 2011 (Annex 4) to CMDs of
all CPSES to decide and lay-down the nature of procurements/contracts and threshold limit
for IP by September 30, 2011.
FEATURES OF INTEGRITY PACT

(a) A Pact (contract) is entered into by the Principal (a government oce invi6ng public
tenders for the supply, consultancy, construc6on and/or any other service) and the
Counter-party (bidders, contractors or the suppliers).

(b) The Principal and the Counter-party commit that they will not demand or accept any
bribe or gi&. The Principal agrees that its ocials will not do so. They will be subject
to disciplinary or criminal sanc6on in case of viola6on. Similarly, the bidder assures
that he would not pay any bribe in order to obtain and retain this contract.
(c) IEM is appointed based on considera6ons of his impeccable integrity record and
working knowledge of tendering/contrac6ng process and that panel of IEM for
central PSUs is approved by CVC. Use of IEM's advice as conict resolu6on
mechanism is important for sound implementa6on of Integrity Pact.

(d) A set of sanc6ons for any viola6on by a bidder of its commitments or undertakings.

Mechanisms
of ensuring
accountability
are necessary
within a
governance
system,
especially in
public
procurement
wherein
clearly
delineated
black and
white is a
rarity and the
grey areas
are the way
of life

(e) Regarding state PSUs, the role of CVC can be performed by the concerned state vigilance commission or Lok Ayukta
as decided by concerned State Government.

WORKING OF INTEGRITY PACT

(a) Dra&s of the MOU and the Integrity Pact are prepared by the Principal and approved by Central Vigilance Commission
(CVC) and TII.
(b) A MOU is signed between the Principal and TII.

(c) Commitment is obtained from all senior ocials of the Principal to implement the IP program.
(d) In case there are subsidiaries of the Principal, they are advised to follow IP of the Principal

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

METHODOLOGY AND SCOPE OF THIS STUDY


METHODOLOGY

The purpose of the assessment of Integrity Pact is to provide a systema6c method (framework) for evalua6ng and mapping the
procurement func6on within government and allied agencies. This framework can be used to iden6fy opportuni6es for
improvements in acquisi6on processes as well as to highlight specic risks faced by each agency. Experience, knowledge and
exper6se of several stakeholders become an important ingredient of this framework.
While many of the issues have already been discussed, this report seeks to develop a proposi6on to suggest why integrity pact
is likely to succeed beyond delivering minimal governance benchmarks.

The analysis in this report will show that public procurement is a subject not only to divergent poli6cal, managerial and
regulatory objec6ves, but also to Transparency and Fairness in the whole deployment of procurement process (Mapping of
these has been done with the help of ques6onnaires that take into account - key performance measures associated with these
divergent yet related objec6ves in the light of Integrity Pact Implementa6on)

This report a7empts to analyze the percep6ons of stakeholders towards public procurement and contrac6ng prac6ces in IP
complaint PSUs. The survey and interview methods were used in the study to analyze the percep6ons of their stake holders
keeping in view the lens of integrity pact towards public procurement and contract-related issues in PSUs in India.

Within the management environment, control, risk mi6ga6on and transparency objec6ves are o&en the focus of centrally
mandated regulatory compliance frameworks while management performance in terms of value outcomes is o&en pursued
through devolved decision-making and deregula6on.

In what follows Integrity Pact seeks to develop each of these factors as a founda6on for a framework within which they can
be more meaningfully ordered, related and understood. All of these elements make up the procurement environment and
need to be accounted for in any useful framework if it is to reconcile the ac6vi6es of procurement managers with the demands
of their execu6ves, the agendas of the poli6cians and the expecta6ons of the business sector, the media and the community8

SCOPE

Public procurement is a func6on of government that is most prone to corrup6on, par6cularly in developing countries, where
there is insucient transparency and compe66on. Procurement is one of the fundamental links in the supply chain of any
organiza6on. If this link is not managed eciently and eec6vely, serious downstream challenges abound9.

Many jurisdic6ons worldwide have, implicitly or explicitly, similar management objec6ves for public procurement 10,11,12.
Common policies are widespread between jurisdic6ons, notwithstanding the great variances in methodologies and opera6onal
prac6ce. Such common policies are generally constructed from the following elemental objec6ves:

Public condence

Policy compliance and consistency

Eciency and eec6veness

These objec6ves are unsurprising and are consistent with generic public management. They simply say that the management
of public procurement needs to be in accordance with community standards, eec6ve, ecient and consistent with the broader
roles of government. However, while they seem simple, experience is that transla6ng them into opera6onal reality involves
issues and policies that are frequently in conict if not mutually incompa6ble. Broadly, above three approaches, some6mes
in various degrees of combina6on, are employed to deliver these objec6ves. The following discussion includes each of these
approaches, generally dened in terms of their focus on regula6on, management and centraliza6on of public procurement.
Md. RaquI Islam (2007), Public procurement and contrac3ng in Bangladesh: An analysis of the percep3ons of civil servants, Journal of public procurement,
volume 1, Issue 3, pp. 381-390
8 Paul R. Schapper, Joo N. Veiga Malta and Diane L. Gilbert (2006), An analy3cal framework for the management and reform of public procurement, Journal
Of Public Procurement, Volume 6, Issues 1 & 3, pp. 1-26
9 Thai, K. V. (2008). "Measuring Losses to Public Procurement Corrup3on: The Uganda Case." The 3"^ interna3onal Public Procurement Conference
proceedings, August 28-30, 2008. [Online] .Available at www.ippa.ws.
10 Qiao, Y., & Cummings, G. (2003). The Use of Qualica3ons-Based Selec3on in Public Procurement: A Survey Research. The Journal of Public
Procurement, 3 (2), pp. 215-249.
11 Jones, D. S. (2002). Procurement Prac3ces in the Singapore Civil Service: Balancing Control and Delega3on. Journal of Public Procurement, 2 (1), pp.
29-53.
12 Thai, K.V. (2001). Public Procurement Re-Examined. Journal of Public Procurement, 1 (1), pp. 9-50.
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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Opera6onal failures of procurement governance are a7ributed by pro-regulators to weaknesses in the professionalism of
prac66oners rather than to any inherent weaknesses in the regula6ons as such; while pro-management advocates a7ribute
failure to professional weaknesses but iden6fy the causes with the regulatory regime itself which tends to reduce the role of
management of everything other than mechanical compliance. In both cases, the broader policy context and policy roles are
frequently not acknowledged at all. Governments have responded to many of the issues with cyclical reforms of regula6on and
management and some6mes centraliza6on to deliver the corresponding expecta6ons of the day in terms of compliance and
performance respec6vely.

Extending concept13,14,15 of gure 1 further, gure 2 shows that any public procurement exercise can be subjected tocompe6ng
goals of conformance management and performance management, and each of these may also be compe6ng with broader
strategic poli6cal goals of the government or reforms8.

Doing extensive literature and allied secondary resource mining (both academic as well as prac6ce oriented) we can lay down
basic framework of the whole public procurement no6on and the role played by Integrity Pact and Transparency Ini6a6ves.

Taking cue from Snider and Rendons paper on Public Procurement Policy: Implica6ons for Theory and Prac6ce it can be
proposed

Pegnato, J.A. (2003). Assessing Federal Procurement Reform: Has the Procurement Pendulum Stopped Swinging? Journal of Public Procurement, 3(2),
pp. 145-175.
14 Kovacic, W.E. (1992). Regulatory Controls as Barriers to Entry in Government Procurement. Policy Sciences, 25 (1), pp. 29-42.
15 Shoop, T., (1994). Steven Kelman: Advocate of Reform. Government Execu3ve, 26 (8), pp. 68-72
13

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

FACTS, FIGURES AND ANALYSIS

Good public management and administra6on, with emphasis on accountability and responsiveness to customer needs; against
the backdrop of serious accountability scandals, has been seen as an aspect of good governance by donor agencies suppor6ng
reforms in developing countries (Economic Commission for Africa, 2003). We have divided this analysis into qualita6ve and
quan6ta6ve analysis. First the detailed quan6ta6ve analysis, followed by the qualita6ve analysis have been described.
QUANTITATIVE ANALYSIS

In this par6cular sec6on, we propose a conceptual model (Figure 4) of analyzing value delivered by the Integrity Pact. Also, we
enlist various ques6onnaire responses (sta6s6cal items) that have helped us in mapping and quan6fying the implementa6on
(and value) of Integrity Pact, analyze them and thereby discussing the ecacy and impact of Integrity Pact.
CONCEPTUAL FRAMEWORK

PAGE

This conceptual framework basically represents the value that Integrity Pact delivers when implemented and adopted in various
Public Procurement Ini6a6ves.

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

PAGE

Feedback from IP Compliant Public Sector Undertakings

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

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Feedback from IP Compliant PSUs Chief Vigilance Ocers

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

11

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

PAGE

Composition of Independent
External Monitors

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Feedback from Independent External Monitors:

13

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Feedback from Bidders

Observa2ons :

1. Almost all respondent bidders feel that TII should organize more
workshops to educate bidders about various provisions of IP.

PAGE

2. Majority of bidders are not aware about ac6vi6es of TII.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

GENERAL OBSERVATIONS AND SUGGESTIONS


General

1. Sub-contractor must be part of IP process and program


2. In case of any default pertaining to various provisions of IP, including bribery by sub-contractor, the contractor has to be
held responsible and accountable.
3. Every IP compliant bidder PSU must also sign IP document of Principal while par6cipa6ng in bidding process.
4. There are various instances, where bribes are routed through sub-contractors, big bidder companies, including MNCs are
very much into it.
5. No cases of Bribery have been reported.
6. Almost all respondents feel that there is a need of IP like tool in India, and this tool is to be further ne tuned by taking
feedback from them.
7. Almost all respondents feel sa6sed with role played by CVC and TII. Major chunk of the bidders feel that TII has to be more
proac6ve in terms of advocacy of IP and complaint redressal.
8. Almost all PSUs feel that they are not overburdened with expenses on IEMs.
9. No PSU and CVO feels that IEM(s) is/ are duplica6ng the work of vigilance department.
10. Some PSUs are changing nomenclature of Independent External Monitor for External Independent Monitor (EIM), TII
suggest a common nomenclature of Independent External Monitor should be used by all.
11. Interac6ve mee6ngs with IEMs should be conducted more frequently and at regular intervals for speedier review of cases

PSUs

12. Minutes of IEM-Management mee6ng, annual report submi7ed by IEMs, ac6on taken report on complaints be uploaded
on the PSUs website.

CVC

13. Since maximum IEMs are re6red bureaucrats, there is a need to diversify pool of IEM(s), persons of impeccable integrity
and having domain knowledge from private sector, academics, NGOs, Media, PSUs etc. should be also appointed as IEM.

IEM(s)

14. IEM must submit annual report pertaining to implementa6on of IP to the concerned CMD, with a copy to CVC and TII.

Private Sector

15. Private sector is no more vic6m of corrup6on. Instead they are instrumental and hand-in-gloves with public ocers.
16. Bribery among ocials of private rms is rampant. They pay bribes to ocers from others pvt. companies to get their
work done.
17. Government must bring a strong deterrent tool to curb corrup6on in private sector.

World Bank

18. A few PSUs have reported that World Bank doesnt allow its funded project to be a part of IP program. TII and TI-S should
take up this ma7er with World Bank Ocials.

TI India

19. List of all bidding companies which are not signing IP, must be displayed on concerned PSUs and TIIs website. In case of
foreign mul6na6onal, TII may pursue this ma7er with their counterparts located in the countries concerned.
15

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Dimensions of procurement process that has to be taken care by PSUs while implemen2ng IP.
1.

2.

Finding the proper balance between over- and under-centraliza2on :

A centralized procurement func6on fosters economies of scale in purchasing, eases enforcement of procurement rules, and
makes for a more transparent process to vendors. However, a hyper-centralized func6on may be too slow and unresponsive
to unique needs of organiza6onal sub-divisions. Eec6ve procurement nds the happy medium between the two extremes.
Maintenance of an ethical opera2ng environment :

All actors (government employees, vendors, and elected ocials) must be aware of the legal-ethical environment in which
they operate. This requires constant training as well as clear guidelines for what cons6tutes legal procedure.

3. Benchmarks for success and prac2ce :

4.

5.

PAGE

6.

Those in charge of the procurement process need to know what is thegood procurement. Is good procurement based
on cost? On quality? How long should procurement take? These are but a few of the ques6ons that should be addressed
on an on-going basis if one is to determine the success or failure of the procurement func6on.
Maintaining a transparent opera2on :

A frequently men6oned a7ribute of a good procurement process is transparency. All actors in the system should know
what is expected of them in terms of procedures and outcome. Where ever there is a doubt, procedures should be in
place to clarify to the vendors what is expected from them. Government employees should understand how they must
behave in contractual specica6on and award.
Emphasizing the importance of on-going training :

Procurement is a highly specialized profession. Like any other profession, it requires training and commitment to
professional norms. There is a need for par6cipa6on in professional conferences and con6nuing educa6on as sine quo
non.
Adop2on of e-Procurement while understanding its limita2ons :

The internet has tremendous poten6al for procurement. It can broaden the bidding pool while speeding up the bidding
process. It can also foster a more transparent process by virtue of the speed and ease by which informa6on can be
disseminated. On the other hand, recent experience suggests the e-procurement is not without its shortcomings.
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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

7.

Implementa6on is expensive, par6cularly if advanced automated bidding so&ware is adopted. Procurement personnel
and vendors need training prior to implementa6on. e-procurement may bring outof-jurisdic6on (or even foreign) vendors,
crea6ng poten6al conict with current procurement rules. Hence, it is recommended that a roll-out should be tested in
one or two func6ons before organiza6on-wide implementa6on; the upshot is that the internet and procurement is a
potent match but start-up can be 6me-consuming and costly. Smaller ci6es and organiza6ons may nd that e-procurement
is limited to pos6ng of Request of Proposal (RFP)s and the like.
Rela2onship management with vendors must be on-going :

Successful procurement, par6cularly in contrac6ng and outsourcing, requires ongoing contact with vendors to assess
results and outcomes. Successful procurement requires weeding out of low quality vendors and constant outreach to
those that sa6sfy the cost and outcomes associated with the benchmarks established before the award of contract.
Maintenance of sound rela6onship with vendors is not only dened in le7er-of-the-law aspects of procurement; actors
must also realize the import of partnering with vendors as a means of achieving strategic organiza6onal goals. This requires
a high degree of professionalism and strong interpersonal skills.

Keeping an eye on these seven factors simultaneously is not easy. But if taxpayers are to get the biggest bang for the buck
in the procurement process, maximizing success on these factors is essen6al16.

16 Beyond the Bid: An Evalua3on of State and Local Government Procurement Prac3ces. By Sherri Greenberg, Aus3n, TX: University of Texas, Lyndon B. Johnson
School of Public Aairs, 2004.

17

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

INTEGRITY PACT IN DEFENCE PROCUREMENT

Strengthening Integrity Pact in Defence Procurement

The Defence Procurement Procedures (DPP) 2006 for the rst 6me introduced a provision called pre-contract Integrity Pact (IP),
in a move to eliminate all forms of corrup6on in defence deals (IP is a binding agreement between the seller and the buyer,
prohibi6ng any misconduct from either side). Further, the DPP 2006 also made a provision of appointment of Independent
Monitors (IMs), who would be responsible to examine any viola6ons of pact, brought to no6ce by the buyer.

However, the DPP 2006 and also the DPP 2008, which upholds the same, did not men6on the precise role and power of the
IMs. To ll up the gap the Amendment-2009, has made the provision, giving precise role and powers to this oversight agency.
Henceforth, IMs are authorised to scru6nize complaints with regards to viola6on of Integrity Pact, through the access to the
relevant oce records in connec6on with the complaints sent to them by the buyer. It may be men6oned that the Ministry
of Defence (MoD) had made certain amendments to the Defence Procurement Procedures 2008 (DPP 2008) to further promote
the domes6c industry to par6cipate in defence produc6on; streamline formula6on of qualita6ve requirements; ensure greater
transparency and accountability in defence procurement; and facilitate oset transac6ons.

(Based on an ar6cle of Shri Laxman Kumar Behra, an Associate Fellow at New Delhi-based Ins6tute for Defence Studies and
Analyses [IDSA]) published in India Strategic, November 2009)

According to Defence Procurement Procedures 2011, Integrity Pact is applicable on the procurement worth Rs 100 crores &
above and in Defence Enterprises at Rs 20 crores & above.

In his address to a TI India Workshop on Integrity Pact on January 23, 2010,


Our Defence Minister Shri A. K. Antony commented

Defence procurements have always been ridden with controversies. ------ Our Government is commi7ed to ensure
transparency into all defece deals and enforce a ban on middleman and agents. Our Government has taken several steps
to enhance the benchmarks for transparency, accountability and integrity. Our Defence Procurement Procedure (DPP) is now
revised every year, whereas earlier, it was revised every two years. The focus of DPP is to encourage widest possible
par6cipa6on from various manufacturers in the defence industry and above all, to ensure transparency and integrity in
defence procurements. It is in this context -------------- the Integrity Pact is welcome. The Pact includes an agreement between
the buyer and the bidder to neither give nor accept bribe in any form. Integrity Pact is an essen6al tool to help government
and civil society to combat corrup6on, par6cularly in the eld of defence procurements and the system of public contrac6ng.
In fact in his address to CBI and police ocers in August last year, the Prime Minister, Dr. Manmohan Sing also highlighted
the introduc6on of Integrity Pact for high-value transac6ons. We must strengthen the ins6tu6on of Independent External
Monitors (IEMs) under the Integrity Pact to scru6nize complaints in case of a viola6on of the integrity Pact. The integrity
of IEMs is of crucial importance. It is here that CVC has an important role to play in the selec6on of IEMs. The External
Monitors must be experts in their respec6ve elds and should be persons of unques6onable integrity. ----- The Integrity Pact
thus, establishes a monitoring process and is a legal document.

PAGE

(Comments: TI India has not come across any of the details about the implementaon of Integrity Pact in any of the
defence contract/procurement)

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

INTRODUCTION OF INTEGRITY PACT IN PRIVATE SECTOR

We have been repeatedly approached by a number of private sector corporates for signing MoU for the
implementa6on of IP in their dealings. During our study, there has been a strong demand for the
introduc6on of the Integrity Pact in the private sector also. Keeping it in mind, TI India is considering about
its pros & cons. We wanted to have an ins6tu6on to play the role being currently played by CVC in
appoin6ng IEMs of impeccable integrity and take deterrent ac6on against the concerned private sector
corporate if IP is not implemented in le7er & spirit once it is commi7ed. Accordingly, TI India wrote a
le7er exploring the possibility of Securi6es and Exchange Board of India (SEBI) to perform the role similar
to the CVC that provides for independent oversight and accountability in case of IP compliant PSUs.

However, rejec6ng the idea of assuming a CVC-like role of an6-corrup6on watchdog for the private sector,
capital market regulator, the SEBI in a memorandum (Annex-5) submi7ed to its board at its mee6ng on
November 24, 2011, said a CVC-like role is not within the mandate of SEBI under the exis6ng legal
framework. Its jurisdic6on extends to listed companies in the private sector on certain ma7ers delegated
under the Companies Act, and it has been established to protect the interest of investors in securi6es
and to promote the development of, and to regulate, the securi6es market as enshrined in the SEBI Act,".

Instead, it approved a new disclosure-based regime for listed companies with respect to non-ethical
business prac6ces. Accordingly, companies would need to submit a Business Responsibility Report, along
with their annual reports, to help assess the fullment of their environmental, social and the corporate
governance responsibili6es. These disclosures would be based on nine key principles of responsible,
transparent and ethical business prac6ces. These include the companies' conduct and governance being
based on ethics, transparency and accountability, promo6on of the well-being of all employees, respect
toward human rights and environmental issues, among others. They also call for businesses to act
responsibly when engaged in inuencing public and regulatory policy. These would ini6ally apply to the
top 100 companies.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

CASE STUDIES FROM IP COMPLIANT PSUs

Case Study-I

Gas Authority of India Limited : Savings

Gas Authority of India Limited (a state owned IP compliant company) referred two cases to IEMs seeking advice before
nalizing tenders:
Case 1 :

Brief

Procurement of bare lines pipes for VDPL project:


Dia 48 X 25 mm thick: 116.9 km
Dia 48 X 27 mm thick: 1.8 km

It was explained that due to sharp fall in steel prices during the period from oa6ng to the opening of tender
bids, there was a need to secure benet of the same in the procurement of pipes against the tender, as steel
cons6tutes 60 to 70% of cost of pipes.
IEM advised the management to open price bids of the qualied bidders and nego6ate with the lowest
bidder to arrive at reasonable prices, having regard to the revised es6mate which should duly be considered
by ECPC while according approval for award. We were informed that as nega6ons did not fetch any nancial
benet, the tender was re-oated.

FINANCIAL BENEFITS : Fresh bids resulted in a reduc6on of Rs 297.05 crore (2970.5 Million) against the
ini6al oer.

Case 2 :

Procurement of carbon steel bare line pipes for Dahejvijaipur up grada6on project (DVPL-2):

Brief

IEM were informed that representa6ons had been received from third par6es before opening of nancial bids
for re-tendering or obtaining revised bids as steel prices had come down substan6ally.

Dia 48 API 5L Gr.X-70or X -80PSL- 2

The management apprised IEM that since the date of invi6ng bids and opening of tenders, prices of steel had
fallen sharply (steel index fallen by 11% up to price bid opening and has gone down further therea&er.)

It was felt that reduc6on in steel prices of this magnitude within a span of three months was not a normal
situa6on and company must look for ways and means to secure a compe66ve bid.
GAIL was therefore advised that in the given circumstances it could exercise either of the following two
op6ons:
(a) Best reduced prices could be invited from the qualied tenderers and CVC informed accordingly, fully
explaining the circumstances for adop6ng such a course of ac6on in the best interest of the company.
or

(b) Management could nego6ate with L-1 bidder a&er revising es6mates to get the desired reduc6on, failing
which the process of re-tendering could be resorted to.
The Management was le& free to take ac6on having regard to policy and legal tenability. As nego6a6ons
did not yield signicant nancial benet, the tender was reoated.

PAGE

FINANCIAL BENEFITS : Re tendering resulted in reduc6on of cost by Rs 64.57 crores (645.7 Million).

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Case Study-II
Bidders :
IEM

Central Coalelds Limited: Role Of IEMs in Grievance Redressal

Monnet Ispat & Energy, Aryan Coal Benecia6ons (P) Ltd., Mecnally Bharat Engg. Co.
Shri M. N. Buch

Dura2on of Case : February 2011

Indicators : The result and impact of IP implementa6on are dicult to measure, o&en because it is dicult to establish
a casual rela6onship between what was done and what didnt happen. It is nevertheless possible to observe
impact through indicators including :

Background :

Things run as planned; bidding documents were observed; contractual agreements were upheld and
enforced; the project was successfully concluded.

The process was visible, transparent and accountable. Informa6on was shared with the public, and the
par6cipa6on of stakeholders was possible and eec6ve.

Conicts and complaints related to bidding process and contract execu6on were minimized or adequately
managed.
There was an observable reduc6on in costs or prices compared to the original budget

The strategy facilitates the improvement of processes or the undertaking of reforms that benet future
projects at organiza6onal and ins6tu6onal (legal) levels.
Corrup6on is detected and addressed, and savings are made as a result or prevented damages.

Central Coalelds Limited (CCL) in NK coalelds near Ranchi invited tender for se8ng up 10 MT capacity
washery at their Ashoka project. Three bidders, namely- Monnet Ispat & Energy, Aryan Coal
Benecia6ons (P) Ltd., and Mecnally Bharat Engg. Co., were declared qualied bidders a&er ini6al
scru6ny by Central Mines Planning and Design Ins6tute CMPDIL (which was appointed by CCL to evaluate
the tenders)
It was observed that all three tenders had not quoted on a moisture free basis as required in the tender.
CCL sought clarica6on from all three tenderers to resubmit the yield statement of wash coal on a
moisture free basis as per the prescribed level to bring all the three bidders on the same pla5orm.

All three tenderers submi7ed their clarica6ons. These clarica6ons were found to be in order by the
CMPDIL, a&er which the tender commi7ee decided to open price bid in presence of the tenderers on a
pre-xed date. Accordingly, the prices were opened of all three tenderers and yield was also declared by
the CCL during the mee6ng. CMPDIL on behalf of CCL again evaluated the composite tender both
technically and commercially and declared Monnets bid as the techno-commercially lowest bid to the
tender commi7ee which was approved unanimously by them.
As evaluated by CMPDIL, the dierence in yield of L1 (Monnet) and L2 (Aryan) was 0.3 units. Monets
capital cost was Rs. 128.5 crores as compared to Rs. 163.6 crores of Aryans - a clear 20% lower bid.
Monets opera6ng cost was Rs. 54 per tonne as compared to Rs 69 per tonne of Aryans. The dierence
in opera6ng cost tenta6vely saved CCL Rs. 450 crores.

Ac2on taken :
by IEM

A&er the price bid was opened and Aryan started ques6oning the en6re process and advocated
retendering. The ma7er was referred to IEM Shri M. N. Buch.
Shri Buch convened a mee6ng , in which all par6es were present. He gave separate hearing to all three

bidders and based on inputs received from them and opinion from technical heads of the management,
he upheld the original decision taken by the management, and his decision was accepted by the
aggrieved partytoo.

Outcome and advantages of IP, as being observed from this case:


1.

A separate grievance redressall system has boosted condence of bidder in the system.

3.

Be7er compe66ve rates for the procurement

2.

4.

5.

Decrease in the number of li6ga6on.

The project became visible, transparent and accountable.

Informa6on was shared with the public, and the par6cipa6on of stakeholders was possible and eec6ves
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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Case Study III

Bharat Petroleum Corpora2on Limited : Grievance Redressal

Tender was oated on a limited tender basis in two-part bid system, i.e., techno commercial bids and price bids. Four Vendors
were technically qualied. One of the vendors made representa6on to IEMs that the bid of one of the vendors was received
in open condi6on and was considered for evalua6on even though the tender specied that the techno commercial bids and
price bids have to be in sealed covers separately.
The IEMs deliberated on the issue and advised as under:

The tender opening commi7ee members should have sealed the opened price bid of the vendor and obtained the signatures
of the bidders present during tender opening. It was also noted that other vendors did not raise their objec6ons at the 6me
of opening of the price bid but sent their objec6ons ten days a&er opening the price bid. Considering transparency and fairness,
the IEMs suggested that the tender be reoated. This sugges6on was accepted.
Case Study IV

Na2onal Mineral Development Corpora2on - Grievance Redressal & Savings

Case History of Procurement of 10 Mul2pass Drills : This case pertains to procurement of 6 nos. 10 dia. Blast Hole Drills with
Opera6on and Maintenance spares for four years required for BIOM, Kirandul Complex (5 nos.) and BIOM, Bacheli Complex (1
no.) at an es6mated indent value of Rs. 1,923 lakhs.
Global Tender Enquiry was issued on 5.06.2008 in three bid system with due date of tender opening as 31.07.2008

Oers were received from M/S. Atlas Copco Construc6on and Mining Sales, Hyderabad, M/S. Revathi Equipment Limited,
Coimbatore and M/s. MMHC Rudgormash Voronezh Ltd. Russia (Indian Representa6ve M/s. Stork HKB (India) Pvt. Ltd., New
Delhi). Accordingly, they were opened on 31.07.2008 in presence of the tenderers representa6ves.
M/s. MMHC Rudgormash-Voronezh Ltd., Russia (Indian Representa6ve M/s. Stork HKB (India) Pvt. Ltd., New Delhi) has not
submi7ed the integrity pact in full as per tender. Firm had submi7ed only 2 pages (rst page and last page) with sec6ons 129
and 10. M/s Revathi and M/s. Atlas Copco have submi7ed representa6on that the oer of M/s. MMHC Rudgormash should
not be considered as they had not submi7ed the integrity pact in full as per NIT format.
Case was referred to IEM who had opined that M/s. Rudgormashs Part-A of the bid should be considered invalid and rms
bid be treated as disqualied. The recommenda6ons of IEM were approved by competent authority and accordingly M/s.
Rudgormash was informed.

The oers of both M/s. Revathi and M/s. Atlas Copco were processed and order was placed with M/s. Atlas Copco on lowest
oer basis.
Case Study V

Shipping Corpora2on of India (SCI) : Grievance Redressal

The SET-IT Projects : A Report by the Independent External Monitors (IEMs).

1. The Vigilance Division of Shipping Corpora6on of India (SCI) had received two complaints regarding Implementa6on
of SET-IT Projects, both for awarding the contracts, one to Tata Consultancy services (TCS) and another to M/S. Entel
Network Systems Pvt.Ltd. (ENS). The consultancy contract to TCS and Local Area Network (LAN) contract to ENS were
nalized prior to the implementa6on of Integrity Pact (IP) in SCI.
2. Due to lack of IT exper6se, the Vigilance Division of SCI a&er having inves6gated the above complaints, could not
carry out the detailed inves6ga6on in all respects, and thus had referred the ma7er to the Central Vigilance
Commission (CVC) for inspec6on by the Chief Technical Examiner (CTE). While agreeing to the above, CVC advised to
refer these cases for detailed study and report by the Independent External Monitors (IEMs) appointed for SCI.

3. On CVCs direc6ons, the IEMs carried out a detailed study of the en6re procurement process followed by SCI in this
regard, and had elabora6ve discussions with the concerned ocials of SCI and TCS.

PAGE

4. The background of the above two contracts awarded were :


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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

SET-IT CONTRACT TO TCS

A&er processing a global tender, M/s. Tata Consultancy Services (TCS) was selected as the IT partner of SCI and awarded
the contract on 12.10. 2006 to study and implement and end to end integrated IT system in SCI. The project was
planned to be executed in two phases viz.
o

Phase 1 - Study the IT requirements of SCI and prepare IT Blueprint and Roadmap for implementa6on.
Phase 2 - The solu6ons iden6ed in Phase 1 to be implemented as per the Roadmap.

During the selec6on of an IT partner, the par6es were not in a posi6on to quote actual price of implementa6on before
Phase 1 was completed and the IT blueprint was nalized. In addi6on to the lumpsum cost quoted by the par6es for
phase 1, the inter- departmental commi7ee recommended that for cost comparison of commercial bids, the
man-month requirements for dierent skill sets. Thus, the par6es were asked to quote for the es6mates regarding skill
sets and four par6es had given indica6ve gures, which were used to arrive at the skill set requirement. These skill
sets were also debated at the pre-bid conference and changes were incorporated in the Request for Proposal (RFP).
The Phase 1 ac6vi6es of the project commenced on o6.11.2006 TCS submi7ed IT Blueprint and the Roadmap on
12.03.2007. Phase 2 was scheduled to start from May 2007.

TCS had submi7ed the budgetary costs to SCI comprising of a capital expenditure of Rs. 28.96 crores. Since this cost
was substan6ally higher than what was envisaged, SCI advised TCS to prune down the scope so that the vital and
essen6al func6ons are focused. A&er extensive discussions and taking into considera6on the management priori6es,
the SCI pain areas, the core business func6onally and a robust backbone for a fully integrated system in future, TCS
resubmi7ed revised Implementa6on Plan and presented a revised budgetary es6mate of Rs.80.28 crores and Rs.
17.28 crores as the recurring annual expenditure.

When SCI oated the RFP for selec6on of an IT partner for consultancy-cum-implementa6on of an end-to-end
integrated IT system, all the par6es were asked to quote a lump-sum cost for phase 1 and since the scope an the exact
quantum of work in phase 2 could not be known then, they were asked to quote cost for phase 2 based on the
es6mated skill set and man-months assumed by SCI, a&er discussing with all the vendors during the pre-bid mee6ng.
All par6es were also informed that the skill set rate quoted by them would be considered during the actual
implementa6on. On this basis, TCSs cost for Phase 2 worked out to be Rs.7.11 crore as per their commercial bid. This
was based on the es6mated/indica6ve skill set and manmonths furnished by SCI. This gure alongwith the lump-sum
cost of phase-1 was taken in the cost tabula6on to arrive at the L1 party. Finally, TCS had agreed for the cos6ng of
Rs.10.13 crores for Phase 2 a&er pruning down the scope to the great extent.
In view of the foregoing and since the very scope of the tender/contract awarded to TCS had undergone a varia6on,
the selec6on of TCS as IT partner has been challenged by the complaintant.

OBSERVARIONS

The details of the consultancy contract awarded to TCS were discussed and deliberated by the IEMs with the ocials
of SCI and TCS. In the mee6ng held on 19th January, 2011, more informa6on was sought.

The Chief Vigilance Ocer (CVO) of SCI in a mee6ng held on 12th. March, 2010 informed IEMs that this subject ma7er
has been referred to Dr. Gulshan Rai, Director, CERT by the CVC and also conrmed the above vide his le7er
Vig/TS-IT/08/D4(c)/243dt. 17th March, 2010. He requested IEMs not to do any enquiry or inves6ga6on or study of
the allega6ons pertaining to the awarding of the contract to TCS to avoid any duplica6on.
Further, in the second complaint (i.e. LAN contract), IEMs were requested to do the enquiry/inves6ga6on/study at the
Shipping House only and the rest are being handled by the Vigilance Division (i.e. Data Center at Pawai).

PROCUREMENT OF LAN CONTRACT

A request for proposal (REP) was prepared in consulta6on with TCS wherein specic brand of passive components,
based on the exis6ng LAN cabling being used in SCI viz Sys6max Cabling was men6oned and tender was oated
specifying the above brand name as one of the requirement criteria by SCI.

TCS had submi7ed LAN implementa6on strategy on 29th April 2008, The purpose of this document was to draw a
roadmap for SCI to upgrade its exis6ng LAN infrastructure in line with recommenda6on made in IT blueprint. In this
report, TCS had stated as under :
o

Para 2.1 - As SCI(HO) was being renovated, new network cabling was included as part of the renova6on plan. The
cabling was included as part of the renova6on plan. The cabling on the oor was done through conduits below
the oor. Cable channels were not used on any renovated oor.
23

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

o
o

Para 3.3 - The IT Blueprint & roadmap document had iden6ed certain lacunae like scraping to GBPS speed,
structured cabling etc. In exis6ng passive cabling implementa6on at SCI (HO). TCS had also observed that all the
newly renovated oors had a Sys6max cable (CAT 5e/6) for LAN.
Para 5.1.2 : Since 11th oor South wing had CAT 6 cabling and North wing had CAT 5e cabling, TCS had further
recommended to have one type of cabling on en6re oor.

A Technical Evalua6on Report was submi7ed in January 2009 a&er evalua6on of total 17 bids received in response to
the RFP, wherein only 3 par6es, viz. HCL Infosystems, ENS and HCL Comnet Ltd. had emerged as the qualied bidders.
ENS was the lowest bidder and had complied with all requirements of the tender IT/108/2008/21 dt.25.11.2008
oated for the purpose.

A&er processing a global tender, a contract was awarded to M/S. Entel Network Systems (P) Ltd. (ENS) on 17th March
2009 for revamping of LAN SET-IT project at Shipping House (HO) at a nego6ated cost of Rs.1.69 crore.

OBSERVATIONS

In order to minimize cost, 6me and eorts, TCS had recommended that oor cabling at SCI (HO) should be surveyed
again to ascertain cabling as per structured cabling norms, best prac6ces and capability to support GBPS and POE
features. TCS had also suggested that the survey would also help in iden6fying scope of the work for addi6onal cabling
work at HO, and the surveyed renovated oor with Sys6max cable (CAT 5e/6) cabling should be sa6sed and accepted
for current/proposed applica6on implemented during Phase 2. Nevertheless, for the purpose of standardiza6on of
physical layer LAN cabling, TCS had recommended to con6nue using CAT 6 Sys6max cabling in future.

TCS, the IT consultants of SCI, was fully aware of the CVC guidelines. However, they jus6ed their ac6on by elabora6ng
various advantages of con6nuing the exis6ng cabling.

It is observed that since a brand name of Sys6max Cabling was men6oned in the RFP, the advantage of compe66ve
rates could not be taken by SCI in the procurement process. The complainants have also objected to branding the
name in the tender oated.

Both the projects, viz. procurement of LAN at HO and MTI Powai oce have already been completed based on tenders
oated specifying the brand name of Sys6max cabling as one of the requirement criteria.

As per CVC guidelines (No.98/ORD/1 dt.05.05.2003), specifying the brand name in the tender is prohibited as it
encourages the monopolis6c prac6ces. In 2007, CVC had taken strong objec6on for branding name for purchase of
computers by SCI when the tender was eventually scrapped and SCI had to re-tender. It may be per6nent to men6on
that SCI had also oated another fender IT/106/2009/07 in March, 2009 wherein the same specic brand of exis6ng
LAN cabling had been included as one of the requirement criteria for its LAN procurement in MTI Powai oce.

The concerned ocers of IT division of SCI were solely guided by the advice of the consultant TCS, who prepared the
complete technical specica6ons of all the IT hardware and so&ware and so&ware required for the SET-IT projects in
SCI. Since there was a devia6on from the guidelines, the concerned ocials should have recorded the jus6ca6on and
taken the approvals of the competent authority.

The ocials of IT division of SCI to be fully conversant with latest technology available in the market and also conscious
of the CVC guidelines while oa6ng the tenders in future.
IEMs have not commented on the alleged bribe of Rs.30 lakhs taken by the consul6ng and deciding authority.

Case Study VI

South Eastern Coal Limited : Grievance Redressal

Conclusion of RC for procurement of DGMS approved Cement capsules. Size 500 x 35 mm for non watery mines against our
adver2sed E tender No. 176 dated 6.01.10
Background

The rm M/S Hi -Tech Enterprises Dhanbad represented by fax on 19.2.2010 that they had submi7ed the tender papers as per
specica6ons, i.e., both on-line and o-line (manual) and also submi7ed that.

PAGE

1. With reference to the above tender we had submi7ed the tender paper as per the specica6ons - both on-line and
o-line (manual)

24

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

2. We enclose the copy of acknowledgement of submission of tender on-line on 18.02.10 at 13-30 hrs, for your ready
reference and kind perusal

3. As per the specica6ons, we had also deposited the tender manually/o-line on 17.02.10. Our rep. had contacted the
concern materials manager, namely, Mr Sarewar and had shown him the envelope prior to deposi6on of the tender
paper .

4. Your ocial record will conrm the visit of our rep. namely Mr. Raju ,whose visit has been recorded on 17-2-10 at 11
AM.

5. The undersigned had a talk with the concerned material manager on the telephone, who had conrmed the deposi6on
of the tender by our rep, within minutes of the deposi6on, and if need arises we shall obtain the records of telephonic
conversa6ons.

The rm also represented that:

As the tender documents were submi7ed by us, but is being claimed that there is no tender paper, we are of the opinion that
there are certain ocials who must have colluded, connived and in abatement with the local vendors have claimed that the
tender papers were not submi7ed which was actually deposited on 17.02.10. Hope we shall be meted with proper jus6ce, with
suppression of the execu6on of the tender, 6ll verifying and authen6ca6ng our claim. Hope for your expedient, ra6onal and
jus6ed ac6on towards the needful.

On receipt of the above le7er from the rm, the ma7er was discussed by CGM (MM) over phone with the rep. of the rm
wherein rep. of the rm conrmed to visit this oce on 22.02.10. to explain the case.

Rep. of the rm visited oce on 23.02.10 and the ma7er was discussed with him in the chamber of CGM (MM) wherein rep
of the rm conrmed that they had submi7ed the required o-line documents in their on-line bid with a copy of tender fee
of Rs 5000.00. They have further submi7ed DGMS approval and NSIC registra6on copies along with project report, ISO
cer6cate, TIN no. and photocopy of the tender fee DD dtd. 13.02.10.
SECL issued NIT Through E-Tendering Process only vide reference No. SECL/BSP/MMW/Sec-III/A/Cement capsules/176

25

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Methodology of submission of tender was Part-1 and Part-II through ON _LINE bidding up-to the scheduled 6me and date i.e.
18.2.2010. In addi6on to the ON-LINE submission of the oer, the following documents were to be submi7ed in sealed cover
address to Chief General Manager (MM) on or before the due date and 6me of submission of required documents (for ON-Line
bidding) i.e. 18.2.2010. These included Tender fee or exemp6on cer6cate, EMD and other documents listed at III g (i to xvi)
Methodology of submission of tender of the NIT.
It has been stated in the SECL note that following three bids were received on-line and o-line documents were also received
from them within due date and 6me.
1.

2.
3.

M/S Pawan Putra Chemicals, Bilaspur

M/S High Tech Mining Products, Bilaspur


M/S Bhar6 Chemicals, Bilaspur.

4. In addi6on, on-line tender was submi7ed by M/S Hi Tech Enterprises, Dhanbad but their o-line documents were
not received. Therefore, their on-line bid was not considered for opening. The other above three bids were opened
and a&er approval of board, purchase order was placed on the three Ancillary rms for supply of total 18 lakh Nos.
cement capsules for non watery mines on provisional rate basis. The above men6oned quan6ty will, however, be
sucient only for only one and half months requirement.

SECL note explains that:

A. There is severe crisis for the supply of DGMS approved cement capsules, as at present there is no long term arrangement
for their supply. Cement capsule is a cri6cal safety item required regularly to avoid loss of life and property in UG mines.

B. Earlier, tender no 140 dtd 12.11.09 could not be nalised due to unreasonable price and suspicion of carteliza6on. Hence
there is a need of expedi6ous naliza6on of the tender.

C. In e-tender, the technical & commercial bids are uploaded in the TII portal and simultaneously, o-line documents like
tender fee, EMD/EMD exemp6on documents, DGMS approval (if required), BIS license etc are required to be submi7ed
o-line within the s6pulated 6me.

In the instant case, M/s Hi-Tech Enterprises, Dhanbad have claimed to have submi7ed the o-line documents in the tender box,
though the same were not received a&er opening of tender box on the due date and 6me.
The rm, however, further claimed that all the o-line documents duly scanned are available along with their online
techno-commercial bid.
They proposed for board approval that:

1. As M/s Hi-Tech Enterprises, Dhanbad, have claimed to have upload the scanned copies of their o-line documents
along with their on-line techno-commercial bid, we may consider opening of on-line bid of M/S Hi- Tech Enterprises.
If the o-line required documents are found available and also in order, with their on line bid, their oer may be
considered further. In this case, they may be asked to submit tender fee within 7 days from the date of in6ma6on to
them and if they fail to comply, their oer may not be considered.

2. To maintain transparency and fairness, all the other three par6cipa6ng rms may also be informed about the above
ac6on in respect of M/S Hi Tech Enterprises and, in case of any objec6on raised by three rms, case may again be
up for kind perusal and advice of competent authority.

Since the above ac6on suggested at Sl. No 1 above will not be in accordance with NIT provision, approval of CMD to
be obtained for waiver of NIT provision/tender terms in regard to submission and opening of tender at clause III(G),
page 1-2.

It is also men6oned here that the above proposed ac6on may enhance par6cipa6on.

Further, to strengthen and streamline the system of submission and opening of tender in case of E-Tenders, following may be
incorporated in the future NIT terms to avoid recurrence of problems faced in the subject case:

PAGE

All o-line required documents shall be submi3ed on-line also, duly scanned, along with on-line technocommercial bid,
apart from submi4ng the same o-line, within the s2pulated date and 2me. A conrma2on in this regard may also be
submi3ed either with o-line documents or separately, but the same may be received within the s2pulated 2me of
submission.
26

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

A&er ge8ng approval for above, all the other three par6cipa6ng rms were informed vide le7er nos.4665-4667 dtd 16.03.10
about considering the opening of oer of M/s Hi Tech Enterprises, Dhanbad, based on the on-line documents up-loaded by
the rm and they were requested to conrm that they have no objec6on in this regard. In spite of regular follow up, no response
was received from all the three rms and, they were reminded vide our le7er Nos. 4750-4752 dtd 20.03 10 clearly indica6ng
to submit their reply immediately latest by 25.03.2010, failing which it shall be presumed that they have no objec6on in this
regard, and the case shall be processed further accordingly.
Subsequent to the above, replies were received from M/s Pawan Putra Chemicals vide le7er No.PPC/2009-10/HQ76 dtd.
28.03.10 and from M/s High Tech Mining Products vide le7er No. HTMP/2009-10/HQ/82 dtd 28.03.10 as follows :

M/s High Tech Mining Products

Dear Sir,

In reference to the above, if the acceptance of the oer of M/s Hi-Tech Enterprises, Dhanbad is under the provisionof the
tender then we have no objec6on in acceptance of their oer by SECL
M/S Pawan Putra Chemicals
Dear Sir,

Please read the NIT condi6ons which as under The bidders who have not submi7ed the required tender fee/exemp6on
documents for tender fee o-line as men6oned under clause III G (i) will not be considered for opening of their online techno
commercial bids. Further, if the bidder fails to submit the other required documents o-line as men6oned under clause G,
their price bid may not be considered for opening In considera6ons of the above condi6ons and also other condi6ons of the
tender, if the oer of M/S Hi Tech Enterprises, Dhanbad is found acceptable then we have no objec6on in this regard.
The two bidders have naturally referred to the NIT condi6on of on-line and o-line submissions. The third has not replied.

We feel that the ma7er must be considered keeping in view all the circumstances of the case. M/s Hi Tech Enterprises,
Dhanbad had oered the bid on-line in 6me. It is also conrmed that their representa6ve had talked to Mr. Sarewar on phone
and requested for his help in submission of the paper that he was sending. His man and a representa6ve had come to submit
o-line documents and asked Mr. Sarewar who guided him to go to the tender box. He obviously cannot conrm whether the
papers were put in the box but having come there, it will be unnatural that he will not do so. The rm is also sta6ng that these
copies of papers which were sent o-line as required are also in the on-line bid. It is also in the interest of the enhanced
compe66on to open this online bid. It will be considered further only if these required papers are included in the on-line bid
papers. The company is in urgent need of these cement capsules.
IEM Mrs. Nirmala Buch Opined as follows:

As M/s HiTech Enterprises, Dhanbad, have claimed to have upload the scanned copies of their o-line documents along with
their on-line techno commercial bid, SECL may consider opening of on-line bid of M/s HiTech Enterprises. If the o-line
required documents are found available and also in order with their online bid, their oer may be considered further. In this
case, as the tender fee, Dra& will here be only a scanned copy, they may be asked to submit tender fee within 7 days from the
date of in6ma6on to them and if they fail to comply, their oer may not be considered. In our opinion, it will enhance
compe66on, expedite ma7er of procurement of needed cement capsules. I also fully support the proposal that:
Further to strengthen and streamline the system of submission and opening of tender in case of E- tenders, following may be
incorporated in the future NIT terms to avoid recurrence of problems faced in the subjects case:

All o-line required documents shall be submi3ed on-line also, duly scanned, along with online techno-commercial bid,
apart from submi4ng the same o-line, within the s2pulated date and 2me. A conrma2on in this regard may also be
submi3ed either with o-line documents or separately, but the same may be received within the s2pulated 2me of
submission of opening
(Shri Yogesh Chandra, Independent External Monitor, fully concurred with the above opinion)

27

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Case Study VII

Collusion between Private & Public Sector Undertakings (PSU)

In the year 2007, Damodar Valley Corpora6on (DVC) had issued an EPC (Engineering, Procurement and Construc6on) contract
for se8ng up a 1200 megawa7 Thermal Power Sta6on at Raghunathpur in West Bengal. The contract was awarded to Reliance
Energy Ltd (REL) in Dec 2007 on single tender basis, as the sole bid received was from REL.

Later, BHEL, another PSU, had also purchased the tender papers and asked for extension of the date of opening of the tender.
However, their request was rejected on the ground that the project would miss the target of supplying power needed for
Common Wealth Games scheduled for October 2010, if 6me extension was granted. It is a normal procedure and in tune with
CVC guidelines, to extend the tender date in cases where single bid is received, in order to generate fair and adequate
compe66on.

A&er awarding the project to REL, DVC gave an interest free advance of over Rs 354 crore to REL (now R Infra). It is a common
prac6ce to give a "Mobilisa6on Advance" (of about 10 % of contract) to the EPC contractor a&er award of contract for several
reasons. First, it shows that the ordering party is serious and commi7ed to the project. Once the advance is given, the ordering
party is in no posi6on to back out. Second, the zero date or star6ng date of contract is counted from the date of advance
payment. Third, it is a facility to the EPC contractor to start the execu6on of project with the funds at his disposal. In the tender
documents, it is specied whether the advance is to be given on interest or free of interest. In this case, the tender documents
s6pulated that it would be an interest bearing advance. The bids are submi7ed by various par6es taking into account that the
interest charges are to be paid, i.e., the interest cost is added to the bid amount. A&er award of contract to make a change in
bid condi6on by changing interest bearing advance to interest free advance straight away gives the benet to EPC contractor
to the extent if interest charges now being made zero. If we take an interest rate of 10% on an advance of Rs 354 cr it means
a benet of Rs 35.4 cr per year to the contractor. It is a universal prac6ce and a golden rule that "Pos7ender developments"
or changes in bid condi6ons to give an advantage to bidding party is a sure proof of corrup6on.
DVC also changed the coal boiler specica6ons a&er awarding of tender, to help REL.

The date of commissioning of the rst 600 megawa7 unit was October 2010 (6me when Commonwealth Games were being
held in Delhi). However, the project is now delayed to March 2012, defea6ng the very purpose for which the tender was
awarded on single bid to REL.
Comptroller & Auditor General (CAG), which is mandated to audit the award of tender has not been able to do anything in this
case, since the original tender le has gone missing in 2008-09. DVC has neither located the le nor registered an FIR. It has
also not referred the case to CBI for a probe.

Collusion between DVC and R Infra was detected in the construc6on of a cooling tower by R Infra. It was found that there was
a short-fall in the amount of steel, needed to construct the tower. Construc6on of tower has been stopped mid-way. Since the
last 13 months, R Infra has not been able to take correc6ve measure of demolishing the structure and reconstruc6ng it. The
rst unit of 600 MW was to be commissioned in Oct 2010, to give power for Commonwealth Games. By contrast when fraud
was detected and work stopped in Oct 2010 the cooling tower was only about 50% complete. Since it takes two years to
complete a cooling tower, it means that the cooling tower was about one year behind schedule.

In February 2011, DVC cons6tuted a Commi7ee to look into the ma7er. The Commi7ee in its report in July 2011, opined that
very li7le steel was used in the construc6on of the cooling tower, leading to poor quality construc6on. The supervision and
inspec6on of the Tower was contracted to Tata Consul6ng Engineers who failed to carry out the necessary checking and
inspec6on which made the fraud possible. Inspite of irregulari6es commi7ed by R Infra, DVC has neither registered an FIR
against them nor blacklisted the company.

The ma7er was referred to Shri S. K. Shinde, Minister for power, the CVO of Ministry of Power and the CVC, by All India Power
Engineers Federa6on. So far, no ac6on has been taken against R Infra. CVC has simply forwarded the case to CVO of DVC where
it is pending, while the Minister has not responded to the complaint.
(Case vii is based on a report submi3ed by All India Power Engineers Federa2on to TII).

PAGE

TIIs feedback : If the DVC had adopted IP , the ins2tu2on of IEMs would have helped in tackling such collusion)

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Annexure - 1

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Annexure - 2
STANDARD OPERATING PROCEDURE

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Annexure - 3

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Annexure - 4

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Annexure - 5
SECURITIES AND EXCHANGE BOARD OF INDIA

Memorandum to the SEBIs Board


on
Conference organized by Transparency Interna7onal India on Ethics in Business

1. The need for greater transparency in aairs of Government especially in Government procurement procedures has been
felt world over for its likely benets. Transparency could enhance eciency, clarity and the ease of supply of goods and
services for Governmental use. The addi7onal advantages can be lesser opportuni7es for covert rent seeking and nepo7sm
thereby saving public resources and enhancing the quality of resource alloca7on. Transparency further increases
accountability and can be an eec7ve check in curbing the corrup7on in the day-to-day ac7vi7es of Governmental bodies.

2. The Central Government has taken various measures to curb the corrup7on at various levels including the passing of
Preven7on of Corrup7on Act. Central Vigilance Commission (CVC) set up under the Central Vigilance Commission Act,
inquires into oences alleged to have been commi8ed under the Preven7on of Corrup7on Act by certain categories of
public servants of the Central Government, Corpora7ons established by or under any Central Act, Government Companies,
Socie7es and local authori7es owned and controlled by the Central Government.
3. Supplemen7ng the eorts made by the Government, various en77es of civil society are contribu7ng to the ameliora7on
of corrup7on. Transparency Interna7onal India, (TII) founded in 1993 is a global civil society organiza7on working towards
the above objec7ve. It a8empts to achieve its goals by bringing together relevant players from government, civil society,
business and the media to promote transparency in elec7ons, in public administra7on, in procurement and in business.
The Integrity Pact (IP) developed by TII is one of the tools aimed at preven7ng corrup7on in public contrac7ng. The IP is
an agreement between a Governmental agency and all bidders for a public contract containing rights and obliga7ons to
the eect that par7es to the agreement will not pay, oer, demand or accept bribes; collude with compe7tors to obtain
the contract; or engage in such abuses while carrying out the contract. The IP also introduces a monitoring system with
the approval of CVC that provides for independent oversight and accountability.
4. SEBI received a le8er dated 8th July 2011 from TII reques7ng the presence of SEBI in the Conference on Ethics in Business
organized by TII on 17th August, 2011. It is further stated in the le8er that TII is exploring the possibility of SEBI performing
the similar role of CVC with regard to the ac7vi7es of companies in the private sector. An ocer from SEBI has par7cipated
in the conference and noted the discussion.

5. Basically the conference was targeted towards the performance of IP that was required to be adopted by all Government
Organisa7ons in all major procurements as directed by CVC and reviewing the role of Independent External Monitors
(IEMs). IP is a model for transparency in public procurement/ contracts which establishes mutual contractual rights &
obliga7ons to reduce high procurement cost and adverse eects of corrup7on. IP covers all contract related ac7vi7es from
pre-selec7on of bidders, bidding, contrac7ng, implementa7on, comple7on and opera7on. IEMs are appointed with the
approval of CVC to monitor & assess the implementa7on of IP. There were long discussions on extending the principles of
Business Ethics to the Corporates in Private Sector. Representa7ves from TII have informed that they have been working
out modali7es to extend the principles of Business Ethics, adop7ng the Integrity Pact, etc. by the Corporates in Private
Sector and urged that they should also extend co-opera7on for eradica7on of bribery, corrup7on, etc., in respect of their
business dealings which would ul7mately help the na7on to a8ain the targeted growth rate.

6. Even though CVC has issued various circulars emphasizing the necessity of adop7ng IP in the Government Organisa7ons
in their major procurement ac7vi7es, however, in view of limited procurement ac7vi7es in the Public Sector Banks,
Insurance companies and Financial Ins7tu7ons they are exempted from adop7ng the IP. SEBI being Government
Organisa7on covered under the said circulars of CVC, yet the fact remains that SEBI has only very limited procurement
ac7vi7es.

7. Regarding the adop7on of similar role of CVC in respect of ac7vi7es of companies in the private sector by SEBI, it may be
stated that SEBIs jurisdic7on extends to listed companies in the private sector on certain ma8ers delegated under the
Companies Act. Further, SEBI has been established to protect the interest of investors in securi7es and to promote the
development of, and to regulate, the securi7es market as enshrined in the SEBI Act. Therefore, such a role is not within
the mandate of SEBI under the exis7ng legal framework.
This is submi8ed for kind informa7on of the Board.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

SEBI wants listed companies to be ethical


(Express India Jan. 3, 2012)

New Delhi : Rejec7ng the idea of assuming a CVC-like role of an7-corrup7on watchdog for the private sector, capital market
regulator SEBI has said it wants listed en77es to follow a nine-point disclosure norm against non-ethical business prac7ces
instead.
The Securi7es and Exchange Board of India (SEBI), which regulates thousands of listed companies as well as hundreds of other
market en77es like brokers, merchant banks and ra7ngs agencies, has informed its board that it cannot adopt a private sectors
role similar to that of the Central Vigilance Commission (CVC) for government en77es.

In a memorandum submi8ed to its board at its last mee7ng on November 24, SEBI said a CVC-like role "is not within the
mandate of SEBI under the exis7ng legal framework".

At the same board mee7ng, SEBI approved a new disclosure-based regime for listed companies with respect tonon-ethical
business prac7ces.
As per the decision, companies would need to submit a 'Business Responsibility Report', along with their annual reports, to
help assess the fullment of their environmental, social and the corporate governance responsibili7es.
These disclosures, which SEBI has proposed to be based on nine key principles of responsible, transparent and ethical business
prac7ces, would ini7ally apply to the top 100 companies.

Regarding the adop7on of a CVC-like role in respect of ac7vi7es of private sector companies, SEBI said its jurisdic7on extends
to listed companies in the private sector on certain ma8ers delegated under the Companies Act.
Further, SEBI has been established to protect the interest of investors in securi7es and to promote the development of, and
to regulate, the securi7es market as enshrined in the SEBI Act," the regulator told its board.

The ma8er came up for discussion in the backdrop of a proposal to SEBI by Transparency Interna7onal, a global civil society
organisa7on working against corrup7on, for exploring the possibility of SEBI performing a CVC-like role with respect to the
ac7vi7es of private companies.

The CVC was set up by the government with a mandate to inquire into oences alleged to have been commi8ed under the
Preven7on of Corrup7on Act by certain categories of central government employees, corpora7ons established by or under any
Central Act, government companies and other en77es owned and controlled by the central government.
SEBI said that Transparency Interna3onal India (TII) was also working toward eradica3on of corrup3on by "bringing together
relevant players from government, civil society, business and the media to promote transparency in elec3ons, in public
administra3on, in procurement and in business."

In a le8er sent to SEBI in July, invi7ng the regulator to par7cipate in a Conference on Ethics in Business, TII had suggested
exploring the possibility of SEBI performing a role similar to the CVC with regard to the ac7vi7es of private sector rms.
SEBI par7cipated in the conference, held in August.

SEBI said the conference was focused on the performance of Integrity Pacts (IP), a tool developed by TII for preven7ng
corrup7on in public contrac7ng.

An IP is an agreement between a government agency and all the bidders for a public contract and lays down each par7es'
rights and obliga7ons for preven7on of bribery and other corrupt prac7ces.

This tool also introduces a monitoring system with the approval of the CVC that provides for independent oversight and
accountability.

SEBI told its board that it was also informed by the TII representa7ves about their ini7a7ves for extending the principles of
business ethics and adop7on of IP by corporates in private sector in their business dealings.

SEBI also noted that the "CVC has issued various circulars emphasising the necessity of adop7ng IP in government organisa7ons
in their major procurement ac7vi7es."
However, in view of the limited procurement ac7vi7es of public sector banks, insurance companies and nancial ins7tu7ons,
these organisa7ons were exempted from the IPs.

PAGE

No7ng that SEBI, being a government organisa7on, was covered under the said circulars of the CVC, the board was told "... the
fact remains that SEBI has only very limited procurement ac7vi7es."
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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

On the Business Responsibility Report, SEBI told its board that companies were "accountable not merely to their shareholders
from a revenue and protability perspec7ve, but also to the larger society, which is also its stakeholder."

Hence, adop7on of responsible business prac7ces in the interest of the social set-up and the environment are as vital as their
nancial and opera7onal performance.

"This is all the more relevant for listed en77es, which, considering the fact that they have accessed funds from the public,
have an element of public interest involved, and are obligated to make exhaus7ve con7nuous disclosures on a regular basis,"
the board was informed.
The nine key principles proposed for the new disclosures include the companies' conduct and governance being based on
ethics, transparency and accountability, promo7on of the well-being of all employees, respect toward human rights and
environmental issues, among others.
They also call for businesses to act responsibly when engaged in inuencing public and regulatory policy.

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Annexure - 6

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

BEYOND
NUMBERS
STATUS OF INTEGRITY PACT IMPLEMENTATION
QUALITATIVE ANALYSIS

In this par7cular sec7on, we enlist various PSUs that have implemented Integrity Pact,
analyze their responses to our open-ended ques7ons, discussions and mee7ngs, and
thereby the status of ecacy and impact of Integrity Pact.

Annexure - 7

Integrity Pacts Highlights17:


Feedback from PSU

ONGC was the rst PSU to adopt IP.

72 cases were recorded Sta7s7cs on cases registered and resolved are available at ONGCs website.

Holding regular mee7ngs with Independent External Monitors (IEMs).


Savings are es7mated to be about Rs.1.5 crores.
The benets as men3oned by ONGC are :
o

Transparency.

IP boosts market capitaliza7on and image of the company.

o
o

Low cost

Comfortable and speedy decision making process.

VIP references have reduced.

Condence of the bidders increased.

IP has helped ONGC to revise the organiza7ons vision and build its image as well as its reputa7on.

Till date, 43 cases have been referred to IEMs, out of which IEMs have endorsed ONGCs opinion in 34 cases and they
were very contrary to managements opinion in 5 cases However, these have been accepted by management. In two
cases, decisions have been challenged in the court of law
Ge9ng 360 degree reviews from external experts.

In a short span of 2.5 years, ONGC has organized several mee7ngs with its vendors to discuss their cases. They have
ac7vely par7cipated in the mee7ngs and immensely contributed by their valuable sugges7ons. Their experiences
have been very sa7sfactory and their responses were very encouraging while simultaneously they exchanged views

PAGE

17 Major highlights presented here are based on the Speech Given by Shri A.K. Hazarika, CMD, ONGC - at an Integrity Pact conference cum workshop at MDI,
Gurgaon in April 2011.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

from 7me to 7me.

Now, ONGC is planning to improve in areas le' untouched so far.

Guidelines for commitment and obliga7on of counterparty are being worked out in greater detail.

Self assessment is also being undertaken in respect of -

Good governance and transparency on the workplace are being promoted.


(a) Threshold limit currently Rs.1 Crore.
(b) Annual vendor mee7ngs.

(c) Periodic reviews and mee7ngs.


Self assessment of IP.

Thus, by adop7ng IP, they have become more compe77ve and protable

Highlights of IEMs feedback


Shri Arvind Varma

IP has helped in making procurement process more transparent.


Private Sector should also adopt the IP.
Shri V. K. Agarwal

IP has helped in making procurement process more transparent.

Present IP monitoring mechanism is very much dependent on willing support of the PSU management and the quality
and exposure of the IEMs, further development of faith between vendors and IEM mechanism is essen7al.

Private Sector should also adopt the IP.

Strength of IP : It has a fast grievance redressal mechanism (average 7me taken for case disposal in ONGC is about 7
days) and the vendors have faith that the cases have been decided by senior experienced and impar7al IEMs of
impeccable integrity.
Weaknesses of IP : Cases pertain to the stage from Bidding to awards. Reasons for reference of no case from a
project in the supply/execu7on stage need examina7on.

Level of awareness and sa3sfac3on among Bidders :

No ocial Bidders list has been provided by ONGC. So awareness and sa7sfac7on level among bidders cant be
assessed.

Feedback from TII :

No ocial feedback received from the Nodal Ocer or CVO.

We expect be8er response from Nodal department (IP).


Two important points from the feedback of IEMs:

(a) Major issue arise at stages from Bidding to Award (and herein the implementa7on of Integrity Pact is done in an
acceptable and righteous manner)

(b) No issues came across from supply and execu7on stage (and this needs to be examined since no issues reported
does not necessarily means no problems)

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Integrity Pact Highlights:

Feedback from PSU

Total number of cases referred to IEMs - 4

Bringing IP under legal system, so that views of IEMs become enforceable and to reduce frivolous law suits /arbitra7on
cases. Perhaps a law similar in nature to consumer protec7on act may be considered.
Implementa7on of IP should be the responsibility of Vigilance Department.

A clause to be introduced for taking penal ac7on on the party lodging a false complaint

In case of dierence in the views of IEMs, CVO of the organiza7on may be asked to submit his views for considera7on
by CMD of the company.
Appointment and extension of the term of IEM should be decided by CVC

Highlights of IEMs feedback


Shri P. C. Parakh

Procurement has become more transparent with the adop7on of Integrity Pact.

Not sa7sed with the role of PSU management: No date for review has been conveyed in the last few months.

Strengths of IP: While it is dicult to quan7fy the savings and conrm reduc7on in corrup7on, IP has acted as fast,
eec7ve and low cost grievance redressal mechanism for vendors.

Weakness of IP monitoring : There is no standard system of monitoring. Each PSU follows its own system.

Not all vendors believe that corrup7on can be stopped through IP, there is an element of cynicism.

Sugges3ons : In selec7ng IEMs, some care should be taken to ensure that they should have some domain knowledge.
Those who are already having enough work in hand and are not available for taking up enquires at short no7ce should
not be appointed IEMs. As far as possible, IEMs should be located close to the loca7on of the company for easy
accessibility.
Private sector should also adopt IP.

It would be desirable to create a standard system of monitoring.

Level of awareness and sa3sfac3on among Bidders :

Bidders are aware about IP but sa7sfac7on is not up to the mark.

Advocacy is there, but for them Integrity Pact is another compliance hokum

Feedback from TII :

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48

Conic7ng nature of feedback received from Management, CVO and IEM is an area of concern. A joint mee7ng of
management, IEM, CVC and TII representa7ve must be convened to resolve these issues. IP document has to be
standardized so that these issues can be addressed.

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Integrity Pacts Highlights: With the adop7on of IP, instances of contractors going in for arbitra7on/legal proceedings to se8le
their claims/dispute have reduced to some extent.

HPCL convenes mee7ngs of its senior ocials, including the whole 7me Directors, to review/discuss the status of IPs
implementa7on.
Independent External Monitors are regularly invited in IP mee7ngs.

Feedback from PSU

IP has helped in making procurement process more transparent.

Rejec7on of bids of par7es who fail to sign IP some7me reduces compe77on.

Special mechanism/process implemented by the PSU to improve the IP program: Vigilance ocials are asked to
check compliance of IP while they are on the Job of reviewing tenders.

IP has facilitated improvement in the HPCLs image of purchasing func7on.

Frequency of IEM - Management mee7ng : Quarterly structured, need based, when referred.

Those PSUs which are already IP compliant and are indirectly signatory to IP program, they are to be exempted from
signing IP document as bidder.

There is a need to exclude sub-contractor from purview of IP: sub contrac7on are not decided at the 7me of awarding
contracts to the principal. More over, HPCLs direct contract/payment is with principal.
Total complaint referred to IEMs - 8

Sugges3ons to improve IP program :

(1) Foreign par7es need to be brought on board

(2) IP should not be a disqualifying criterion. It may be treated as decient document.

Highlights of feedback from CVO:

IP has increased the visibility of ethical prac7ces among the bidders. It has also created awareness among purchasing
and project authori7es about a neutral review of their work.
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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Integrity pact (IP) has helped in making procurement process more transparent.

Signing of IP can be made as a mandatory document at the 7me of bidders registra7on.

Foreign contractor(s)/bidder(s) are not extending adequate coopera7on and support in the implementa7on of IP
programme.
Issues related to non-disclosure and the right of IEM to access technical documents is an area of concern for them.

Important experience and qualica7ons of IEMs


(I)

Proven integrity in their previous jobs.

(ii) Exposure to purchasing func7on.

(iii) Awareness of vigilance administra7on.

IPs monitoring systems strengths: Crea7ng a sense of responsibility towards ethical governance, in procurement &
execu7on of work contracts.
IPs monitoring systems weaknesses: Disqualifying criteria for non-submission.
Sugges3ons : Foreign par7es to be taken on board for eec7ve compliance.

It shall not be a disqualifying criteria. It should be treated as a decient document and should be acceptable before
opening of price bids.

Highlights of IEMs feedback:


Ms. Ranjana Kumar

Procurement has become more transparent in general with adop7on of Integrity Pact.

Private sector must also adopt IP.

Strengths of IP: Objec7vity, transparency, greater discipline and accountability of PSUs and the vendors.

Greater publicity should be given to IP so that vendors are more aware of its provisions.

Sugges3ons :

(a) IEMs go through in detail the policies of the PSU assigned to them.

(b) Discre7onary powers if accorded by PSUs to their ocials, for certain exigencies /situa7ons, should be made
clear, and brought to the a8en7on of the IEMs in the beginning itself, and their IEMs views sought for.

Level of awareness and sa3sfac3on among Bidders :

Level of awareness: Average

Level of Sa7sfac7on: Below Average

Feedback from TII:

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50

PSU must organize bidders meet to make them aware of IP.

Regular IEM-Management and TII-Bidders mee7ngs are desirable.

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Status of IP Implementa3on of Integrity Pact:

The Number and value of tenders in which Integrity Pact was applied are detailed below:

Details regarding the number of bidders are as under:

Benets Incurred due to Integrity Pact:

Financial Benets : Substan7al savings have accrued in both the cases as per details below (Please refer case study 1)

(a) Procurement of bare line pipes for VDPL projects: Fresh bid resulted in a reduc7on of Rs 297.05 crores against
ini7al oer.

(b) Procurement of carbon steel bare line pipes for Dahej-Vijaipur up-grada7on project (DVPL-11) : Retendering
resulted in reduc7on of cost by Rs 64.57 crores.

Greater condence amongst bidders while tendering

Indirect Cost Savings due to minimiza7on of delays in tender naliza7on and direct cost savings through naliza7on
of tender at a lower value.
Vendors are careful while quo7ng and feel comfortable in the post-award ma8er/disputes.

Mo7vated complaints have been minimized.

IP provides a window to the bidders for redressal of their grievances and IEMs experiences help the GAIL management
in taking logical and appropriate decisions.

Highlights of PSUs feedback :

(a) Total complaints referred to IEMs : Nine

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

(b) Number of IP related complaints: One

(c) Other : Eight

Frequency of IEM-management mee7ng: Quarterly

Cases in which ac3on was taken against supplier/ contractors and nature of ac3on: M/S. Calcu8a Transport Services
contract was terminated, EMD was forfeited and contractor was put on a holiday for three years.
In case of dierence of opinion, to have 3 IEMs helps in a majority view.

There is no need to exempt IP compliant PSUs from signing IP document.

Complaints have been reduced but there is no method to know whether it is because of IP or otherwise.

TII may conduct workshops, seminars etc. once in a year to educate vendors and contractors about IP and its
func7oning where par7cipa7on of vendor and contractors is to be ensured.
In case of dispute, advice/sugges7ons from IEMs are sought and vendors can also approach them for redressal of
their grievances. Therefore, there is a possibility of reduc7on in arbitra7on and legal proceedings.

Reasons for not signing the IP

A few of the bidders have not signed the IP for the following reasons:-

Some global agencies ini7ally raised objec7on to the principals authority to decide viola7on against clauses of IP,
which they fell, should be vested with courts only. Finally, they agreed to comply with the provisions of IP.

In respect of tenders involving procurement, ve bidders who were not technically qualied for other reasons, refused
to sign the IP. All successful bidders had signed IP. The provision rela7ng to signing of similar agreement with subcontractors has not been agreed to.
Monthly reports on implementa7on of IP have been furnished to IEMs giving details of processing of tenders at various
stages i.e. at the 7me of oa7ng of tenders, a'er opening of Tender and a'er award of purchase order/work order.

Seven interac7ve sessions were organized to review various aspects rela7ng to IPs implementa7on. During these
mee7ngs, representa7ons received from the bidders were deliberated and resolved and some sugges7ons were also
oered.

Eec3veness of Integrity Pact programme

It is helping to generate condence amongst bidders while tendering.

Delays have been curtailed due to quicker resolu7on of tender issues/complaints and processing 7me reduced.

Vendors are careful while quo7ng and feel comfortable of the resolu7on of post award ma8ers/disputes, if any.
Mo7vated complaints have been minimized.

Increase in comfort level-both for the organiza7on and vendors.

Indirect cost saving due to minimiza7on of delays in tender naliza7on; direct cost saving through naliza7on of tender
at a lower value.
Cri7cal issues rela7ng to tender naliza7on have been resolved due to impar7al and objec7ve assessment.

Sugges3ons for Improvements

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52

To evolve methodology to ensure that vendors also meet their obliga7ons in terms of IP.

The issue of compliance of IP by sub-contractors needs to be studied in detail. The possibility of phased implementa7on
of the provisions may be examined.
To establish a procurement environment where condi7ons prevent possibili7es of corrup7on.
Reverse Auc7on should be opera7onalized expedi7ously for realising associated benets.

Company should examine the feasibility of referring the disputes to IEMs before resor7ng to Arbitra7on proceedings.
Interac7ve mee7ng with IEMs should be conducted more frequently for speedier review of cases.

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Highlights of CVOs feedback:

IP has provided an opportunity to get to know transgression conducted by the bidders elsewhere in the world and the
treatment thereof and thus in a way guiding us towards seeking solu7on to mi7gate such situa7ons as well as se9ng
a precedent for future course of ac7on. Similarly, informa7on received from bidders regarding downward market
trends have resulted in considerable savings. Thus representa7on received in GAIL along with delibera7on on the
issue with IEMs who act as sounding boards, helps, GAIL management in taking 7mely, reasoned decision.
IP has helped in making procurement system process more transparent.

IP has to be signed for each bid: Considering the dynamic changes in terms of ownership of business, change in person
authorized to sign IP on behalf of bidder, a generic document signed once by a bidder to be applicable in all its tenders
over a period of 7me may become redundant/untenable as an evidence in courts of law, if the need so arise. Further,
varying tender specica7on/condi7ons would have varied response/bidders and so signing of IP by bidder for each
tender necessary.
Minor dierence in IPs adopted by dierent PSEs creates unnecessary complica7ons, so IP compliant PSU bidder must
be exempted from signing IP with buyer PSU.

Sub-contractors are to be excluded from purview of IP : Ensuring signing of Integrity Pact by sub-contractors is dicult;
it is proposed that the subject clause may be modied as under;

The Bidder/contactor undertakes to obtain from his sub-contractor a commitment consistent with this integrity pact,
and inform compliance to the principal.
This commitment shall be taken only from those sub-contractors whose contract value is more than 20% of
Bidders/Contractors contract value with the principal.
The Bidder(s)/ Contractor(s) shall con7nue to remain responsible for any default by his sub-contractor(s).

Tender provisions include a name of IEM and the dealing ocer; hence normally the complaints are received there
or through the oces of concerned Director. But some7mes copies of the complaints are received in CVOs oce
directly through the complainant.
Qualica3ons for IEMs : Considering that provision of IP are applicable to tender bearing implica7ons largely
commercial/legal in nature, IEMs vast experiences in dealing the above issues both na7onally and interna7onally
would add value to the quality of judgments, qualica7on on these lines are always an add on.

Strengths of the Integrity Pacts monitoring system : Besides conveying an impression about authen7city of adopted
bidding process to global community at large in line with interna7onal best prac7ces, the system being evidence
based also acts as a deterrent to otherwise errant bidders.
Weaknesses of the Integrity Pacts monitoring system:

1.
2.

While compliance by the PSE concerned is compara7vely easy to monitor, it is extremely dicult to monitor
compliance by vendors.

At a recent conference of IEMs organized by GAIL, it was felt that greater clarity is required in the role of IEMs.

Highlights of IEMs feedback:


Shri A. K. Kundra:
1.

The procurement in the PSU in general has become more transparent with adop7on of Integrity Pact.

2. PSU be given more exibility in regards to the adop7on of IPs framework. Keeping in view the nature of business, some
minor modica7ons may some7mes become necessary.

3. Private Sector should also adopt the IP

4. Sub-contractors are reluctant to fall in line as quite a few of them have limited opera7ons.

5. IP mechanism is a good tool to ght corrup7on, primarily for curbing non-collusive corrup7on.

6. E-tendering, bill watch system and reverse auc7on are already in vogue in GAIL; further IT applica7ons can be explored
to enhance transparency.
53

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

7. CVC should also arrange an interface with IEMs once a year for taking feedback.
8.

IEMs play a posi7ve role even during the process of tendering. The CVO, however, cannot interfere at this stage.

9. IEMs had made some useful sugges7ons based on their experience during a seminar held some7mes ago in GTC,
Noida. The role of IEMs needs to be further claried in the light of discussion during the seminar.
10. Strengths of IPs: It ensures reitera7on of commitment to transparency and facilitates faster dispute resolu7on. IEMs
are also a source of independent advice.

11. Weaknesses of IPs: Access to informa7on in respect of foreign companies and large MNCs is limited to disclosures only.
12. Other comments/sugges7ons: The ins7tu7on of IEMs is gaining strength with the passage of 7me. The reluctance on
the part of PSUs is fast disappearing. The vendors and contractors are increasingly becoming aware of it.

Shri U. Sundararajan (Former IEM):

1. The PSU in general has become more transparent with adop7on of Integrity Pact.

2. Sub-contrac7ng facing problem with regard to IP are out of the purview as of now. However, If the value is really
material, it is be8er to bring it under the ambit of IP.

3. IP mechanism is a good tool to ght corrup7on. It is one step towards the goal of gh7ng corrup7on. This covers the
area where there is a complaint. Where there is no complaint, IP does not help.
4. Strengths of IPs: It gives a support to the vendors and contractors so that they can rely on independent group to look
at the issues. For the Company also, consequences of frivolous complaints are minimized.

5. Weaknesses of IPs: The present IP covers only a por7on of the problem. It should deal with all complaints having a
bearing on corrup7on.

6. The IEMs may take the help of CVOs or any other agency for ge9ng a ma8er examined. If IEMs Report is sent to the
Board for appropriate ac7on, it will have a major impact on the performance of the PSU.

Level of awareness and sa3sfac3on among Bidders :

The level of awareness and sa7sfac7on among bidders is above average.

GAIL is one of the PSUs which has implemented IP very eec7vely. Other PSUs can take a lead from GAIL in adop7ng
their model and mechanism of quan7fying gains from IP. The level of sa7sfac7on among dierent stakeholders of
GAIL is commendable.

PAGE

Feedback from TII:

54

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Status of IP Implementa3on of Integrity Pact:


Highlights of CVOs feedback:

IP is treated as just another formality by stakeholders. There is no change of heart or a9tude towards bringing more
transparency. SOPs are not followed; e.g. instead of referring case (s) to all IEMs, management refers cases to selec7ve
IEMs. Most IEMs are not conversant with rules, regula7on & manuals. The IEMs ndings are ra7onal but arbitrary and
more of a personalized approach rather than in consonance with rules & regula7ons. However, IEMs have their own
problems. They lack proper infrastructure. A few IEMs are very good but most of them act supercially.

As per SOP, IEMs should not be a part of the managements decision making. However, the opposite happens . IP has
not helped in making procurement process more transparent.
IP is a very good tool but real issue is its proper implementa7on.

Not sa7sed with the role played by TII. It should be careful while entertaining complaints from bidders.
Quality is more important. Even one IEM with sucient knowledge and pro-ac7veness is sucient.
No need to exempt IP compliant bidder PSU from signing IP document
No need to exclude sub-contractor from purview of IP

IEM of CIL must have a background of working in mining industry.

IP is an embellishment. Even without IP, we have enough system in place, which if property implemented, transparency
can be ensured. However, there is a clear lack of will on the part of management to ensure transparency. In such a
scenario no system can work.
IEMs recommenda7ons should be binding on management.

CVCs recommenda7ons should also be bindings.

Even Ministrys role is not up to the mark. Nothing will change 7ll people, who are at helm of aairs, change.

Highlights of IEMs Feedback:

Shri Sujit Shankar Cha4opadhyay:

The procurement in the PSU in general has become more transparent with adop7on of Integrity Pact

At present, IEMs can help only a'er issue of NIT and receipt of a complaint. It cant prevent an incident and suggest
correc7ve measure.
IP mechanism is a good tool to ght corrup7on.

IEMs should be given secretarial assistance.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Weaknesses of IP monitoring system: An IEM is not informed formally by the PSU about the ac7on taken by the la8er
on his advice. A copy of the IEMs report should be sent to CVC who should monitor the ac7on taken.
Strengths of IPs: Independent External Monitoring

Weaknesses of IPs: Non binding nature of the advice.

Comments /sugges3ons:

Regular IEM-Management mee7ngs are very much desired which is missing in the PSU.

The division of responsibili7es and task between CVO and IEMs should be spelt out in clear manner.

The IEMs should at least once be taken on a eld visit to the site in order to give them a rst-hand experience of
the ground reali7es.

Level of Sa3sfac3on and awareness among bidders :

No ocial bidders list has been provided by the PSU. CIL centrally procures only two items, i.e. (a) Explosive, and (b)
Tyres for Heavy Earth Moving Machinery. Rest is all done independently by subsidiaries.

Feedback from TII:

Compliance of IP in CIL and its subsidiaries is an area of concern for all stakeholders of IP.

A mee7ng of all concerned par7es is very much desired. Ministry of Coal can take up the lead and call for a mee7ng
of all CMDs, CVOs and IEMs with reprehensive from bidders also, for eec7ve IP compliance.

Highlights of CVOs feedback:

IP is not an eec7ve tool as it would have been.

Sub-contractors should be part of IP.

IP has not helped in making procurement process more transparent.


IEMs should not be re7red govt ocers.

Bidders have to be educated with supplementary notes regarding benets of IP

Not sa7sed with threshold limits of the PSU.

Not sa7sed with the role of TII.

No comments on the CVCs role in advocacy of IP.

Highlights of IEMs feedback:


Shri S. K. Banerjee

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56

IP has helped in making procurement process more transparent

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Expressed his concern regarding IP and the process of procurement. At present, a casual and non-priority approach
is being followed towards the implementa7on of IP.
He has recommended that sub-contractors should also be brought under the purview of Integrity Pact.
Private sector must adopt IP

Level of Sa3sfac3on and Awareness among Bidders

No ocial Bidders list has been provided by HSCL, so awareness and sa7sfac7on level among bidders could not be
assessed

Feedback from TII:

The feedback from CVO and IEM is an area of concern.

PSU management has to gear itself more eec7vely for implementa7on of IP.

Highlights of Integrity Pact Implementa3on:

No ocial feedback has been provided on the Ques3onnaire. The following feedback is based on the applica3on
led under RTI Act 2005:
MECON have not organized any vendor meet. Since EPC jobs are being carried out by the Contracts Sec7on, no vendor
meet is required.
As per records available, there have been ve structured mee7ngs between IEM and CMD of MECON.

No. of complaints received by MECON from its bidders and vendors since September 2007 7ll date NIL.

Internal Assessment of the impact of IP carried out by the CVO of MECON states that there has been no problem in
implemen7ng the IP.
No. of reports on Implementa7on status of IP posted to CVC by CVO of MECON since Sep. 2007: 23

Feedback from Bidders:

Level of awareness among Bidders : Below average

Level of sa7sfac7on about IP among Bidders (who are aware of IP): Below Average

PSU management has to be more serious and eec7ve when it comes to proper implementa7on of IP.

Feedback from TII:

The nodal department has to be more ac7ve in terms of sharing informa7on with TII.

IP shouldnt be used as g-leaf. IEM must submit Annual Report on progress of IP implementa7on in the PSU.

All desired informa7on has to be uploaded on companies website.

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PAGE

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Highlights of Integrity Pact Implementa3on

Highlights of PSUs feedback:

IP has helped in making procurement process more transparent.

Proposal for approval or xing up of threshold limit for IP is under considera7on of the Board. However currently all
the transac7ons are covered under IP.
IEM-management mee7ngs take place on an annual basis

Periodical Mee7ngs are held with Senior Execu7ves for monitoring the progress of the IP implementa7on.

Highlights of CVOs feedback:

IP has helped in making procurement process more transparent.

Periodical Mee7ngs are held with senior execu7ves for monitoring the progress of the IP implementa7on.

IEM-management mee7ngs take place on an annual basis

Highlights of IEMs feedback:


Shri Mihir Kumar Moitra

IP has made procurement process more transparent and bidders now can approach IEM for grievance redressal.

PSU has to be more serious in IP implementa7on. PSU shouldnt be given more exibility in the adop7on of IPs
framework.
Private sector should also adopt IP.

Sub-contrac7ng is facing problem with regard to IP.

PSU is not providing adequate support and facili7es and ensuring the same from the contractors for the IEMs to
discharge their responsibili7es sa7sfactorily.
No need to provide secretariat assistance to IEM with in PSU premises.

Weaknesses of IP monitoring system: No monitoring system in PSUs. IEMs have to ini7ate the whole process.
Sugges3ons :

(1) Role and responsibili7es of IEM are to be told to PSUs.

(2) Provision for secretarial assistance like correspondence, phone calls (STD) mobile, sta7onery, transporta7on
etc. shouldnt be at own cost. Over the last 3 years, all such expensesare borne by the IEM. It is not incumbent
on IEM to keep on ge9ng in touch with PSU. It should be primarily PSUs responsibility to promptly respond to
queries calls from IEM.

Level of sa3sfac3on and awareness among Bidders

No ocial Bidders list has been provided by MSTC, so awareness and sa7sfac7on level among bidders cant be
assessed.

Feedback from TII:

PAGE

58

PSU must gear up its resources for proper implementa7on of IP.

The report from IEM and other stakeholders is not very much encouraging.
ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

IP has helped in making the procurement process more transparent.

Total Number of IP related complaints referred to IEMs, since adop7on of IP programme by the PSU: Three

Highlights of Integrity Pact Implementa3on:

Highlights of PSUs feedback:

Complaints referred to IEMs 3 ; Total Number of IP-related complaints 2


IEM-management mee7ngs take place on need basis.

Nature and outcome of IEMs review

Materials Dept : One case referred to IEMs regarding non-submission of IP as per NIT terms, IEMs recommended
rejec7ng the oer concerned.
Engineering /contracts Dept : All tendering processes under IP are periodically reviewing by IEMs.

Projects : Case specically referred are reviewed by IEMs. Generally, each tender document is in7mated in advance.
Advice, if any, is given by IEMs considering PSUs informa7on.
Frequency of these reviews : As per requirement, on case-to-case basis.
Number of cases in which IEMs advice has been accepted - 03

Number of cases in which ac7on taken against suppliers/contractors and nature of ac7on
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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

o
o

Materials Dept.
Projects Dept.

:
:

1 Case - Oer rejected/ Not considered

1 Case - Insucient IP documenta7on suppliers bid rejected


2 Case - Pre-qualica7on related.

For each bid, IP is a binding agreement for that case only. Each tender enquiry is a separate event. Signatures of
bidders required for each tender enquiry.

Sugges3on to improve the IP:

List of transgression made by domes7c and interna7onal companies may be made available in TII website, cases where
very few bidders are available for a product and transgressions made by any of them need to be addressed. For be8er
implementa7on, interac7on is required between organiza7on regarding IP implementa7on and related issues.

Feedback from ocers who have a4ended MDI workshop:

All contracts has to be included under purview of IP.

IEM shouldnt be re7red bureaucrat.

Not sa7sed with TIIs role.

Sub-contracts shouldnt be excluded from purview of IP otherwise all contracts will be executed through subcontractors.

Other Highlights (and sugges3ons) of the Review Mee3ng held with IEMs on August 18, 2011

1. IEMs appreciated that the system adopted and followed in NMDC is good-leaving no scope for complaints from the
suppliers and enquired whether any complaint was received in those tenders. GM (Projects) replied that there was
no complaint pending.

2. Then IEMs suggested that in case of referral of complains before IEM, all par7es concerned should be called and
discussions held separately. This will facilitate quicker solving of the issues.

3. IEMs suggested for review of the tenders on quarterly basis. They men7oned that that they are here to help the
corpora7on and not to interfere in the process.
4. DGM (Contracts) informed that one party wanted to change the clause of IP. Jt. GM (S&CP) /Nodal ocer (IP) informed
that the present systems of changing any clause in IP, following steps are involved.

5. With the recommenda7on of review commi8ee and commi8ee of directors, CVO processes the le and the same will
be approved by the competent authority (i.e. CMD) and a'erwards forwarded to TII. The clause will be modied a'er
the TIIs consent. DGM (Contracts) was suggested to ask the party to submit the IP of other PSUs.

6. Materials/Contracts Dep8. explained that the reason of cancella7on were mostly due to over quo7ng of price, lack
of minimum tenders, oers not at all matching with the requirement.

7. IEMs wanted the list/status of the work of tenders issued a'er their taking charge. At the end they shared their
experience in brief by quo7ng one or two incidents at the TIIs Mumbai conference.

8. IEMs suggested that an all India IEMs Meet may be conducted in Hyderabad in the month of October/ November
2011 under the sponsorship of NMDC.
9. In the end, IEMs, suggested for a Vendors Meet in their presence, before IEMs meet. It was informed that earlier
Vendors Meet was a8ended by Shri M. Gopalakirshna, former IEM.

Feedback from IEMs:

Shri S. Anwar :

Procurement in the PSU in general has become more transparent with the adop7on of IP.

Formal uniform and periodic mee7ng between stakeholders to ensure eec7veness.

On the whole, the IP is a good beginning. Both PSU and Private sector companies should adopt IP in their system.

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60

Private sector should also adopt IP.

All the PSUs should compulsorily appoint IEMs and formalize the IPs. This is not being done.

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Level of Sa3sfac3on and Awareness among Bidders :

Low levels of awareness, medium levels of sa7sfac7on (but this is limited to only those who are aware of IP).

The implementa7on of IP in the PSU appears to be sa7sfactory but a lot has to be done to create condence among
vendors and make them aware of various provisions of IP.

Feedback from TII :

PSU must organize bidders meet to educate them about various provisions of IP.

Status of IP Implementa3on of Integrity Pact:


Highlights of CVOs feedback :

IP has helped in making procurement process more transparent

IEM-management mee7ngs take place on an annual basis

Periodical Mee7ngs are held with senior execu7ves for monitoring the progress in IPs implementa7on.

Highlights of IEMs feedback:


Shri Mihir Kumar Moitra

IP has made procurement process more transparent. Bidders now can approach IEM for grievance redresal.

PSU has to be more serious in IPs implementa7on. PSU shouldnt be given more exibility in the adop7on of IPs
framework.
Private sector should also adopt IP.

Sub-contrac7ng is facing problem with regard to IP.

PSU is not providing adequate support and facili7es and ensuring the same from the contractors to discharge IEMs
responsibili7es sa7sfactorily.
No need to provide secretariat assistance to IEM within PSU premises.

Weaknesses of IP monitoring system: No monitoring system in PSUs. IEMs have to ini7ate the whole process.
Sugges3ons : Role and responsibili7es of IEM is to be told to PSUs.

Provision for secretarial assistance : Over the last 3 years all expenses on correspondence, phone calls (STD) mobile,
sta7onery, transporta7on etc. are borne by the IEM. It is not incumbent on IEM to keep on ge9ng in touch with PSU.
It should be primarily PSUs responsibility to promptly respond to queries calls from IEM.

Level of sa3sfac3on and awareness among Bidders : No ocial Bidders list has been provided by FSNL so awareness and
sa7sfac7on level among bidders could not be assessed
Feedback from TII:

No ocial feedback and bidders list have been provided by the PSU.

Management has to take IP more seriously. IP should not be used as g-leaf; seriousness has to be shown in le8er and spirit.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Highlights of Integrity Pact Implementa3on:

Feedback from the PSU:

IP has helped in making procurement process more transparent.

A separate IP secretariat has been established under Project Directorates in Corporate Oce, New Delhi to monitor
its implementa7on. The secretariat sends monthly reports to IEM about the tenders published with Integrity Pact and
coordinate quarterly review mee7ngs with IEMs on IPs implementa7on.

Ocers have been designated at every Plant and Unit to ensure IPs implementa7on and to coordinate with the IP
Secretariat. Reference of IEMs is being given in all published tenders with IP; complaints, if any, are being referred to
the IEMs.
Vigilance department does inves7ga7on, in case a complaint is referred to IEMs.
Bidders meet is being organized on regular interval.

One bidder company has been blacklisted for submi9ng forged documents.
Private sector must adopt IP.

Feedback from CVO:

A'er the ini7al reluctance on the part of certain bidders to sign the Pact, it has now been accepted by the bidders.
Further, the decisions given by the IEMs while deciding complaints pertaining to IP have also not been ques7oned by
the bidders. However, it is not feasible to pinpoint savings due to Integrity Pact.

IP does not envisage any change in SAILs procurement process. IP provides an added assurance to bidders that tender
will be dealt with in a fair transparent manner.

The percentage of contracts (value-wise) that are covered under IP is less than that s7pulated by CVC. However, new
areas, considering their cri7cality, are being brought under the ambit of the IP even though the value involved is less
than the threshold limit.

IP has to be signed each 7me the bidder signs the pact. He is reminded of his commitments for a fair and transparent
dealing.
There is no need to exclude sub-contractor from purview of IP.

SPECIAL PROCESS/MECHANISM TO IMPROVE THE IP PROGRAMME WITHIN THE PSU

PAGE

SAIL has organized vendors meet to get raise their awareness levels and also to get their feedback on IP. Management
holds regular mee7ngs with the IEMs to discuss the issues involved and ways to take forward the IP program. One area of
opera7on of SAIL - Handling contracts of CMO - was not covered under IP as the contract value was lower than the s7pulated
threshold limit. However, considering the various aspects of the contract, it was brought under the ambit of IP. IEMs also
hold mee7ng with management and Vigilance before deciding on specic complaints received by them.
62

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

CASE RELATED TO VIOLATION OF IP : Inves7ga7on into a complaint in a tender revealed that one of the bidders had submi8ed
a fabricated IP document. Therefore, banning ac7on was taken against the party a'er concurrence of IEMs.
SUGGESTIONS TO IMPROVE THE IP :

Choice and roles of IEMs play a vital role in the successful implementa7on of IP in any PSU. Therefore, there must be an
Ins7tu7onal framework to select and nominate the IEMs for appointment.
Highlights of IEMs feedback:
Shri Janaki Ballabh

IP has helped in making procurement process more transparent.

IP has improved the credibility of the public procurement system. Both vendors and management of the company feel
empowered to follow proper and transparent procedures.
In certain cases, the eligibility/qualifying standards for short lis7ng eligible vendors leave scope for improvement to
make them more equitable.

There is a need to organize vendors meet along with the management along of the company and the IEMs to clarify
doubt and to get an objec7ve feedback
IEM should be given secretarial assistance within the PSU premises.

Private Sector should also adopt the IP.

IP has helped in making procurement process more transparent.

Vendors are to be made aware of IP program.

Shri A. C. Wadhawan

There is less visibility and awareness among vendors.

IEM should be given secretarial assistance with in the PSU premises.


More IEM Management mee7ng are required.

Selec7on of IEMs With impeccable integrity and credible records is important for eec7ve implementa7on of IPs.

In every quarter, IEM-Management mee7ng is to be organized.

Unable to verify that procurement in the PSU in general has become more transparent with adop7on of IP

Shri P. Shankar

There should be periodical publicity campaigns to make vendors aware of Integrity Pact program.

Strengths of Integrity Pact : Denitely Adds to the transparency of the system and helps an ordinary vendor to register
his concern on any aspect of procurement process.

Dont feel that IEM should be given secretarial assistance by the PSU.

Level of awareness and sa3sfac3on among Bidders :

Level of awareness about IP : Below Average.


Level of sa3sfac3on : Below average

Feedback from TII;

Dierent PSUs are following dierent mechanism for complaint handling. There is a need for standardiza7on of
complaint handling process. As per provisions of IP, a common person can also approach IEM, if he/she founds any
malprac7ces related to procurement process.
Low awareness of IP and low sa7sfac7on level among bidders is an area of concern.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Highlights of the PSUs feedback;

During ini7al period of implementa7on, it took some 7me for the spirit and principles IP to sink into the system. Now
the concepts have been well understood by vendors and customers and we are not facing any problems.
The Integrity Pact (IP) has helped in making procurement process more transparent.

Total Complaints referred to IEMs : Nil

Frequency of IEM Management mee7ng : Quarterly

Decision of bidders Management can change over a period of 7me, so IP has to be signed for every bid.

The contractor(s)/bidder(s) (especially foreign bidder) are extending adequate coopera7on and support to the PSU in
IPs implementa7on.

Present IEMs are doing an excellent job. Since the number of cases under IP in KIOCL is rela7vely less as compared to
other PSUs, two IEMs can handle KIOCL cases.
No need to exempt IP compliant bidder PSU from signing IP document.

There is no direct contract between buyer and sub-contractor and as such buyer cannot enforce. However, contractor
can get IP signed by sub-contractor.
Eec7veness of IP can be improved by proper awareness programs and guidance.
No annual report is submi8ed by IEMs.

Review mee7ngs are held with IEMs and main points are discussed in detail

Implementa7on of IP has helped is making procurement process more transparent.

Highlights of CVOs feedback:

A'er implementa7on of IP from 1st January 2008, as on date, IP clause was incorporated in 294 contracts. However,
7ll date no complaint has been received.
If bidders sign IP for a specied period, this may lead to a situa7on in the procurement of item below IP threshold
because some par7cipants will be with the IP and others without IP.
There is no need to exclude sub-contractors from purview of IP.

IEMs should be well conversant with tender /contracts /procurement process.

IEM may be requested to submit an annual report with respect to implementa7on of IP in the organiza7on.

Highlights of IEMs feedback


Mr. Lukose Vallatharai

PAGE

64

Cant say that the procurement in the PSU in general has become more transparent with adop7on of Integrity Pact

Unable to verify that IEMs are providing good services.

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

IP is useful as a tool to reduce corrup7on.

The factors that would help IEM to improve their level of services: Audit of a few ongoing and closed les will throw
light on overall levels of integrity and provide domain knowledge.

Within the broad framework and non-nego7able principles of the IP, PSUs should be given exibility to improve
transparency and probity and IP opera7ons.
Private Companies that are listed under the Lis7ng Agreement may be asked to evolve an IP system.

Corrup7on can exist even a'er the award of a contract to obtain favourable terms and condi7ons of contract or as
speed money to obtain / se8le payments/delivery. Hence, occasional audit of the en7re le assumes relevance.

PSU is providing adequate coopera7on, support and facili7es and ensuring the same from the contractors for the
IEMs to discharge their responsibili7es sa7sfactorily
IEM should be given Secretarial assistance within the PSU premises.

Technology should be used to monitor and alert every devia7on from the General Condi7ons of Contract and a8endant
terms and condi7ons by no7fying the same in the public domain of web page.
Besides a 100% paperless, forward and reverse auc7ons should be put in place.

Communica7on issued to all the tenderers by way of clarica7ons / amendments to the Tender, arising out of pre-bid
mee7ng /exercise should form part and parcel of the General and Specic condi7ons of Tender and it should be put
up in the public domain (Website) and the IEMs too should be kept informed about such devia7ons / amendments.

The weaknesses of the monitoring system : IP is a reac7ve process based on an adversarial system of law and as such there
is very li8le monitoring of transac7ons so long as there are no complaints.

Strengths of IPs : There is an apprecia7on by both the contrac7ng par7es with regard to upholding public probity and a8endant
nega7ve consequences of breach of contract. It also averts avoidable li7ga7on.

Weaknesses of IPs : The monitoring is at a macro level, co-related to receipt of a complaint. Unless the IEMs a8end a few prebid and such other micro-management mee7ngs involving the department/PSU and the vendors/buyers, issues of
bias/favori7sm, if any, cannot be detected. At present, there is no such provision.

KIOCL is a rela7vely mid-sized PSU. Its top leadership led by Sri K. Ranganath and ably assisted by Directors/GMs and Senior
Managers are persons of high integrity. Hence, my observa7ons on system improvement are general in nature and not specic
to KIOCL.
Level of awareness and sa3sfac3on among Bidders : Above average
Feedback from other stakeholders:

Though physical and nancial impact review on account of IP implementa7on is not possible, s7ll its implementa7on
demonstrates organiza7onal commitment to clean tendering process.

TII may consider issuing of a standard for implemen7ng IP alike the standards that exists for various management
systems.

IP should nd its applica7ons globally in all spheres without limita7ons and restric7ons.

IP implementa7on should not have barriers and it should encompass the en7re ac7vity covering all the concerned.

Sub-contractors should be a part of IP.

Feedback from TII :

It is one of the two PSUs (other being TCIL) that hold an annual review mee7ng with TII. CVOs, IEMs, and all the
Vendors are present at the mee7ngs.
There has been an apprecia7on of IP by both the contrac7ng par7es with regard to upholding public probity and
a8endant nega7ve consequences of breach of contract.
IP has also been helpful in avoiding superuous li7ga7ons.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Feedback from TII:

Despite repeated reminders sent to CMD and CVO and telephonic calls made, no ocial informa7on or feedback has
so far been received.

Highlights of Integrity Pact Implementa3on:

[The highlights presented here are based on the speech given by Shri T.K. Ananth Kumar, Director (Finance), Oil India Limited
- at an Integrity Pact conference cum workshop at MDI, Gurgaon in April 2011]

OILs vision is based on transparency, ethics and good governance

To improve IPs eec7veness, vendors mee7ngs are organized in Delhi with periodical reviews

Very sa7sfactory results observed - good response from vendors, employees and others.
Almost 80% procurement is under IP at present.

Role of independent External Monitors (IEMs) and other stakeholders have been clearly dened.

It has helped OIL in market capitaliza7on and its image building through transparency and good governance.

Feedback from PSU

Vendors meet held to appraise vendor about IP program in OIL at -

Duliajan

15.09.2008

Mumbai

25.02.2009

Kolkata

Chennai

PAGE

Noida

66

11.11.2008
15.06.2010
27.09.2010
ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Date of IP implementa7on in OIL

Ini7al Threshold Value

01.01.2010

Rs. 1 Crore

Threshold value reduc7on

To Rs. 50 Lakhs in December, 2010

Vendors meet held for feedback on IP implementa7on by OIL

18.02.2011 (At Noida)

% Coverage achieved 7ll Dec. 2010 end

Sugges7ons/complaint received from Vendors

Sugges3on

Outcome

Outcome

Complaint

77.59% (Rs. 1350 cr. out of Rs. 1750 cr.)

One in August, 2010 for inclusion of other connec7ons in addi7on to only one specied connec7on in
tender for supply of Tubing.
Sugges7on accepted. Other connec7on included.

Complaint from one vendor as his oer was being ignored in view of poor past record of failure to
execute contract.
IEMs found no merit in the complaint.

Issues raised by OIL / Status :

Sugges3ons/Issues raised by Vendors :

Waiver of IP between two IP compliant PSUs (BHEL & OIL)

A'er Bid opening, give a chance to party to sign IP if not signed and submit with tender.

Implement IP in all tenders irrespec7ve value

Consider one IP for all tender instead of IP signing/Submission for each tender.

Whether OIL has derived any benet from IP program.

Desired to know consequence in case of breach by OIL as liabili7es for only vendor are men7oned.

Vendors Feedback :

Good ini7a7ve as it gives opportunity to vendors for redressal of their grievances.

One year is a small period to judge success or shortcomings of IP program.

Most vendors submi9ng IP with oers. Few forgot to submit IP with oer in the ini7al period. Hence more vendors
meet to appraise vendors.

OILs Feedback :

Issues raised by BHEL for not signing IP between PSUs to be addressed by TII/CVC as a policy ma8er.

Execu7ve handling tenders have expressed happiness as this has made system more transparent and beneted
vendors.
Only one sugges7on and one complaint received during one year. Both resolved.

Highlights of CVOs feedback:

Experience has been posi7ve, although it has been only about 1.5 years experience (IP implemented in OIL w.e.f. Jan.
1, 2010).
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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

IP has helped in making procurement process more transparent.

Special process/mechanism to improve the IP program: Strong awareness among external stakeholders (vendors) and
internal stakeholder (concerned employees) and properly dening the process /mechanism to improve IPs
implementa7on.
No need to exempt IP compliant bidder PSUs from signing IP document.

No need to exclude sub-contractor from purview of IP because the sub-contractor plays the front line role in the
business transac7on.
IEMs should preferably have worked in organiza7ons having large scale contracts and purchase .

Strengths of IP : The monitoring is done by an authority as high as CVC, who is highly conversed with the issues of
transparency and business ethics. Secondly, TII brings along their interna7onal experiences from both least corrupt
and highly corrupt countries.
Weaknesses of IP : Lack of compulsion and non-involvement of private sector.

Need to give direc7ves to all PSUs for adop7on of IP.

Highlights of IEMs feedback:


Shri R.C. Agarwal:

By and large, the procurement in the PSU in general has become more transparent with the adop7on of Integrity Pact

Vendors are aware about IP, but periodical Vendors' meet would give impetus to awareness and regular exchange of
notes between Vendors may help improve condence and acceptability/ reduce Vendors skep7cism in IP

IEMs are providing good services, but the correct feedback about it would come from the PSU and the Vendors

IP mechanism is a good tool to ght corrup7on, but not wholly sucient

PSU is providing adequate coopera7on, support and facili7es and ensuring the same from the contractors for the
IEMs to discharge their responsibili7es sa7sfactorily

Role of technology : (A) Compulsory e-tendering and introduc7on of further sophis7cated methods like reverse
auc7on etc. (B) A Standing Commi8ee of Experts on e-tendering issues, if cons7tuted by the CVC, would be helpful
to IEMs as then they can refer technical issues to the experts for advice in cases of dispute/complaint involving the
func7oning of the e-tendering system etc , if required.

There is no duplica7on of the work carried out by the Vigilance Department and the IEM. In fact, an eec7ve IEM work
can be complementary to vigilance work and vice-versa
The actual number of IEMs should depend on the volume of tenders being oated, number of complaints etc. Some
of the PSUs may need a large number as they may be opera7ng from dierent loca7ons.
Private Sector should also adopt IP. It will make for a more level-playing eld especially in a mixed economy like India.

IPs Strengths : IP, if implemented with sincere support of the CMD, Func7onal Directors and Senior Management
Personnel, will improve (a) transparency (b) ethical dealings; and above all (c) will help the management by reducing
unnecessary references from the parent Ministry and other agencies like CVC and thereby consequent delays in
processing tenders etc. It may also expedite decision making by ins7lling greater condence in func7onaries.

Shri N. Gopalaswami

PAGE

68

The procurement in the PSU in general has become more transparent with adop7on of Integrity Pact

IEMs are providing good services but the answer to this must come from the PSU and more especially from the
Vendors
There is no duplica7on of the work carried out by the Vigilance Department and the IEM. In fact an eec7ve IEM
work can be complementary to vigilance work and vice-versa

The actual no. of IEMs should have relevance to the no. of tenders being oated, volume of complaints etc. - some of
the PSUs like say the Coal PSUs opera7ng at dierent loca7ons may actually need a large no. of IEMs.

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Vendors are aware about IP but periodical Vendors' meets would increase awareness further and exchange of notes
between Vendors may help improve condence and acceptability/ reduce skep7cism of Vendors.
The Private Sector should also adopt the IP, there is great need. That will make for a more level-playing eld.
The IP mechanism is a good tool to ght corrup7on, but not wholly sucient.

PSU is providing adequate coopera7on, support and facili7es and ensuring the same from the contractors for the
IEMs to discharge their responsibili7es sa7sfactorily.
Present arrangement at the PSU premises is adequate. But end when work like typing, commu7ng to post oces etc.
is involved, help to IEMs, if possible from PSU, will be welcome.
The adop7on of some technology would help in IPs eec7veness. For example:

(A) Compulsory e-tendering and introduc7on of further sophis7cated methods like reverse auc7on etc.

(B) A Standing Commi8ee of Experts on e-tendering issues, if cons7tuted by the CVC, would be very helpful as the
IEMs can then refer technical issues to the experts for advice in cases of dispute/complaint involving the
func7oning of the e-tendering portal and the interpreta7on of the func7onal parameters or error messages if
raised in any ma8er before the IEMs.

IPs strengths : If implemented with full backing of the CMD, Func7onal Directors and Senior Management Personnel, IP will
improve (a) transparency (b) ethical dealings; and above all (c) help the management by reducing unnecessary references from
the parent Ministry and consequent delays in processing tenders etc. and by extrapola7on, inuence-peddling and interference
Level of awareness and sa3sfac3on among Bidders :

Level of Awareness : Above average


Level of Sa7sfac7on : Average

Feedback from TII:

OIL has raised various queries with TII and CVC with respect to IP implementa7on. While they received feedback from
TII but they havent received any response from CVC. The delay in response not only hampers the major opera7on of
the PSU but at the same 7me discourage them. A separate cell can be created within CVC to deal with IP related
issues.
It has been suggested by the PSU that all PSUs under same ministry must have same IP program.

Highlights of the feedback from the PSU and CVO:

CONCOR introduced Integrity Pact in its tender from January 2008 onwards. Till date no diculty has arisen on this
account. None of the bidders have had reserva7ons in signing IP. CONCOR has made use of resolving the conten7ous
issues by u7lising the IP provisions and making references to the IEMs
Implementa7on of IP has helped is making procurement process more transparent.
Total number of complaints referred to IEMs - One.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Number of cases in which IEM advice has been accepted and acted upon Two.

IP must be signed for each bid.

Frequency of IEMManagement mee7ng : Quarterly

There is no need to exempt IP compliant bidder PSUs from signing IP document.

Highlights of IEMs feedback:


Shri Ashok Kumar

Implementa7on of IP has helped in making procurement process more transparent.

Vendors need to be educated on the IP provisions and the op7ons to protect their interest.

PSU is not ge9ng enough support and guidance from CVC

Private sector should also adopt IP.

PSU should give secretarial assistance to IEMs.

Data of cases referred to the IEMs 7me taken to give the opinion, clarica7on and decision given, should be put on
website.
Implementa7on of IP is the issue, fear is lacking.

Shri Birendra Prasad Mathur

Implementa7on of IP has helped in making procurement process more transparent

Vendors are not aware of IPs provisions.

Weakness of IP monitoring system : IEMs get involved to the extent PSUs management want. They have simply an
Advisory role
Strengths : Helps in quick resolu7on of dispute with vendors

Sugges3ons : IEMs are appointed only when a PSU voluntarily agrees. All major procurement department of
government should have IEMs and publicity be given to their role & func7ons. When all buying/selling agencies of
dealing with public procurement develop condence that they can go/appeal to IEMs for jus7ce & fair dealing, we can
say some dent has been made in the problem of corrup7on bleeding the country.

Level of awareness and sa3sfac3on among Bidders :

Level of awareness about IP: Above Average.


Level of sa7sfac7on: Above average

Feedback from TII:

PAGE

70

The implementa7on and eec7veness of IP in the PSU is above average.

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Highlights of the PSUs Feedback

Integrity Pact has helped in making procurement process more transparent.

IEM-Management mee7ng is need based.

IEMs also review NLCL tender documents with regards to commercial clause.

Complaints received in rela7on to Integrity Pact : NIL

No need to exempt IP compliant bidder PSUs from signing IP documents

IP has to be signed for each bid since the person/IEM/Bidders/Ocers involved may be dierent for each occasion and
each bid is to be dealt separately. Moreover, entering IP would be a preliminary qualica7on for each tender and each
pact has varying 7me dura7on.

As IEMs are mostly senior re7red Govt. Ocials and engage in various honorary assignments, it will be be8er if we
have three IEMs so that in the absence of any one, the others can be approached.
There is no need to exclude sub-contractors from purview of IP, what is applicable to the contractor is applicable to
the sub-contractors also. If excluded, it will indirectly help the contractor and the very purpose will get defeated.
No annual report is being submi8ed by IEM.

Highlights of CVOs feedback :

Integrity Pact has helped in making procurement process more transparent.

As everything is made transparent, it establishes mutual contractual rights and obliga7ons to reduce high cost and
eects of corrup7on.
The IEMs should posses domain experience of the PSU ac7vi7es and the relevant eld, with which they have to deal.

Strengths of IP monitoring system: Easy accessibility to IEMs, interac7on opportunity with IEMs to be provided by the
Principal.
Weaknesses of IP monitoring system: IEMs advices are not binding.

Sugges3ons to Improve IP program:

(i) If IEMs sugges7ons are not accepted, they may transmit the same to CVC for their review and for issuing suitable
guidelines to the PSUs.
(ii) There is no need to exempt IP compliant bidders PSUs from signing IP document.

Feedback based on le4er dated 08-08-2011

Integrity Pact compliance has been made mandatory for tenders of the value Rs. 1 crore and above, thereby ensuring
that 95% value of the tenders oated by NLCL comes under the ambit of Integrity Pact Programme
Periodic Review mee7ngs are held by NLCL with the IEMs

Online integrated materials management system is in place. This is a versa7le e-procurement tools (high levels of
transparency and minimal levels of manual interven7on)
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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Major highlights of IEMs feedback :


Shri D. Mukherjee

Unable to verify that the procurement in the PSU in general has become more transparent with IPs adop7on.

No logis7c support for IEMs eec7ve func7oning. In annual assessment and prepara7on of annual report data base
has to be furnished by Principal/CVO.

Monthly interac7on with CEO & bi-monthly mee7ng between IEMs not held; no complaint referred, informa7on
rela7ng to tenders in progress not shared on a monthly basis.
Also, private sector should adopt IP.

Weaknesses of IP: Advice by IEM is not binding on the Principal, IEM is a lone soldier.

Sugges3ons

All complaints/source informa7on should be furnished to IEMs to go into specic cases.


(a) CVOs should interact with IEMs on a regular basis.

(b) Logis7c support should be provided to IEMs.

Merely taking a mutual pledge (not to oer/accept illegal gra7ca7on) becomes a meaningless exercise if there is no
mechanism to detect contraven7on. Corrup7on can exist even if the sanc7ty of the tender process is maintained. It
is a common knowledge that kickbacks can ow even if L1 is awarded the tender. The only way a frui6ul probe can
be launched is on the basis of complaints from unsuccessful bidders or into through sources. In this regard, the CVO
is in a be8er posi7on and should share his info with the IEMs.

Shri R. Poornalingam

Unable to verify the procurement in the PSU, in general, has become more transparent with adop7on of IP.

IEM should be given Secretarial assistance within the PSU premises, whenever needed.

PSU is not ge9ng enough support and guidance from the CVC. Instead of ac7ng like a policeman CVC should infuse
condence among management they should take quick decisions.
Private sector should also adopt IP.

Shri P. K. Banerjee

The procurement in the PSU in general has become more transparent with adop7on of IP.

Unable to verify that vendors are aware about IP or not.

PSU is not ge9ng support and guidance from the CVC. Its approach to all PSUs needs to be looked into. An
airline/bank/insurance companies need to be dealt with dierently vis--vis mining /power genera7on.

Private sector should also adopt the IP, huge undetected malprac7ces are rampant in private sector.

Strengths of IP : The greatest strength of IP is its informal nature-it binds stakeholders to avoid being reckless in their
behavior. Since IEMs dont owe their posi7on to anyone, they can exercise an impar7al and benecial inuence on all.

Sugges3ons : IP aided by IEMs is a weapon in the hands of the management, which can be used for both defensive
and oensive purposes. Pressure from various quarters in procurement ma8ers can be resisted by elding the IEMs
.Likewise several decades long procurement malprac7ces can be curbed if not eliminated by unleashing the IP or IEM
system.

Level of awareness and Sa3sfac3on among bidders :

It could not be measured as any ocial bidders list has not been provided by the PSU.

The issues raised by IEMs have to be resolved by the management.

The nodal department has to be more ac7ve when it comes to sharing of informa7on related to IP.

Feedback from TII :

PAGE

72

Regular IEM-Management-Bidders meet is very much desired.

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Highlights of the PSUs feedback:

IPs Implementa7on has helped in making procurement process more transparent. Enhanced fairness and
transparency help us in resolving disputes, if any prior to decision making during tendering process.
Provides a mechanism for speedy resolu7on of disputes by reference to IEMs.

Till date, only one complaint has been referred to IEMs.

Venue for the IEM mee7ngs is the PSU oce.

Frequency of IEM review mee7ng is quarterly.

Registered vendors can be requested to sign the IP document once a year. Other bidders as and when they bid for a
par7cular tender.
Certain foreign bidders have expressed reserva7ons in signing the IP document.

There is no need to exclude sub-contractors from purview of IP. This will help to widen the awareness and scope of
the IP process leading to increased transparency.
There is a need to increase the number of IP workshops for vendors.

Highlights of IEMs feedback:


Shri Janaki Ballabh

IP has helped in making procurement process more transparent.

IPs have improved the credibility of the public procurement system. Both vendors and management of the company
feel empowered to follow proper and transparent procedures.

IEM should be given secretarial assistance with in the PSU premises.

It is observed that in certain cases the eligibility /qualifying standards for shortlis7ng eligible vendors leave scope for
improvement to make them more equitable.

There is a need to organize vendors meet along with the management along of the company and the IEMs to clarify
doubt and to get an objec7ve feedback
Private Sector should also adopt IP.

Shri T. S. Krishnamurthy

Par7ally, IP has helped in making procurement process more transparent.

PSU is providing adequate coopera7on, support and facili7es and ensuring the same from the contractors for the
IEMs to discharge their responsibili7es sa7sfactorily.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

IEM should be given Secretarial assistance

The standardiza7on of tender procedure, comprehensive training to the persons concerned in ma8ers rela7ng to
oa7ng of tenders specifying essen7al and desirable condi7ons to be fullled, opening of technical bid, opening of
nancial bids only a'er nality is reached a'er technical bid, nego7a7ons to be restricted only to one session of a
clarica7on with a compliance date.
Private Sector should also adopt the IP.

Weaknesses of the monitoring system:


(a) Absence of secretarial assistance
(b) Monitoring the follow-up ac7on

Delays in the appointment and renewal of IEM (in BSNL, the third IEM was not appointed for two years with the result
the two IEMs carried on the work although both of them worked unanimously. If they had diered, the situa7on
would have been odd!)
Good to have one technical person as IEM in case it is a highly engineering oriented company.

Strengths of IPs:

Recommendatory nature of its views

Periodical review of pending cases

There is no standard prac7ce in nalizing technical specica7ons rela7ng to the tender. Very o'en clarica7ons are
sought and provided on all ma8ers thereby delaying the tender naliza7on. O'en discussions are held in order to
clarify technical specica7ons thereby providing varia7ons in tender specica7ons resul7ng in confusion in the minds
of the bidders. There must be clarify /uniformity in the procedures rela7ng to tenders.

Unbiased so as to check any external (especially poli7cal) inuences

Sugges3ons:

Level of awareness and sa3sfac3on among Bidders :

Level of awareness about IP: Below Average.


Level of sa7sfac7on: Below average

Feedback from TII :

PAGE

Below average, level of awareness and sa7sfac7on among bidders/vendor is an area of concern.
PSU must organize at least annual bidders meet to educate vendors on various aspects of IP.

74

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Highlights of the PSUs feedback :

Integrity Pact has been uniformly and eec7vely implemented across all the divisions of the Corpora7on-leading to
a transparency-oriented approach and faster tendering process. Regular mee7ng with IEMs are being organized on a
monthly basis. In these regular mee7ngs, both complaints and status of tenders under IP are apprised to the IEMs in
a structured manner. Informa7on has been hoisted in the internet for the stakeholders knowledge and it covers status
of all ongoing tenders under IP.
Implementa7on of IP has helped in making procurement process more transparent.

Number of complaints referred to IEMs - Two

Nature and outcome of the review done by IEMs:

o
o

Structured review of IP compliance of tenders


Faster complaint resolu7on.

Frequency of these reviews: Monthly and ongoing

No. of cases in which IEMs advice have been accepted: All cases

IEMs are signing Non-Disclosure Agreement (NDA) for ensuring secrecy of informa7on shared by the bidder.

In case of empanelled par7es or par7es supplying equipments or providing services on proprietary basis one 7me
signing of IP is sucient. Otherwise it should be tender wise.
Many foreign bidders are not aware of IP and they are following their country-wise prac7ces.

The number of IEMs in a PSU depends upon the geographical spread and the public interface requirement.

Stage wise reports on the progress of tenders under IP are being submi8ed to IEMs on a regular basis.

For ecacy, IP must be extended to private players uniformly star7ng with the listed private en77es.

Annual report submi8ed by IEM(s) : None

On one-7me basis, all PSUs can sign the IP with other PSUs to reinforce IP compliance.

All PSUs should be compulsorily covered in the ambit of IP.

Review and evalua7on mee7ngs held between IEMs and management Frequently, No records available.

Benets accrued due to IPs implementa3on:

Savings incurred due to IEMs interven7on in tendering process. But amount can not be quan7ed tender-wise.
Instances of cartel forma7on by bidders has come down or eliminated.

IEMs Feedback:
Shri B. C. Bora

IP has helped in making the procurement process more transparent.

Unable to verify whether vendors are aware of IP.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Sub-contractors of main vendors, at 7mes, refuse to abide by the IP guidelines.


Private sector should also adopt IP.

Strengths of Integrity Pact : Providing opportuni7es to aggrieved vendors to seek redressal, fear of scru7ny by IEMs, peer
pressure on PSUs to provide fair play.

Weaknesses of Integrity Pact : IEMs have to rely on the informa7on presented to them by the PSUs and have to convey their
decision based on the same.
Sugges3ons

Periodic review by PSU Board on all complaints and decisions taken with or without consul7ng the IEMs.

Strict compliance of the rule of rota7on of ocials holding sensi7ve posi7on.

Direc7ve from CVC to make technical specica7ons broad-based to encourage large compe77on, excep7ons must be
reported to Board/IEMs.

Shri RSSLN Bhaskarudu

Procurement in the PSU in general has become more transparent with the adop7on of IP

Technology can play very important role in IPs eec7veness. Various oces of TI should leverage technology to build
and maintain a comprehensive and global data base of par7es, which have commi8ed transgressions from IP, so as
to disqualify such par7es from ambit of IP tenders globally. This will facilitate uniform implementa7on of IP across the
globe and minimize scope of viola7on of IP by global bidders in other countries

Shri B. B. Tandon

Procurement in the PSU in general has become more transparent with adop7on of IP.

Sa7sed with implementa7on of IP in IOCL.

There must be three IEMs in one PSU.


Private sector must adopt IP.

Level of Sa3sfac3on and awareness among bidders : It could not be veried as no ocial bidders list has been provided.

Feedback from TII :

PSU must organize regular bidders meet.

Nodal department has to be more ac7ve in terms of sharing informa7on with other stakeholders.

Highlights of the PSUs feedback:

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76

Integrity Pact has been instrumental in fairness, equity and transparency; and has improved sense of business ethics
amongst vendors. It has been instrumental in over all upli'ment of public image of the organiza7ons. It has also
helped in reduc7on of complaints /arbitra7on and court cases.
Implementa7on of IP has helped in making procurement process more transparent.

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Number of complaints referred to IEMs : Two

Number of cases in which IEMs advice has been accepted and acted upon : Two

IP must be signed for each bid.

Frequency of IEM Management mee7ng : Need-based

There is no need to exempt IP compliant bidder PSU from signing IP document.


Sub-contractors are to be a part of IP.
More interac7on with TII is required.

Highlights of the Annual Review Mee3ng

Shri M. K. Kaw, former IEM, pointed out that as and when any complaint is received by any of IEM regarding tendering
process, the same shall be discussed /reviewed by full panel of IEMs for ensuring the desired transparency and
objec7vity as per CVCs Standard Opera7ng Procedure (SOP).
Shri M. K. Kaw made specic references to the provisions laid down in the SOP and emphasized that the role doesnt
end with the award of contract, but 7ll the comple7on of contract and naliza7on of bill.

Shri M. K. Kaw suggested that for giving wide publicity of IP to the tenderers, the IP clause /name of the IEM and
details thereof should be given in bold le8ers, which was agreed for necessary follow up.
IEM Shri R. C. Rekhi men7oned that physical and nancial progress reports of IP projects should be submi8ed to IEMs.

IEMs suggested that some dispute/complaints, which involve detailed examina7on regarding tendering/execu7on to
ascertain malprac7ces men7oned under IP should be referred to them.

Shri Kaw suggested that if any bidder/contractor takes up a case before any court which comes under the purview of
IP, concerned should be informed about the facility under IP to resolve the ma8er and dispute be referred to IEMs with
the permission of the court.
Shri Kaw suggested widening the scope of IP so as to cover monitoring pace and quality of work and also to establish
some mechanism to assess func7oning of monitoring team.

Shri Rekhi suggested that in order to derive full benet of IP, there is an urgent need to focus on monitoring the
progress of work and quality control during execu7on.

Shri Rekhi, men7oned that physical and nancial progress reports of IP projects should be submi8ed to IEMs . CVO
men7oned that the same would be given an a proper format for respec7ve ED.

Level of awareness and sa3sfac3on among Bidders :

Awareness : Above Average

45% of the respondent bidders feel that IEMs are facilita7ng procurement process.

Level of sa7sfac7on is above average, but a major chunk of bidders feel that it is a rou7ne work for them.

IEMs Feedback :

Shri M.K. Kaw (Former IEM)

Implementa7on of IP has helped is making procurement process more transparent.

Vendors are not aware of provisions of IP as not enough is being done to publicize the scheme. Only one vendors meet
was held during his tenure of three years.

The top management should meet the IEMs once in two months. Vendors meets should be held at dierent loca7ons
once in 3 months.
IEM must be given secretarial assistance.

Private sector should adopt IP.

Regular interac7on between AAI-Bidders-IEM and TII is very much desired.

Feedback from TII :

TII must take lead to address issues raised by PSU management .

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Feedback from the PSU : No feedback either from PSU or CVO oce.

IEMs Feedback:
Shri P Shankar

Unable to verify that procurement in the PSU in general has become more transparent with adop7on of IP

There should be periodical publicity campaigns to make vendors aware of Integrity Pact program.

Strengths of Integrity Pact : Denitely Adds to the transparency of the system and helps an ordinary vendor to register
his concern on any aspect of procurement process.

Do not feel that IEM should be given secretarial assistance by the PSU.

Shri K. N. Singh :

IP has helped in making procurement process more transparent.

No exemp7on should be given to sub contractors.

CVC has to be more proac7ve in terms of eec7ve implementa7on of IP.

Private sector must adopt IP.

Level of awareness and sa3sfac3on among Bidders :

Level of awareness about IP is above average.

Almost 75% of respondent bidders feel that ins7tu7on of IEMs is facilita7ng procurement/contrac7ng process.

No exemp7on should be given to IP compliant bidder PSUs.

Maximum bidders feel that its a good tool and it helped in making procurement system more transparent

IP document should be signed both by the bidders and purchasers before bid submission.

Sugges3ons to make IP eec3ve: There should be ac7ve par7cipa7on from all bidders and buyers.

Though we havent received any ocial feedback from the PSU, the response from bidders is very encouraging. The
Nodal department (IP) of MTNL has to be more ac7ve, when it comes to sharing of informa7on related to IP.

PAGE

Feedback from TII :

78

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

PSUs Feedback : No ocial feedback has been received.

IEMs Feedback

Shri Brijesh Kumar

Integrity Pact has helped in making procurement process more transparent.

IEMs should be given secretarial assistance.

PSU shouldnt be given more exibility in regards to the adop7on of IPs framework.

To some extent there is duplica7on of work carried out by the Vigilance Department and IEM. IEMs do not know what
the Vigilance Department is doing.
There should be three IEMs in a PSU.

There is a need for awareness among the IEMs about the procedures/func7on of the PSUs.

Private sector should also adopt IP.

With adop7on of IP, bidders have got an alternate mechanism for grievance redressal.

Shri M. N. Buch

Knowledge of the procedures followed in the PSU is very important for IEMs.

IEM should be given secretarial assistance

In some cases there is a duplica7on of work carried out by the Vigilance Department and IEMs.

Private sector should adopt IP.

Level of awareness : Above average

Level of awareness and sa3sfac3on among Bidders :

Level of sa7sfac7on : Below average

Feedback from TII

As we havent received any ocial feedback from the PSU, we are not in a posi7on to comment about implementa7on of IP
in the PSU. Coal PSU has to be more ac7ve when it comes to implementa7on of IP.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Highlights of the PSUs Feedback :

Implementa7on of IP has helped in making procurement process more transparent.

Cases referred to IEMs from 7me to 7me as per the representa7ons received from par7cipa7ng bidders and were
handled by IEMs as per Standard Opera7ng Procedure (SOP).
Frequency of IEMManagement mee7ng is need-based.
IP is tender based so IP must be signed for each bid.

There is no need to exempt IP compliant bidder PSUs from signing IP document.

It may not be possible for bidders to execute IP with all sub-contractors within prescribed period as men7oned in
CMM/MCEW (Manual) for civil sec7on.
There is a need for regular workshop and mee7ng for advocacy and ne-tuning of IP program.
Benets accrued due to implementa3on of IP :

(a) Reduc7on in complaints against PSU ocials regarding adverse integrity and the general image regarding integrity
has improved.
(b) Conduct of Bidders/contractors became more transparent in not inducing /pressurizing the ocials to indulge in
corrupt prac7ces.

(c) Instances of cartel forma7on have come down because of IP.

(d) Extraneous interference in awarding and managing contracts has reduced.

(e) Instances of contractors going in for arbitra7on /legal proceedings to se8le their claims/disputes have reduced.

IEMs Feedback:

Ms. Nirmal Buch

Implementa7on of IP has helped is making procurement process more transparent.

Strengths of IP: Gives opportunity to the venders to address their issues to an outsider, independent person. The PSU
sta also is able to see how to proceed further impar7ally, with condence and guidance for furthering work.

Sa7sed with role played by the PSU

Sugges3ons : Based on our limited observa7on of the PSU and interac7on with those who have made representa7ons,
the number of complaints has increased with 7me and awareness.. The system cannot solve all problems of any
malprac7ces but denitely helps. It should con7nue and then review again.

Level of awareness and sa3sfac3on among Bidders :

The level of awareness: Average

Level of sa7sfac7on: Below average

Feedback from TII:

PAGE

The level of sa7sfac7on and feedback from other stakeholders is an area of concern for us. Management has to be more
proac7ve in terms of implementa7on of IP. Regular IEM-Management Bidders meet is desired.

80

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Highlights of the PSUs feedback:

Implementa7on of IP has helped in making procurement process more transparent.

It has resulted into sharp decline in Vigilance Complaints

IEMs should have thorough knowledge of tender and procurement process.

Of the total 11 complains referred to IEMs, their advice has been accepted in 9 cases.
Frequency of IEM Management mee7ng : Annually

Each bid is being dealt separately and has separate decisions.

IP is tender based, so it must be signed for each bid.

There is a need for regular workshop and mee7ng for advocacy and ne-tuning of IP program.

There is no need to exempt IP compliant bidder PSUs from signing IP document.

IEMs Feedback

Shri S.K. Cha4erjee:

IP infuses a sense of rm commitment into the buyers and sellers not to indulge in corrupt prac7ces. It implies self
imposed check and balances.
With the adop7on of IP, procurement in the PSU in general has become transparent.

Unable to verify that vendors are aware of IP or not.

Sub-contractors should be part of IP.

There should be frequent interface between IEMs and CVC, either individually or in group.

Strengths of IP : Fewer li7ga7ons, situa7ons and increase in revenue produc7vity.

IP has helped in making procurement process more transparent.

Shri B. N. Mishra

Various obstacles/hurdles are faced in ini7al phase but in later stage with proper advocacy, we get desired coopera7on
from the PSU and Bidders.
Sub-contractors must be a part of IP program.

Non implementa7on of IEMs recommenda7ons should be viewed seriously.

Level of awareness and sa3sfac3on among Bidders :

The level of awareness: Average

Level of sa7sfac7on: Below average

The level of sa7sfac7on and feedback from other stakeholders is an area of concern. Management has to be more
proac7ve in terms of implementa7on of IP, regular IEM-ManagementBidders meet is desired.

Feedback from TII:

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Highlights of Integrity Pact Implementa3on:

PSUs feedback: NIL


CVOs feedback:

The implementa7on of IP has been only for the name sake. IP has become a ritual.

Not sa7sed with the role of TII.

IEM shouldnt be senior re7red Bureaucrat IAS ocer who feels it is below their dignity to interact with vigilance.

The circulars of CVC on the role and responsibili7es of IEMs is not being implemented properly in WCL.

IEMs are not aware what is the vigilance set up in the PSU and what are the role and func7on of the CVO.

The impact of the usefulness of IP has not percolated to contractors. There are vested interests to prevent this, and
extra eorts are needed.
No need to exempt IP complaint bidder PSUs from signing IP.

Sub- contractor must be a part of IP


Sugges7ons to improve IP:

i.

TII should withdraw as partner in case the IP implementa7on is not being done properly.

ii. IEM panel may be drawn from NGO, and re7red Public Sector Undertakings employees.

Feedback from IEM:

Shri B. S. Minhas

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82

IP has helped in making procurement process more transparent.

Awareness among vendors is missing not even one complaint was received directly from any vendor regarding WCL
during last three year.
Full coopera7on from management is missing.

CVC should quarterly monitor the working of I.P. in each P.S.U. to ensure that its instruc7ons are followed both in
le8er and spirit.
Not sa7sed with role of Vigilance department in WCL.

IP is to be given more publicity by the PSUs, present management dont take much interest in popularising IP with their
vendors. There is no monitoring by CMD or CVC.
Strengths of IP: It avoids costly li7ga7on. It can help in ge9ng procurement at compe77ve rates.

Sugges3ons : The PSU should give wide publicity over na7onal and regional TV networks and newspapers.
It should hold regular mee7ngs with IEMs and Vendors.

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

CVC should hold half yearly mee7ng with CMDs and IEMs to review the working of IP. The mee7ng can be held in
groups of 7-8 PSUs, to ensure a proper dialogue.

Level of awareness and sa3sfac3on among Bidders :

Level of awareness among Bidders: Average

Level of Sa7sfac7on among Bidders (who are aware of IP) : Below Average

Feedback from TII

Conic7ng informa7on received from IEM CVO is an area of concern, the concern management, CVC, TII and concern
ministry must intervene to end this deadlock.
There is need for Bidder-Management IEM TII meet to increase level of advocacy of IP among bidders.

Level of sa7sfac7on among bidders is an area of concern.

Highlights of PSUs feedback :

Implementa7on of IP has helped in making procurement process more transparent.

There is a need to exempt IP compliant bidder PSUs from signing IP document.

In all cases, advice of IEMs has been accepted.

The number of complaints refered to IEMs Three


With the adop7on of IP a)

The conduct of bidders/contractors becomes more ethical in not inducing/pressuring the ocials to indulge in
corrupt prac7ces.

b) Instances of cartel forma7on by bidders have come down.

c)

Extraneous interference in awarding and managing contracts reduced.

d) Instances of contractors going in for arbitra7on/legal proceedings to se8le their claims/disputes have reduced.

e) IEMs mee7ng is need- based

There is a need for regular workshop and mee7ng for advocacy of IP program.

CVOs feedback:

As per threshold limit, IP is being signed in CCL and has become integral part of the NIT.

During the year 2010-11, IP was signed in respect of 100 (provisional) tenders no7ed by the HQ and areas/unit of
CCL.
Unable to verify that IP has helped in making procurement process more transparent. People must understand IP in
le8er and spirit. IP is to be followed in le8er and spirit.
Lodging of complaint pertaining to tenders is not reducing.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Irrespec7ve of threshold, IP should be made applicable in all contracts and tenders.

Signing of IP documents once by the bidders who are par7cipa7ng in CCL tenders frequently will be benecial which
shall be applicable to certain period.
Special process/mechanism implemented to improve the IP program within the PSU

Mee7ng with HODs are being organized for implementa7on of IP.

As sub-contractors are execu7ng the contract in CCL on behalf of contractor as per the term of the awarded contract,
so they should be kept out of purview of IP.

Implementa7on of IP is being monitored on monthly basis.

There is a need for regular workshop and mee7ng for advocacy and

IEMs feedback :

Shri N. R. Banerjee

Procurement in the PSU in general has become more transparent with adop7on of Integrity Pact.

Vendors are not aware about IP, PSUs (CMDs & Sr. ocials) should interact with vendors to apprise them of the IP
provisions. IEMs should not be made to par7cipate.

PSU provide adequate coopera7on, support, facili7es and ensure the same from the contractors for the IEMs to
discharge their responsibili7es sa7sfactorily only a'er prodding by the IEMs! I feel there should be regular interac7on
between PSUs & IEMs every quarter or every four months.
The IEMs should be given secretarial assistance.

PSUs are not ge9ng enough support and guidance from the CVC. PSUs, CVC and its senior ocials should meet and
interact once every six months, IEMs can also be invited.
There is duplica7on of the work carried out by the PSUs Vigilance Department and the IEM.

CVO is to be a coordinator for IP implementa7on and should oversee any ocial is misusing his posi7on.

The weaknesses of the IP monitoring system : Inadequate structured mee7ng with the PSUs & its oces. Periodic
(once a quarter) summarized details and progress of tender procurement should be made available to IEMs for
reference.
IPs strengths : Transparency and ac7ng as dampeners to corrup7on and carteliza7on by vendors.
Sugges3ons :

(a) More teeth needed to deal with defaulters and more interac7on with IEMs and CVC.

(b) CVC should meet the IEMs (like coal sector IEMs of all PSUs at the same 7me) once in six months to get feedback
and for IEMs to get further briefed about IP. CVO of PSUs need to be controlled by CVC more eec7vely dening
their correct du7es and scope of work. IEMs should have authority to report on adverse working of the CVO of
a PSU in which strict exemplary ac7ons against CVO should be taken.

Level of sa3sfac3on and awareness among bidders :

Awareness about IP is above average and level of sa7sfac7on is average.

Though awareness among bidders is above average but more can be done to increase the level of sa7sfac7on among
stakeholders. There is a need to ins7tu7onalise IEM-Management and Bidders meet.

Feedback from TII :

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84

The issues raised by IEMs are to be addressed by the management, for eec7ve compliance of IP.

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Highlights of CVOs feedback:

With the adop7on of Integrity Pact, procurement in general has become more transparent.

We need to be pa7ent and improve wherever required and asses its benets.

IEMs are not duplica7ng the work of our Vigilance Department.

Regular bidders may have an agreement with the organiza7on on IP for all tenders to be eligible for not signing IP for
their each bid. Tenders may have suitable clause for the same.
Mee7ng with CGMs/ GMs/HODs are being organized for the implementa7on of IP and their interac7on.

No need to exempt IP compliant bidder PSUs from signing IP document.

No case related to viola7on of IP has been registered.

No need to exclude sub- contractor from purview of IP.

In case of complaints, bidders directly approach the CVO oce

Experience and qualica7ons of IEMs: They should be conversant with contracts, manuals and laws governing them,
besides being persons of integrity and honesty.

Weaknesses of the IP Monitoring System : Dealing contracts require deep study and knowledge of related laws. IEMs
should have study exposure to all facets of it to adjudicate on them.
Sugges3ons to improve the IP: Periodic interac7on with all IP stakeholders and lessons learnt from each others
experience to be considered for incorpora7on in IP

IEMs feedback:

Shri N. R. Banerjee

Procurement in general has become more transparent with adop7on of Integrity Pact.

Vendors are not aware about IP, PSUs CMDs & Sr. ocials should interact with vendors to apprise them of the IP
provisions, IEMs should not be made to par7cipate.

PSU is providing adequate coopera7on, support and facili7es and ensuring the same from the contractors for the
IEMs to discharge their responsibili7es sa7sfactorily, only a'er prodding by the IEMs! There should be regular
interac7on between PSUs and IEMs every quarter or every four months.
The IEM should be given secretarial assistance.

PSUs are not ge9ng enough support and guidance from the CVC. PSUs senior ocials and CVC should meet and
interact once every six months, IEMs can also be invited.
There is duplica7on of the work carried out by the Vigilance Department and the IEM.

CVO is to be a coordinator for IP implementa7on and should oversee if any ocial is misusing his posi7on.

The weaknesses of the IP monitoring system: Inadequate structured mee7ngs with the PSUs & its oces. Periodic
(once a quarter) summarized details and progress of tender procurement should be made available to IEMs for
reference.
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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Strengths of IP : Transparency and ac7ng as dampeners to corrup7on and carteliza7on by vendors.

Central Vigilance commissioner should meet the IEMs of the similar group of PSUs (like coal sector IEMs of all PSUs
at the same 7me) once in six months to get feedback and for IEMs to get further briefed about IP. CVOs of PSUs need
to be controlled by CVC more eec7vely dening their correct du7es and scope of work. IEMs should have authority
to report on adverse working of the CVO of a PSU in which strict exemplary ac7ons against CVO should be taken.

Sugges3ons : More teeth needed to deal with defaulters and more interac7on of IEMS with CVC.

Shri N. Narasimhan

Submi8ed feedback directly to Shri R. Shri Kumar VC, CVC.

Level of sa3sfac3on and awareness among bidders:

Awareness about IP is average and level of sa7sfac7on is below average.

Nodal department has to be ac7ve when it comes to sharing of informa7on, and assis7ng IEMs in discharging their
du7es.

Feedback from TII :

Regular IEM-Management mee7ng is desired.

The feedback from IEM is an area of concern.

Bidders meet is to be organized at regular interval

Highlights of the PSUs feedback:

IP created condence among vendors that the process of evalua7on/selec7on of vendors by the company are done
in a transparent & fair manner.

It is felt that integrity of the principal and vendor should exist always irrespec7ve of project, its value loca7on and
dura7on.

Third IEM is required only in case of dierence of opinion between two IEMs. In such situa7on, the case can be referred
to CVC.

Annual vendor meet is being held in TCIL to propagate and give wide publicity among the employees and vendors
thereby providing them the opportunity for direct interac7on with IEMs and TII. It creates condence among them
that the company has commi8ed for selec7on of vendors in a transparent & fair manner and there are external
agencies to monitor the ac7vity.
No need to exempt IP compliant bidder PSUs from signing IP Document.

Since the sub-contractor also executes some por7on of the contact given to the main contractor, they should be within
the purview of IP.
Desired qualica7on for IEM: They should have wide domain knowledge & experience in relevant eld, and should
have handled various tenders and projects, in respect of technical, commercial and nancial aspects.

Strengths of the Integrity Pact monitoring system:

PAGE

86

Create condence among the vendors in bidding and selec7on process.


ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Reduce tender processing 7me due to reduc7on in complaints.

Weaknesses of the Integrity Pact : It may reduce the number of par7cipants in the tenders, as some of the vendors
may not like to sign IP Document.

Provides more transparency thereby reduces the tension among the project handling group.

Sugges3ons : It is proposed that the IP document should be signed by all vendors/contractors (including subcontractors) only once when they par7cipate against any tender and should be applicable therea'er for all project
irrespec7ve of its type, value, period or loca7on.

As per CVC guidelines, two Annual Reports of IEMs on the progress/eec7veness of IP programme in TCIL had been
sent to CVC.
IEMs- Management mee7ngs need based

Nature and outcome of the review done by IEMs : Review on the threshold value, signing of IP document by the bidder for
the tenders covered under IP, any complaint from the vendors, Vendors Meet etc.

IEMs advice in one case has been accepted.

IEMs feedback

Shri K. N. Singh:

IP has helped in making procurement process more transparent.

Private sector must adopt IP.

CVC has to be more proac7ve in terms of eec7ve implementa7on of IP.

No exemp7on should be given to sub- contractors.

Level of awareness and sa3sfac3on among Bidders :

Level of awareness among Bidders : Above average

Level of Sa7sfac7on among Bidders (who are aware of IP) : Average

Feedback from TII

The implementa7on of IP in TCIL is sa7sfactory. Like KIOCL, TCIL also organizes regular Management TII-IEM and
vendors meet.
Need to bring down threshold limit for IP.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Highlights of Integrity Pact Implementa3on:

Highlights of the PSUs feedback:

No ocial feedback received from PSU or CVO oce. This feedback is based on input provided by HCL ocials, who
had a8ended 9th April 2011 Workshop at MDI, Gurgaon
(a) IP has helped in making procurement process more transparent.

(b) There is a need for private sector, state PSUs and other governmental department to adopt IP.
(c) Sub-contractors should be made part of IP program.

(d) Bidders are to be made aware of provisions of IP.

Feedback from IEMs : NIL

Level of awareness and sa3sfac3on among Bidders :

Level of awareness among Bidders : Average

Level of Sa7sfac7on among Bidders (who are aware of IP) : Below Average

Feedback from TII

No feedback from the PSU.

Nodal department has to be ac7ve, when it comes to sharing of IP related informa7on.

Highlights of PSUs feedback :

PAGE

IP is a very good concept for promo7ng transparency in major procurements.

88

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Implementa7on of Sec7on 6 of the model IP:


o

Exis7ng Sec 6.1 of the model IP should be deleted

The bidder PSU who is IP compliant (having implemented IP for its major procurements) is to be exempted from
signing IP document while bidding because if IP compliant Seller PSU signs IP of the Buyer PSU and later procures
inputs from bidders A/B/C etc. Successful bidder A may sub-contract parts of the scope to X/Y/Z etc.; the chain
of sub-contractors con7nues. The issue becomes more complex when the input requirement of many
projects/clients (IP compliant PSUs) is bulked to derive the price advantage. Rarely/Very/Very few sub-contractors
are iden7ed before contract signing.

The words all sub-contractors should be deleted from exis7ng Sec 6.2.

(a) Single Tender procurements; Proprietary, Collaborator Purchase, Customer Contract requirements, Business
Sharing Agreements, Spares/R&M/Repairs by OEMs, urgency, etc. Where the buyer PSUs has no other op7on
when the only vendor refuses to sign IP or insist major modica7ons in the IP.

(b) Categoriza7on of previous transgressions in terms of Minor etc. to enable PSUs to take a view on relaxa7on of
Sec 5 on Previous Transgression.

We have already established Purchase/Works Policies & procedures and have ins7tu7onalized mechanisms to examine
complaints. If the implementa7on issues and their implement ability are not addressed in the model IP, it may create
problems leading to IP viola7ons.
TII should immediately issue (a) Amendment to sec7on 6 of the model IP, and (b) suitable communica7on to all IP
compliant PSUs along with CVCs le8er no. 008/VGL/801/98859 dated 19-08-2010.

Review by the IEM :

(a) Status of tenders issued/orders placed under the IP

Review of Threshold limit

Any other issue where IEMs guidance may be sought by the management

Implementa7on issues

Any other issue that IEMs may like to raise

(b) Review mee7ng with management Quarterly (seven)

Unit visits and reviews at unit level Need- based as expressed by IEMs (Four such visits/reviews held since IP
implementa7on in Feb09)
IP along with name of IEM is included in the NIT condi7ons for the specic tender above the threshold limit.

The monthly MIR from implemen7ng units/regions and consolidated MIR to IEMs cover three parts (a) New
Tenders issued (b) orders placed and (C) tenders in process.
The IP implementa7on aspects should be quickly addressed.

Highlight of CVOs feedback

Since February, 2009, a'er implementa7on of IP, the threshold value has been brought down in steps from Rs.50
crore to Rs. 10 crore at present. With this, approximately 41% of the total procurement (value-wise) is expected to be
covered under IP.

Only one complaint, received recently, from a bidder by one of the IEMs is under examina7on of the
IEMs/Management.
IP has helped in making procurement process more transparent.

Some bidders suggest modica7ons in the IP.

Management Informa7on Report (MIR) is generated every month. This was started as per the recommenda7on of CVO,
BHEL.
Sa7sed with the role played by CVC and TII.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

There is no need to exempt IP compliant bidder PSUs from signing IP document.

There is no need to exclude sub-contractors from purview of IP.

Desired qualica7on for IEMs: Eminent personali7es, widely known for their integrity and upholding of noble values
in public life and thereby commanding respect in general from public.

Strengths of IP

(a) Objec7vely

(b) Impar7ality

(c) Judiciousness

(d) It generates condence and faith.

Weaknesses of IP : Since It is a dynamic process, any weakness in the system shall automa7cally come to no7ce with
7me. There is no weakness no7ced in the system as of now.

IEMs Feedback:
Shri D. P. Bagchi

Procurement general has become more transparent with the adop7on of integrity Pact.

Technologies like e-procurement, reverse bidding will certainly help.

IEM should be given secretariat assistance within the PSU on as needed basis, not a regular basis.

Strengths of Integrity Pact : Give condence to everyone star7ng with the management. Poli7cal or Bureaucra7c
interference get minimised.
Back to back IPs need to be signed by every func7onary in the supply chain, this is to be avoided.

Govt should make signing of IPs by the PSUs compulsory.

Unable to verify that procurement in general has become more transparent with adop7on of integrity Pact.

Shri Kanwarjit Singh

It is a good tool, but with limited consequences to ght against corrup7on.


IP creates a posi7ve percep7on among minds of vendors.

A Note on IP by Shri Kanwarjit Singh

PAGE

90

The signing of IPs, monitored by IEMs, does not in any way make detec7on, inves7ga7on and prosecu7on of corrup7on
easier. The IEMs are in no posi7on to ensure that IPs once signed are actually implemented.

However, this process creates a very posi7ve percep7on in the minds of all stake holders. It is a signicant tool for
preven7on of corrup7on and improving systems. Our eort has to be enhanced its usefulness in these two areas.

The IP mechanisms use as a deterrence will erode in course of 7me if IEMs conne themselves to monitoring the
signing of IPs. Regular inter-ac7on with eld ocials and vendors is necessary to sustain high level of awareness, and
consequent deterrence amongst them. This is also necessary for the IEMs to have an idea about the areas where they
can contribute by nudging a change in the system.

In BHEL, we have a8empted to create greater awareness among the eld ocials through visits to units, which are
issuing tenders for procurement. During these visits, the records of some of the tenders were also seen and the
shortcomings discussed. Some of the issues were also later discussed in the mee7ngs with the CMD.
In the absence of any complaints addressed to IEMs 7ll date, the process of crea7ng greater awareness and deterrence
amongst the vendors has not taken o. It is necessary that the visibility of IEMs amongst vendors be enhanced in a
non- intrusive manner. This, in my view, can be done through:

Compulsory reference by CMD to IEMs, of all complaints rela7ng to tenders which are to be monitored by the IEMs,
whether or not these are addressed to the IEMs.

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

In selected few cases the IEMs must meet the complainant where he is located without the presence of any ocial
of the PSU. Apart from enhancing the deterrence eect amongst the vendors, such mee7ngs will give an insight to the
IEMs regarding the major areas in the system on which to focus.

Similarly, regular one to one mee7ngs with the CVO without the presence of any other ocial of the PSU, in a
structured manner, will again give an insight to the IEMs regarding the major areas in the system on which to focus.
The fear of IEMs playing the role of CVO is mis-placed as the seniority levels are vastly dierent and the roles are
clearly dened.
Regular mee7ngs of the IEMs should be held for sharing their experiences and deciding on the best way forward.

Shri J. M. Lyngdoh

Dicult to quan7fy gains from IP.

Level of awareness among Bidders : Below Average

Level of awareness and sa3sfac3on among Bidders :

Level of Sa3sfac3on among Bidders (who are aware of IP) : Average

Feedback from TII :

There is a need for Bidder-Management -IEM -TII meet to increase level of advocacy of IP among bidders.

Level of sa7sfac7on among bidders is an area of concern.

The issues raised by BHEL has to be resolved immediately for eec7ve compliance of IP.

Highlights of Integrity Pact Implementa3on:

Highlights of PSUs feedback:

Integrity Pact has been introduced in all corporate packages having es7mated value (excluding taxes and du7es) of Rs. 10 crore
& above with eect from 01.06.2009. It is incorporated in the Bidding Document which is signed by NTPC and also by the
authorized representa7ve of the Bidders. In the absence of IP, no bids are opened.

Till date, IP has been eec7vely implemented. Submission of IP by the bidders is mandatory before opening of the Bids. In case
of non-submission of the same, the bid is rejected and returned back unopened. Every bidder signs an Integrity Pact for each
and every bid he submits. No complaints have been reported 7ll date. It has helped in making procurement process more
transparent.
During their mee7ng, IEMs have reviewed the implementa7on of Integrity Pact and had suggested the following

Specifying the e-mail addresses of the IEMs along with the names.

Forwarding details of contract awarded during a period and their Integrity Pact implementa7on status to the IEMs.

Forwarding the details of the NITs published to the IEMs.

Therea'er need- based review is done. Their advises as men7oned above have been accepted and acted upon for eec7ve
implementa7on of the IP

Names of both the nominated IEMs have been explicitly published on NTPC tender website i.e. ntpctender.co.in along
with the format of the Integrity Pact to be submi8ed by the bidders along with their bids. Pre-signed Integrity Pact
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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

(IP) is circulated/ incorporated in the bidding documents to all the prospec7ve bidders purchasing the bidding
documents.
No need to exempt IP compliant bidder PSUs, IP uniformity needs to be maintained.

The Integrity Pact (IP) adopted in NTPC envisages an agreement between the prospec7ve Bidder/Contractor and the
employer/Buyer only. However, in the IP, the Bidder/Contractor undertakes not to, directly or through any other
person or rm oer, promise or give or inuence to any employee of the employer associated with the bidding process
or the execu7on of the contract or to any third person on their behalf any material or immaterial benet which he/she
is not legally en7tled, in order to obtain in exchange any advantage of any kind whatsoever during the bidding process
or during the execu7on of the contract.
No Annual report has been submi8ed by the IEMs

IEMs Feedback:
Shri S Murali

Unable to verify that IP has made procurement process. Havent received any complaint from any vendor.

Proper implementa7on of IP depends on the culture in the company.

While the IP looks a'er large sized companies/tenders, TII should give a thought to smaller rms, mostly in unorganized
sector, which prac7ces tax evasion thereby adding to the black money.

Management has informed that bidders are aware of IP; it can be veried by TII.
IEM should be given secretarial assistance within the PSU premises.

Shri T. S. Krishnamurthy

Par7ally IP has helped in making procurement process more transparent.

Private Sector should also adopt the IP.

PSU is providing adequate coopera7on, support and facili7es and ensuring the same from the contractors for the
IEMs to discharge their responsibili7es sa7sfactorily.
IEM should be given secretarial assistance

The standardiza7on of tender procedure, comprehensive training to the persons concerned in ma8ers rela7ng to
oa7ng of tenders specifying essen7al and desirable condi7ons to be fullled, opening of technical bids, nancial
bids only a'er nality is reached a'er technical bids, nego7a7ons to be restricted only to one session of a clarica7on
with a compliance date.
Weaknesses of the monitoring system :

(a) Absence of secretarial assistance


(b) Monitoring the follow-up ac7on

Delays in the appointment and renewal of IEM (in BSNL, the third IEM was not appointed for two years with the result
the two IEMs carried on the work although both of them worked unanimously. If they had diered, the situa7on
would have been odd!)
Good to have one technical person as IEM in case it is a highly engineering oriented company.

Strengths of IPs:

Recommendatory nature of its views

Unbiased so as to check any external (especially poli7cal) inuences

Periodical review of pending cases

There is no standard prac7ce in nalizing technical specica7ons rela7ng to the tender. Very o'en clarica7ons are
sought and provided on all ma8ers thereby delaying the tender naliza7on. O'en discussions are held in order to

PAGE

Sugges3ons :

92

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

clarify technical specica7ons thereby providing varia7ons in tender specica7ons resul7ng in confusion in the minds
of the bidders. There must be clarify /uniformity in the procedures rela7ng to tenders.

Level of awareness and sa3sfac3on among Bidders :

Level of awareness : Below average.


Level of sa7sfac7on : Below average

Feedback from TII

The low level of awareness and sa7sfac7on among bidders is an area of concern .

Nodal department has to be more eec7ve , in terms of sharing informa7on related to IP

Regular Management-IEM-vendors meet is very much required.

Highlights of Integrity Pact Implementa3on :

Highlights of PSUs feedback: We have not received any feedback either from PSU or CVO.

IEMs Feedback :

Shri Sujit Shankar Cha4opadhyay :

The procurement in general has become more transparent with adop7on of Integrity Pact

At present, IEMs can help only a'er issue of NIT and receipt of a complaint. It cant prevent an incident and suggest
correc7ve measure.
IP mechanism is a good tool to ght corrup7on.
IEMs should be given secretarial assistance.

Weaknesses of IP monitoring system : An IEM is not informed formally by the PSU about the ac7on taken by the la8er
on his advice. A copy of the IEMs report should be sent to CVC who should monitor the ac7on taken.
Strengths of IPs : Independent External Monitoring

Weaknesses of IPs : Non- binding nature of the advice.


Comments /sugges3ons :
o

Regular IEM-Management mee7ngs are very much desired which is missing in the PSU.

The IEMs should at least once be taken on a eld visit to the site in order to give them a rsthand experience of
the ground reali7es.
The division of responsibili7es and task between CVO and IEMs should be spelt out in clear manner.

Level of awareness and sa3sfac3on among Bidders :

Level of awareness : Average

Level of Sa7sfac7on : Below average


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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Feedback from TII

A'er sending repeated reminders, request for personal mee7ngs, and telephonic calls, we havent received any
feedback either from the PSU. The CVC must intervene to know eec7veness and implementa7on of IP in Coal PSUs.
TII must have a review mee7ng with ECL, in case of non-compliance of IP. TII must publicly terminate MoU with ECL.
Level of sa7sfac7on among bidders is an area of concern.

More vendor meet is to be organized to make them aware of IP.

Annual review mee7ng with all stakeholders must be organized by the PSU.

Highlights of Integrity Pact Implementa3on :

Highlights of PSUs feedback: No feedback either from PSU or CVO.

IEMs Feedback :

Shri T. S. Krishnamurthy

IP par7ally has helped in making procurement process more transparent.

IEM should be given secretarial assistance.

PSU is providing adequate coopera7on, support and facili7es and ensuring the same from the contractors for the
IEMs to discharge their responsibili7es sa7sfactorily.
Private sector should also adopt the IP.

The standardiza7on of tender procedure, comprehensive training to the persons concerned in ma8ers rela7ng to
oa7ng of tenders specifying essen7al and desirable condi7ons to be fullled, opening of technical nancial bids only
a'er nality is reached a'er technical bids, nego7a7ons to be restricted only to one session of a clarica7on with a
compliance date
Weaknesses of the monitoring system:

(a) Absence of secretarial assistance


(b) Monitoring the follow-up ac7on

Delays in the appointment and renewal of IEM (in BSNL, the third IEM was not appointed for two years with the result
the two IEMs carried on the work although both of them worked unanimously. If they had diered, the situa7on
would have been odd!)
Good to have one technical person as IEM in case it is a highly engineering oriented company.

Strengths of IPs:

PAGE

94

Recommendatory nature of its views

Unbiased so as to check any external (especially poli7cal) inuences

Periodical review of pending cases

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Sugges3ons : There is no standard prac7ce in nalizing technical specica7ons rela7ng to the tender. Very o'en
clarica7ons are sought and provided on all ma8ers thereby delaying the tender naliza7on. O'en discussions are
held in order to clarify technical specica7ons thereby providing varia7ons in tender specica7ons resul7ng in
confusion in the minds of the bidders. There must be a clarity/uniformity in the procedures rela7ng to tenders.

Shri B. B. Tandon

Procurement in the PSU in general has become more transparent with the adop7on of IP.

Sa7sed with implementa7on of IP.

There must be three IEMs in a PSU.


Private sector must adopt IP.

Level of awareness and sa3sfac3on among Bidders : No ocial bidders list has been prepared by BSNL. So it was not possible
for us to take feedback from bidders.
Feedback from TII

Implementa7on of IP in the PSU is not sa7sfactory.

We strongly recommend that bidders list has to be prepared by all PSUs. It will not only help in streamlining the
process of external review but also helpful in crea7ng awareness about IP among bidders.
Regular Bidder - IEM mee7ng is desired.

Annual IP review mee7ng involving all stakeholders must be organized by the PSU.

Highlights of Integrity Pact Implementa3on:

Highlights of PSUs feedback:

This is a new concept implemented in BCCL in 2009. Ini7ally, the coverage area was the tenders in which CMD/Board
level approval was required. Now, it was extended to Directors level to cover more and more tenders. The
performance at BCCL on IP is excellent.
IP has helped in making procurement process more transparent.

Total number of complaints referred to IEMs: Two

Each bid should be signed separately for be8er control and transparency.

IEM-Management mee7ng is need- based.

No need to exempt IP compliant bidder PSUs from signing IP document as bidder.

The outcome of IP will be assessed a'er some 7me.

Coverage of IP is to be extended.

Private sector should also adopt IP.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

IEMs feedback:

Jus3ce A. K. Chakravarty

The procurement in general has become more transparent with adop7on of IP.

IEM should be given secretarial assistance within the PSU premises.

Absence of any procedural guidance in undertaking reviews.

Weaknesses of the monitoring system:

Non- binding nature of the recommenda7ons by the IEMs may lead unfairness and injus7ce in suitable cases.

IPs are certainly pillars of strengths in enforcing fairness and transparency in govt. corpora7ons.

Strengths:

Approximate number of tenders received for considera7on during the period under review is over 100. Happy to
report that none excep7ng one of them became conten7ous which also found to have without any basis on scru7ny.
In absence of any tenable complaint either from bidders or the principal in respect of any tender there is no doubt
about the fairness of the transac7on held during the period. The objec7ve of TII to promote corrup7on free
transac7ons in contracts must therefore be said to have succeeded to a great extent in BCCL.

Level of awareness and sa3sfac3on among Bidders :

Level of awareness : Average

Level of Sa7sfac7on: Below average

Feedback from TII :

Level of sa7sfac7on among bidders is an area of concern.

The coopera7on from the Nodal ocer is commendable

Threshold limit can be further brought down.

More vendor meet is to be organized to make them aware of IP.

Annual review mee7ng with all stakeholders must be organized by the PSU.

Highlights of Integrity Pact Implementa3on:

Highlights of CVOs feedback:

PAGE

96

Actual implementa7on of IP in RITES was started in August 2009 with its incorpora7on in the tender documents. It is
the experience in RITES that vigilance complaints normally come about a year or two later than the award of work.
Hence, sucient 7me has not yet elapsed since its implementa7on has to indicate signicant change in the prevailing
system.
It is also dicult to indicate the contribu7on of IP in making procurement process more transparent in RITES.

Once a bidder has signed the IP and it is valid for a specied period, there is no need for the bidder to sign IP for each
bid during the period. He may be asked to a8ach a copy of the same and the PSU may verify from record at the stage
of scru7ny of tender documents.
ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

As sucient 7me has not lapsed since the implementa7on of IP, review and modica7on of exis7ng IP programme
within PSU could not be undertaken.
The sub- contractors also need to sign the IP as most of its work is awarded to them.

Sugges3ons to improve the IP:

(i) An eec7ve monitoring system is needed.

(ii) Case studies on implementa7on of IP by various PSUs may be shared with the TI India.

(iii) More awareness about IP Is required to be created par7cularly rela7ng to informa7on disclosure guideline as IP
compliant bidder etc.

Highlights of IEMs feedback:


Shri B. S. Minhas

IP has helped in making procurement process more transparent.

IP is to be given more publicity.

CVC should monitor the working of I.P. quarterly to ensure follow up of its instruc7ons-both in le8er and spirit.

Strengths of IP is its avoidance of costly li7ga7on and help in ge9ng procurement at compe77ve rates.

Sugges3ons:

The PSU should give wide publicity over na7onal and regional TV networks and newspapers.

It should hold regular mee7ngs with IEMs and Vendors.

CVC should hold half yearly mee7ng with CMDs and IEMs to review the working of IP. The mee7ng can be held in
groups of 7-8 PSUs, to ensure a proper dialogue.

Level of awareness and sa3sfac3on among Bidders :

Level of awareness: Average

Level of Sa7sfac7on: Below average

General Observa3on

There is a need for Bidder-Management IEM TII meet to increase level of advocacy of IP among bidders.

Level of sa7sfac7on among bidders is an area of concern.

PSU must have an Annual Review Mee7ng with all stakeholders, including TII.

Highlights of Integrity Pact Implementa3on:

Highlights of PSUs feedback

IP is an eec7ve tool to bring in more transparency in the ma8ers rela7ng to contracts and procurements. The
organiza7on has been able to gain from IEMs vast experiences and valuable guidance.
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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

CPCL started with the threshold limit of Rs.10 crore from March 2009. Based on the experience, the limit was reduced
to Rs.5 crore. CPCL has not experienced any diculty in the implementa7on of IP.
IP gives condence to the vendors / contractors about the transparency and fairness in the tendering process.

Complaint received : Nil.

Frequency of review mee3ng with IEM: Quarterly.

Special Process/mechanism to improve the IP program:


o

Threshold limit is reviewed regularly.

Mee7ngs are conducted with vendors/contractors in the presence of IEMs.

Created awareness about IP through vigilance journal.

IP is to be signed for each bid as this is tender based.

More private companies to be brought under the purview of IP based on the procurement value.

No need to exempt IP compliant bidder PSUs from signing IP document as bidder.


No annual report is being submi8ed by IEMs.

We are not in a posi7on to quan7fy the monetary benets. However, we are able to see the intangible benets such
as improvement in condence level, transparency, fairness in dealings, etc. There is a denite improvement in the
general image of the PSU.

IEMs feedback :
Shri P. Shankar

Unable to verify that procurement in general has become more transparent with adop7on of IP

There should be periodical publicity campaigns to make vendors aware of Integrity Pact program.

Strengths of Integrity Pact: Denitely adds to the transparency of the system and helps an ordinary vendor to register
his concern on any aspect of procurement process.

Dont feel that IEM should be given secretarial assistance by the PSU.

Jus3ce K. Govindrajan (Retd.)

No feedback recd.

Level of awareness: Average

Level of awareness and sa3sfac3on among Bidders :

Level of sa7sfac7on: Average

Feedback from TII

PAGE

98

Level of sa7sfac7on among bidders is an area of concern.

Threshold limit can be further brought down.

More vendor meet is to be organized to make them aware of IP.

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Highlights of Integrity Pact Implementa3on:

Highlights of CVOs feedback:

Three IEMs have been appointed for monitoring contracts in domes7c scenario.

Till date, 12 IEM mee7ngs have been convened.


Complaints refereed to IEMs
Financial Year

2009- 2010
2010- 2011

Total Procurement Issues

IP related contracts

Others

13

IP has helped in making procurement process more transparent.

IP must be signed for each bid. It reinforces organiza7ons con7nual commitment towards transparency and ethics.
Further, it prevents any suppression of facts if there is any subsequent transgression by the bidders.

Bi-monthly IP review mee7ngs with HODs and P&S Dep8., ocials provide realis7c exchange of view for be8erment
of IP. Vendor meet and Nodal contract ocers meet are also being organized by the SCI.

No need to exempt IP compliant bidder PSUs from signing IP document

Important experience and qualica3on for IEMs: Persons of eminence, having a domain knowledge with experience
in tendering & procurement are important qualica7ons of IEMs.

Since sub- contractors are also involved in the performance of the contract, they should be included under IP.

Strengths : The bi-monthly mee7ng being a8ended by SCIs top echelons has been able to resolve various issues
involving dierent departments.

Weakness : Presently, only domes7c sector is covered. The ambit of IP needs to be extended beyond the domes7c
sectors.

Case related to viola3on of IP : In a case concerning LAN installa7on in HQ, a warning le8er was issued to three SCI
ocials of IT Department responsible for the same.

Sugges3ons to improve IP :

Conduc7ng regular IP related mee7ngs by the Management.

Regular interac7ve sessions with the CVC and Transparency interna7onal India.

IEMs to be given more assistance and wherewithal to be able to perform eec7vely


Taking stakeholders into condence and have more seminars with them.

Highlights of PSUs feedback :

The implementa7on of IP in the SCI has been able to generate posi7ve sen7ments among its stakeholders as is evident
by the number of complaints received by the CVO.
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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

IP has helped in making procurement process more transparent.

Total complaints referred to IEMs: Five.

Frequency of IP review done by IEM: Annual

Number of cases in which ac7on taken against supplier/contractors and nature of ac7on : One M/s Saif Marine has
been banned from having business dealing with SCI w.e.f. 17.08.11.

IP adds brand value to SCI and also projects it as a PSU which believes and works in a transparent and ethical manner.

Frequency of IEM- management mee7ng : Quarterly

No. of cases in which IEM advice has been accepted : One

Number of cases in which ac7on taken against its ocials at what level and nature of ac7on: One- warning le8er was
issued to three SCI ocials of IT Department in a case concerning LAN installa7on in HQ.

IP has to be signed for each bid as it reinforce organiza7ons con7nual commitment towards transparency and ethics.
Further, it prevents and suppression of facts, if there are any subsequent transgression by the bidder.

Bi-monthly IP review mee7ng with HODs and P&S Department ocials provide realis7c exchange of views for
be8erment of IP. Vendor meet and nodal contract ocers meet are also being organized.
No need to exempt IP compliant bidder PSUs from signing IP document.

Since sub-contracts are also involved in the performance of the contract, they should be included under IP.

Sugges3ons to improve IP:

Inter- PSU performance ra7ng and the implementa7on policies, mechanisms; experience in the world over should
also be shared by TII to improve IP in India.

The decrease in the number of complaints and the posi7ve vibes of the stakeholders even through subjec7ve have
undoubtedly brought savings to the corpora7on.

The number of IP related complaints, inves7gated by the vigilance division. Has reduced from seven in 2009-10 to
three in 2010-11.

Bidders and contactors have become more aware of the ethical prac7ces and consequences of nega7ve inducements
and pressure tac7cs.
(SCI management along with vigilance is in con7nuous pursuit of elimina7ng any ves7ges of cartel forma7on what so
ever in the corpora7on.

SCI has a policy of pu9ng all tenders > 2 lakhs at NIT websites and SCI website as well. The nalized contacts above
the value of Rs.50 lakhs are also posted on the website. Implementa7on of IP has added transparency and a more
ethical behavior from the stakeholders.

Implementa7on of IP has rearmed SCIs policy of transparency and ins7lled more faith in the SCI management a
commitment towards zero tolerance to corrup7on. Perhaps, so far instances of contract going in for arbitra7on/legal
proceedings to se8le their claims/disputes have been seen or surfaced in the corpora7on.

Highlights of the minutes of IEM Management mee3ng:

PAGE

100

Con7nuing the discussion on Integrity Pact the CVO raised two major issues, viz, (i) electronic complaint box and (ii)
auto-generated response to the complainants. CVO suggested that along-with manual submission, facili7es should be
made available to the complainants for submission of any complaint electronically to the IEMs without being meddled.
He also suggested that the complainant should get auto generated response to his mail that it has been received as
desired and automa7cally Director (P&A) conrmed that auto generated response can be done with simple adjustment
in the mail facility and electronic complaint box is already created. He also informed that three separate e-mail IDs are
being created in SCI mail system for three IEMs for submission of complaint by the complainant meant for each IEMs.
However, the complaints are required to be forwarded to each IEM on their personal e-mail IDs.
It was decided that the transfer of emails from SCI e-mail ID system to personal e-mail ID of individual IEMs should be
automa7c without any intermediary involvement.

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

CMD opined that before reques7ng the par7es for signing the IP document, we need to discuss with them and make
them understand and be comfortable with the ra7onale of inclusion of IP. We cannot expect them to sign the
document immediately.
SVP (P&S) requested the panel of IEMs for their views whether they can par7cipate and give their inputs while the
tender document for a par7cular tender is being nalized. SVP (P&S) further requested that this will serve as preven7ve
measure and if there is any lacuna/shor6all in the tender, it will be iden7ed at the ini7al phase itself leaving no
possibility for an error and complaints in future.

CMD further explained that as the tender document is not a legal document, IEMs prac7cal knowledge &
exposure/experience will help the Tender Processing Commi8ee in nalizing the tender document with accurate
details.
Shri S. Punhani informed that this does not come under the scope of IEMs responsibili7es and the role of the IEM gets
started only when there is any complaint either from the principal or from the bidder.
Shri. D. T Joseph started that the involvement of IEMs in the decision making is not acceptable.

Sri.S. K. Singh said this will require in depth knowledge and study which will be dicult for the IEMs.
D (F) suggested that it will not be prac7cal for the IEMs to evaluate the en7re tender document.
D (P&A) informed that this would amount to viola7on of the independence of the IEMs.

CVO also expressed his view that this will contradict the cons7tu7onal guidelines of integrity Pact w.r.t. the roles &
responsibili7es of the IEMs
It was concluded that it will not be possible for the IEMs to be involved when the tender document is being nalized.

ED (SB&S) added that they had approached the interna7onal shipyards regarding the signing of the Integrity Pact
document as a part of the tender documents, but they were not comfortable with this.

CMD thus concluded that at this stage Integrity Pact would not be prac7cal with respect to interna7onal service
contracts.

Highlights of IEMs feedback:

Shri Sudesh Punhani

Unable to verify that procurement in general has become more transparent with the adop7on of IP.

PSUs should draw their own terms and condi7ons in framing the IP based on their needs.

IEMs to be provided secretariat assistance within the PSU premises.

Private sector should also adopt IP.

Weaknesses of IP : NIL
Sugges3ons

(a) Role of IEMs to be specied in more details.

(b) Number of IEM - Management mee7ngs should be specied and monitored.

Shri D. T. Joseph

There is a need to conceptualize the scheme be8er.

Work of IEM need not be pinned to only complaints and corrup7on alone.

Vendors are aware about IP, but only to the extent of signing acceptance to I P clause.

IEMs would look into complaints by those who have subscribed to IP, and the complaint is related to corrup7on. Now,
the Vigilance Department tends to make IEMs look into any viola7on of instruc7ons by CVC etc.

Private sector should also adopt the IP but let PSUs rst show some clear and concrete advantages of the scheme.

Weaknesses of the monitoring system : Weakness lies in the absence of clear parameters against which monitoring
can be done
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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Strengths of IPs : Preven7on of delay or loss through li7ga7on or arbitra7on.

Any other comments/sugges3ons : Keeping in mind that the corrupt are generally more shrewd and ingenious than
the others, we have to build into the scheme features that will lead to cleansing of the system, and detec7on of
corrup7on, in a focused and prac7cal manner.

Weaknesses of IPs : Collusion of corrupt par7es, on either side, cannot be prevented by IP.

Level of awareness and sa3sfac3on among Bidders :

Level of awareness: Above average

Level of sa7sfac7on: Average

The implementa7on of IP in SCI is sa7sfactory.

Feedback from TII :

SCI is the rst PSU to take ac7on against its ocials, for viola7on of provisions of IP. The task taken up by the CVO is
commendable.
There is a need to expand IP base, all interna7onal contracts has to be covered under IP.

As per SOP, 90-95% of the procurement in term of values must be brought under purview of IP.

Highlights of Integrity Pact Implementa3on:


Highlights of PSUs feedback

PAGE

102

Conten7ous issues, in par7cular complaints of contractors, got resolved with support/opinion of IEMs during tender
evalua7on stage itself which otherwise could have taken more 7me or could have delayed tendering process and
ul7mately award of contract by delayed decision making or retendering.

IP has helped in making procurement process more transparent, concerns of bidders are appropriately addressed by
IEMs.

Bidders have to sign IP document every 7me they bid for a tender, as bidders need to accept the condi7on of par7cular
tender in which it is par7cipa7ng to make IP tool more eec7ve and be8er sensi7zing issue of following ethical
prac7ces in the tendering process.

For eec7ve implementa7on of the IP sub- contractors are required to be kept under purview of IP.
Number of complaints referred to IEMs: One

ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

No. of cases referred to IEMs by CMD, NHPC: Three


No annual report is being submi8ed by IEMs.

IEMs feedback:

Ms. Usha Sahajpal

Procurement in general has become more transparent with adop7on of IP.

In case recommenda7ons of IEMs are not accepted by the management, they must give a proper jus7ca7on.

Orienta7on session for IEMs is to be organized either by TII or CVC.


Private sector should also adopt IP.

Shri V. K. Agarwal

IP has helped in making procurement process more transparent.

Present IP monitoring mechanism is very much dependent on willing support of the PSU management and the quality
and exposure of the IEMs, further development of faith between vendors and IEM mechanism is essen7al.

Strength of IP: It has a fast grievance redressal mechanism and the vendors have faith that the case have been decided
by senior experienced and impar7al IEMs who are person of impeccable integrity.

Weaknesses of IP: Cases came to us pertain to the stage from Bidding to Awards. No case has come from a project
in the supply/execu7on stage, reasons for it need examina7on.
Private Sector should also adopt the IP.

Level of awareness and sa3sfac3on among Bidders :

Level of awareness: Average

Level of sa7sfac7on: Below average

General Observa3on

There is a need for Bidder-ManagementIEMTII meet to increase level of advocacy of IP among bidders.
Level of sa7sfac7on among bidders is an area of concern

Highlights of Integrity Pact Implementa3on:

Highlights of PSUs feedback:

IP has helped in making the procurement process more transparent.

POWER GRID has a well established, fair and transparent procurement system in place. To bring about greater
transparency and compe77on in the procurement system, the steps taken by implemen7ng IP Program and thereby
presence of IEM forum has strengthened the complaints/representa7ons handling system and has further enhanced
vendors condence.
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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

The role of IEMs covers all phases of the contract, i.e., from the stage of No7ce Invi7ng Tender (NIT) to award of
contract to comple7on. All the packages (es7mated cost more than Rs 100 crores) from the NIT to 7ll the award stage
are presently being put up to the IEMs. Further, the representa7ons/complaints, excep7onal cases (with es7mated cost
even below Rs 100 crores but covered under IP Program i.e. es7mated cost more than Rs. 1 crore), etc. are also being
put to the panel of IEMs for suitably resolu7on.
The mee7ng with the IEMs is being held on a monthly basis.

The advice of IEMs has been accepted in all the cases and acted upon.

Sub- contractor shouldnt be excluded from purview of IP.

Based on the experience gained a'er implementa7on of IP Program, it has been noted that all the par7cipa7ng bidders
(including PSUs and interna7onal rms) are rou7nely submi9ng the Integrity Pacts, duly signed, for all the packages
while submi9ng their bids. However, in view of the quantum of procurement and that large no. of tenders are being
invited rou7nely, it is noted that the submission of Integrity Pact with each bid is a repe77ve exercise.

In view of the above, it is submi8ed that the issue regarding adop7ng a mechanism for IP compliant bidders including
PSUs/other bidders submi9ng IP documents once or for a par7cular period of 7me, be examined and necessary policy
be framed so as to be applicable uniformly.

The process adopted by POWER GRID to hold regular mee7ngs with the IEMs each month and placing before them
the details of each and every contract, which is under their purview, irrespec7ve of whether or not any
complaint/representa7on is received, has strengthened the IP program. The progress adopted in thus, u7lizes the
IEM forum for enhanced transparency in the award of contracts and brings out sugges7ons for system improvement
on con7nual basis.
It may also be added that implementa7on of IP program has acquire its proper shape and value in the organiza7on.
As slowly the PSU and bidders are ge9ng fruits of the program, acceptability among them has acquired the requisite
level.

It is suggested that a few mee7ngs between the PSU and the IEMs can also be a8ended by a CVC representa7ve,
wherein the CVC observa7ons related to systems and procedures can be deliberated. As the nature of the benets is
not tangible, these aspects can be commented a'er some more experience. It may, however, be added that IEM
forum through Integrity Pact Program has, in general, added to the transparency in the procurement system
governance.

IEMs feedback:

Shri Arvind Pande

Procurement in general has become more transparent with adop7on of IP.

There is no need for IEM - Bidders meet, as IEM should stay independent of bidding process.

Weakness of IP : The role of IEMs is only advisory.


Private Sector must adopt IP.

Shri R S S L N Bhaskarudu

Procurement in general has become more transparent with adop7on of IP.

Technology can play very important role in IPs eec7veness. Various oces of TI should leverage technology to build
and maintain a comprehensive and global data base of par7es which have commi8ed transgressions from IP, so as to
disqualify such par7es from ambit of IP tenders globally. This will facilitate uniform implementa7on of IP across the
globe and minimize scope of viola7on of IP by global bidders in other countries
Private Sector must adopt IP.

Level of awareness and sa3sfac3on among Bidders :

Bidders list havent been provided by the PSUs, so it is dicult to measure level of sa7sfac7on and awareness.

Feedback from TII:

PAGE

Regular IEM-Management-Bidders meet is very much desired.

The nodal department has to be more ac7ve when it comes to sharing of informa7on related to IP with TII.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

Highlights of Integrity Pact Implementa3on : No ocial feedback from the PSUs


IEMs Feedback :

Shri M.M.K.Sardana

Cant comment as IP implementa7on has not been ini7ated.

Level of Sa3sfac3on and Awareness among Vendors/Bidders : Cant be measured as IP has not been implemented in any of
the tenders
Feedback from TII :

IP must be implemented within a month of signing of MoU

Threshold limit must be kept low so as to cover 90% to 95% of the total transac7ons

Internal advocacy about IP must be carried out especially among the purchase and material management department,
as they are the actual machinery to Implement IP in the PSU.
Before any PSU adopt IP by entering into MoU, it must convene mee7ng of all its vendors, to educate them about IP.

Training of the PSU ocials, who are expected to implement IP is to be completed, before MoU is signed by the
organiza7on.
It has been found in many cases that middle level management is not aware of various clauses of IP, so it delays the
implementa7on process.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

EXPERIENCES OF THE INDIAN OIL CORPORATION

Annexure - 8

The implementa7on of IP in Indian Oil Corpora7on (IOC), at the corporate level, is being overseen by the Corporate Aairs
Department. Execu7ve Director (Corporate Aairs), being the Nodal Ocer, all issues and complaints related to IP are routed
to him. At the divisional level, the Heads of Finance are the Divisional Coordinators for IP.
COMPREHENSIVE PURVIEW OF IP:

All tenders and contracts, including Single, Capex, Service related, Proprietary items tenders and Original Equipment
Manufacturers (OEMs), of the threshold value of Rs. 10 crore and above, fall within the purview of IP. The threshold value of
IP has been demarcated with a view to give maximum coverage to IP (90% of contracts in terms of tender value).

Bidders refusing to sign the IP, having a previous record of transgression or devia7ng from the principles of IP at any stage/in
any aspect of the tender are liable to be disqualied from par7cipa7ng in the ongoing/future tender(s)/contract(s). However,
7ll date, no such case of refusal, transgression or devia7on has been witnessed in tenders under IP. At present, 250 tenders of
Rs. 10 crore and above are under the purview of IP.
THE INDEPENDENT EXTERNAL MONITORS

Endorsing TIs concept of a strong Civil Society Monitoring Mechanism, the IOCL with the approval of CVC has appointed a
panel of three eminent Independent External Monitors (IEMs). They are Shri B.B. Tandon, Shri RSSLN Bhaskarudu and Shri B.C.
Bora. For all tenders of Rs 150 crore and above, an exclusive IEM is nominated from the men7oned panel, on roster basis, to
monitor and review the tendering process from incep7on to the culmina7on of the contract and compliance to IP therein.
STRUCTURED REPORTS - INFORMATION SHARING WITH IEMs:

With a view to building a mode of easy communica7on and informa7on sharing with the IEMs, the IOCL in line with CVC
guideline has developed a set of structured Reports. These are forwarded to the dedicated IEM on regular basis, to keep him
informed about the stage-wise progress, compliance of all internal & CVC norms and devia7ons resorted to, if any, in tenders
(of Rs. 150 crore and above) under his scru7ny. Presenta7ons based on these reports are also made to the en7re panel of
IEMs in the regular monthly mee7ngs to apprise them of the progress made in the on-going tenders and stage-wise compliance
to IP. The reports are generated at the NIT issue stage, upon opening of tender, comple7on of techno-commercial and price
evalua7on of tender, respec7vely, placement of work order and culmina7on of contract.

All complaints/devia7ons, pertaining to tenders of Rs. 10 crore and above, are referred to the en7re panel of IEMs for joint
delibera7on.
MONTHLY INTERACTIONS WITH IEMs:

The panel of IEMs meets once in a month to review the status of IP compliance, interacts with the Nodal Ocer and Divisional
Coordinators and jointly deliberates on complaints received, if any. Presenta7ons are made to the panel by the respec7ve
divisions detailing the progress of tenders of Rs. 150 crore and above, invited/nalized by them. Queries raised by the IEMs,
if any with respect to tenders under review, are answered, cri7cal issues related to tender naliza7on are resolved and
devia7ons in tenders, if any, and reasons thereof, are no7ed and discussed during these presenta7ons. The mee7ng is presided
by the Chairman or Director (Finance) and/or Director (HR). In addi7on to the monthly structured mee7ngs, special mee7ngs
are also convened, if so desired by the IEMs, for delibera7on and resolu7on of complaints.
INFORMATION SHARING THROUGH DEDICATED WEB SPACE:

For greater transparency, sharing of informa7on with prospec7ve bidders and increasing public awareness, a dedicated Sec7on
(viz., Integrity Pact Sec7on on www.indianoiltenders.com and www.iocl.com) has been created on the website to disseminate
informa7on about IP which, inter alia, hoists an overview of implementa7on of IP in the Nodal Ocer along with their e-mail
IDs and addresses and regular updates on the current status of all tenders of Rs. 150 crore and above under IP.

BENEFITS OF IP :

PAGE

IP has enhanced a transparency-oriented perspec7ve facilita7ng impar7al and objec7ve assessment of cri7cal issues rela7ng
to naliza7on of tender. The IOCL has been able to minimize delay through quicker resolu7on of tender issues and complaints
under the esteemed guidance of the IEMs. This has, in turn, led to direct and indirect cost saving.
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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

SUGGESTIONS TO STRENGTHEN IP :

IP, undoubtedly, is a powerful and eec7ve tool for comba7ng corrup7on and enhancing transparency in the public
tendering/procurement process. However, it would be complacent not to acknowledge that IP is in its nascent stage steadying
on the rst footsteps of infancy. Being the torch-bearers, it is our prime responsibility not only to ensure its eec7ve
implementa7on but also to facilitate its evolu7on into a stronger, broad-based and pragma7c mechanism. Following are some
sugges7ons for further strengthening of IP :
1.

2.

3.

4.

5.

6.

STRUCTURED REVIEW MECHANISM FOR IP MONITORING :

Para 3.10 & 4.0 of the CVCs Standard Opera7ng Procedures (SOP) s7pulates informa7on sharing on progress and
naliza7on of tenders with the IEMs on monthly basis. In line with this requirement, IOCL has adopted a well-developed
review mechanism for each tender of above Rs. 150 crore which is based on the CVC guidelines as well as internal
contract/procurement guidelines. Under such a system, stage-wise reports are presented to the IEMs for each such tender
so as to apprise them of the compliance to IP as well as ensure transparency by respec7ve tendering department. This
system has been appreciated by the IEMs and allows all the IEMs to be aware to the procedures adopted. During such
interac7ons, many useful sugges7ons have been made by the IEMs.
For complaints also, a well developed system has been adopted by IOCL which includes hois7ng of informa7on rela7ng
contact details of the IEMs and transparency rela7ng to informa7on for the on-going tenders.
WHOSE IP TO FOLLOW PRINCIPAL OR THE BIDDER

As per CVC guideline, individual organiza7ons are permi8ed to decide the threshold value of tenders to be included under
IP as per their respec7ve requirement/strategy. While this allows certain amount of freedom/elas7city in decision making
to Public Authori7es/Organiza7ons with regard to IP, at the same 7me, the dierent threshold limits create lack of
uniformity and discrepancy, more so, in tenders, wherein both the principal and the bidders are the IP Compliant PSUs with
varying threshold limits. Such occasions necessitate formula7on of concrete guidelines as to whose threshold limit is to
be adhered to while signing the Integrity Pact Agreement that of the PSU invi7ng the tender or of the par7cipa7ng
bidder PSU.
BROADENING THE IP BASE:

Envisaging a broader based and comprehensive IP Programme, a wider par7cipa7on is recommended. It is observed that
PSUs under the same Ministry have not signed the IP. As a result, when tenders are sent to such par7es/PSUs, they seek
exemp7on from signing of certain IP clauses for reasons of not adop7ng IP. Some of these PSUs like EIL are accomplished
players in the eld of engineering/design consultancy of mega projects and cannot be ignored or rejected in order to
ensure healthy compe77on amongst domes7c and foreign players.
EXTENDING OF IP SUB-VENDORS AND SUB-CONTRACTORS :

The ar7cle 6 (1) of Integrity Pact Agreement on Equal Treatment of Bidders requires all the bidders to sign similar
agreements with their sub-vendors and sub-contractors. Many bidders, especially PSUs, have expressed their inability to
meet the requirements of the said clause as they are not themselves signatory to IP. In such cases, discre7on should be
allowed to the Management of the respec7ve PSUs, i.e., the Principals to allow par7cipa7on of non-IP compliant PSUs as
bidders so as to ensure healthy compe77on.
EXTENDING IP IN GOVT. FUNDED PRIVATE ORGANIZATIONS:

As in the case of RTI, private organiza7ons par7ally funded by the government also need to be brought into the ambit of
IP so as to ensure transparency in u7liza7on of public money.
AVAILABILITY OF INFORMATION ON WEB REGARDING TRANSGRESSION OF IP BY BIDDER

Ar7cle 3 (1) of the Integrity Pact on Disqualica7on from Tender Process and Exclusion from Future Contracts s7pulates
that bidders with previous history of transgression are liable to be disqualied from the on- going/future Tender process
and terminated in case contract has already been awarded/executed. Presently, for this purpose, we have to fall back
upon the self-declara7on of the par7cipa7ng/winner bidder regarding and transgression imposed in the absence of a
comprehensive data base to cross-check the same. Considering that many of the par7es are MNCs par7cipa7ng in tenders
across the globe, TI can provide such pla6orm across through its chapters in various countries.
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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

7.

8.

9.

INFORMATION ON IP COMPLIANT COMPANIES ON GLOBAL BASIS ON WEB

A global list of bidders, which are signatory to IP in various countries, would also be desirable so as to have a comprehensive
database on the web.
FOCAL POINT OF IP IMPLEMENTATION:

The CVCs Standard Opera7ng Procedures (SOP) states that the purchase/procurement wing is the focal point of
implementa7on of IP. However, for a more impar7al implementa7on of IP, it is suggested that a nodal department dis7nct
from the procurement/purchase wing may be entrusted with monitoring the execu7on of and compliance of IP.
DOING AWAY WITH FAMILIARIZATION OF BIDDERS WITH IP :

As in case of IOCL, wherever the PSU is already providing comprehensive informa7on on IP on public domain (dedicated
web space), the s7pula7on of periodical vendor meet (as per the SOP) for familiariza7on etc. may be relaxed. Moreover,
during the pre-bid mee7ng (both prior and a'er the technical bid opening ) all the prospec7ve bidders are invited to have
mutual interac7on. Further, equity is maintained by informing amendments in tender condi7ons to all the bidders including
those which have not responded to the tenders though they have purchased the tender document.

10. LACK OF CLARITY ON HANDLING ANONYMOUS COMPLAINTS :

There is no clarity regarding procedure for handing anonymous complaints received under IP. Such complaints are not
even being considered under the RTI Act also as per decision of CIC.

11. ROLE OF IEMs IN CONTRACTS INVOLVING LONG DURATIONS

In view of CVC s7pula7on of once adopted, IP is required to be eec7ve from the incep7on to the culmina7on of a
tender/contract up to the warranty guarantee stage, greater clarity with regard to role of IEM is solicited with respect to
Tenders having long construc7on periods or contracts on BOO/BOOT basis which have opera7on period of 10 years or
more a'er construc7on and before transfer.

12. DISCRETION OF MANAGEMENT ON INCLUSION OF SENSITIVE TENDERS:

Discre7on of the Management in implemen7ng IP should be allowed in case involving sensi7ve tenders keeping the
commercial interest of the organiza7on. This will hasten the decision making process and do away with avoidable
references to CVC.

13. EXCLUSION OF TENDERS ON NOMINATION BASIS FROM THE AMBIT OF IP

In case of tenders awarded on nomina7on basis or single tenders, it might not serve any useful purpose to insist on
implementa7on of IP norms for such tenders as the organiza7on would only go for nomina7on basis when other par7es
are not available, e.g., in case of OEM suppliers or suppliers having long-term exclusive interna7onal 7e ups with leaders
in certain eld, e.g., turbines based on dual mode of opera7on such as oil and gas.

14. GREATER INTERACTION BETWEEN IEMs AND CVC ON REGULAR BASIS

Sharing of IEMs experiences in various organiza7ons with the CVC would help in strengthening as well as in bringing
uniformity in the implementa7on of IP.

PAGE

IP, as men7oned earlier, is a powerful and eec7ve tool. IOCL in its endeavour to match steps with TI has gone beyond the
periphery of mere implementa7on of a policy/opera7ve mechanism. The Corpora7on has groomed IP, in line with CVC
guidelines, to suits its own organiza7onal requirement. In the process, it has simultaneously contributed to its strength and
design. Through the means of stage-wise tender process reports of the IEMs, IP has been elevated to a higher plane of more
structured and interac7ve mechanism. By installing a host of informa7on on the public domain, IOCL aspires to broaden the
knowledge base of the general public regarding IP as it believes that increased awareness paves the path to increased and
eec7ve enforcement. The fora of regular monthly mee7ng with the IEMs have proved to be more than knowledge building
exercises and have facilitated unencumbered and 7mely naliza7on of tender.

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

SAMPLE

Annexure - 9

NON-DISCLOSURE AGREEMENT FOR IEMs


M/s. UOP LLC (UOP)
25E, Algonquin Road
Des Plaines, IL 60017
Indian Oil Corpora7on Limited (IOCL) Gujarat, India
Tender Enquiry No. RJRMM93087 for supply of Pacol DeH- 11 Catalyst
Dear Sirs,

As Independent External Monitor under the Integrity Pact Program of IOCL , I will be receiving from IOCL,
certain of your informa7on, hereina'er referred to as UOP Informa7on, to be used by be in accordance
with the Integrity Pact dated entered into between UOP and IOCL (Pact) for the above referenced
enquiry.

In considera7on of IOCL supplying to me UOP Informa7on, I agree that such informa7on furnished to
me will be used by me only in performing my responsibili7es under the Pact and that I will not disclose
to others (including employees and agents of IOCL, its subsidiaries and aliates). Duplicate or use in any
other manner UOP Informa7on supplied to me.

Upon the comple7on of my responsibili7es under the Pact, I will promptly return to IOCL all UOP
Informa7on supplied to me.
Yours faithfully

RSSLN Bhaskarudu
Date : 18th November, 2010

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ASSESSMENT OF INTEGRITY PACT (IP) IN IP COMPLIANT PUBLIC SECTOR UNDERTAKINGS

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