COVID commission finds procedural and administrative lapses in procurement of medical equipment worth over ₹918.34 crore by Medical Education Directorate

There is prima facie material suggesting bid rigging and cartel formation by certain firms with the nexus of officials: D’Cunha commission report

The report by the commission headed by retired High Court judge John Michael D’Cunha, which probed into the alleged COVID-19 scam that is said to have occurred during the BJP government’s tenure, has found several procedural and administrative lapses in the purchase orders worth over ₹918.34 crore issued by the Directorate of Medical Education (DME) towards procurement of medical equipment, PPE kits, masks, ICU units, CT scanners, baby incubators, and other consumables during the financial years 2019-2020 to 2022-2023.

According to a 351-page report on procurements made by the DME that is compiled in part III of the report, procurement was made without quotations and without determining the price. While several companies dealing in medical equipment have indulged in “corrupt and fraudulent practices” in connivance with officials, records relating to the installations were not available in the files. “There is prima facie material suggesting bid rigging and cartel formation by certain firms with the nexus of officials,” stated the report.

Recommending criminal prosecution against officials and recovery of over ₹90 crore excess amount paid to the companies and dealers, the commission has suggested blacklisting several firms.

Without quotations 

While the commission found several discrepancies in the procurement of arterial blood gas analysers, artificial manual breathing unit bags, and automated biochemistry analysers, it has said the purchase of baby incubators worth nearly ₹2 crore was made without quotations. Noting that the records relating to the installations were not available in the file, the commission has recommended a departmental inquiry against the officials involved in the procurement.

“While there is a delay of more than one month in the supply and installation of baby incubators, the procurement was made based on a single quotation, without the determination of the actual market price of the equipment. The procurement was made at the higher rate at ₹5.5 lakh per unit against the estimated government rate of ₹1 lakh.”

Purchase of defibrillators

According to information provided by the current Medical Education Director to the commission, 253 defibrillators at a total cost of ₹14.5 crore were procured during the pandemic and ₹13.07 crore was paid to the supplier.

Quotations were called on March 23, 2020, for procurement of these machines and the lowest bidder was issued a purchase order on March 26 on the condition to complete the supplies within two days, failing which penalty of 0.15% of the undelivered quantity was to be levied for each day and delay exceeding seven days would entail cancellation.

The commission’s scrutiny of records found that the supplies were completed on April 8, 2020, and installations completed on May 5, 2020, in violation of the contract condition. However, the full payment of ₹79.12 lakh was made without deducting the penalty. The penalty of ₹3.71 lakh has to be recovered from the agency, the report stated. The commission also found that a lower quotation by another agency was rejected by changing the evaluation criteria. The reason cited for rejecting the quotation of another agency was that the equipment could not be upgraded to additional parameters. “This reason on the face of it is proved to be false,” the report stated.

Not upgraded

“There are no records to show that any of these defibrillators were upgraded during COVID-19. Therefore, the approach of the Technical Evaluation Committee on the face of it appears to be to favour the second lowest bidder,” the report pointed out, adding that the award of contract to the second lowest bidder was “arbitrary, illegal, non-transparent, and has resulted in undue advantage to the company corresponding loss to the State”.

‘Blatant illegalities’ in purchase of CT scanners

The commission headed by retired High Court judge John Michael D’Cunha, which probed the alleged COVID-19 scam, has found “blatant illegalities” in the procurement of CT scanners during the pandemic, according to the commission report.

The Directorate of Medical Education had purchased 11 units of 128-slice CT scanners at a price of ₹62.67 crore and six units of 40- rows 80 slice CT scanners at ₹22.32 crore (total cost ₹84.99 crore).

Price variation

Noting that there was a striking variation in the price paid for the same units purchased between August 12, 2020, and March 2, 2022, through different modes, the report stated that out of the 17 CT scanners, one was procured through GeM portal at ₹4.92 crore and two scanners of the same specifications were procured under 4(g) exemption at the same rate. However, two units of scanners bought for the Kalyana Karnataka region were purchased at ₹6.1 crore each. “Besides, the price paid for six similar units purchased through tender from the same agency was ₹5.79 crore each.”

“When the same equipment was already supplied by another company at ₹4.92 crore, there was no necessity whatsoever to call for a quotation and award the contract to another company at a higher rate of ₹5.95 crore and ₹6.1 crore per unit,” the report said. “This has resulted in a loss of over ₹8.55 crore to the State exchequer. That apart, there is no explanation as to why the tender process was initiated and quotation was called for that particular agency, when in fact the CT scanners of the required specifications were readily available on the GeM portal and specific procurement was permitted under Sec.4(g) of the KTPP Act.” It recommended a departmental inquiry against DME officials for making the procurement without administrative approval.

Published - November 14, 2024 09:43 pm IST