1.0 During investigation of a case regarding filling up of post of Supervisors at one of the Inspection Cells of CLW, it was found that notification was issued for filling up of 02 vacant post. For this, a JAG level Screening Committee was constituted. Before this Committee, 05 candidates had appeared and the Committee found all 05 candidates suitable. Accordingly, the Committee had recommended all 05 candidates suitable but without indicating name of 02 candidates finally to be selected against the notified vacancy of 02 post. Further, one of the conditions of the screening criteria was that fresh faces should be given preference over the candidates who had worked earlier at the Inspection Cell. Therefore, if suitable fresh faces are available as per vacancy, the candidate having worked earlier at the Inspection Cell should not be considered though he may be suitable. In the instant case, among the recommended 05 candidates, 01 candidate had already worked in the CLW Inspection Cell. So, this candidate should not have been considered by the Committee though the candidate was suitable. Thus, the Performance Sheet had many irregularities. But the same was approved by the Panel Approving Authority, an SAG level officer, who also ignored these vital aspects.
While deciding the posting of the candidates, the ‘P’ branch indicated that as per notification, there were 02 vacancy. Further, 03 Supervisors were going to complete their tenure of 04 years at Inspection Cell and these vacancies should also be filled up. Therefore, all 05 candidates can be posted at the Inspection Cell: 02 candidates against the notified vacancy of 02 post & 03 candidates against the new arising vacancy due to tenure completion. Similar irregularities have been found in another case regarding filling up of vacant post of Supervisor at Inspection Cell, CLW. Keeping in view the repetitive irregularities being committed as mentioned above, the following System Improvement has been suggested:
“For filling up of post at Inspection Cells, vacancy assessment needs to be done considering the vacant post and likely arising during next 01 year and the same should be notified while inviting application from the eligible candidates. Screening should be done considering Terms & Conditions mentioned in the Notification. Further, after screening of the eligible candidates, the Screening Committee should not only indicate the name of suitable candidates but also name of the candidates to be empaneled against the notified vacancy. The authority approving the Performance Sheet should also ensure the above while approving the final result. At the time of issuing the Posting order, the ‘P’ branch shall also ensure that number of candidates being posted against on hand screening are not more than the notified vacancy”.
2.0 Vendor development is a very critical and important activity for broadening of vendor base. The increased vendor base not only facilitates in meeting the requirement of materials against the enhanced loco production target but also in purchasing of quality material at the reasonable rate due to enhanced competitive environment. For this, CLW has a laid down procedures issued vide WI No.CLW/MLAS/EL/WI/Rev.3 dated 30.12.17. As per WI, major activities involved are: assessment of firms, if firms found capable, clearance for placement of developmental PO, development of material by the firm, its Proto type testing, issue of final Proto type clearance certificate after successful field trial etc. After successful completion of these processes, a firm is considered for manufacturing of the material.
During Preventive checks/complaint investigation, it was found that a very important material having limited sources was developed by a firm. After Proto type clearance, it was fitted in the loco for the mandatory field trial of 06 month. A field performance report for around 06 month was collected by RDSO and the same was forwarded to CLW for final Proto type clearance in Aug’18 as per provisions mentioned in the PO. Instead of examining the Performance Report received from the RDSO for its adequacy or shortcomings, if any, after 02 month, CLW requested the concerned Railways in Oct’18 for furnishing the Performance Report of the subject material. In this regard, the firm had made repetitive requests for final clearance of the material, the last one was in June’19. But no reasonable action was found taken for one year. Subsequently, performance report of the material was received in July’19 and after that, final joint field trial was conducted in Sep’19. Finally, clearance certificate was issued to firm in Nov’19. As such no valid reason has been found in delaying the subject case. It is worth mentioning that many newer cases of Proto type clearance were cleared during the above period. In view of this, the following System Improvement has been suggested:
“For Vendor development cases, after registration, different stages are involved such as assessment of firm, compliance of the observation after assessment, clearance to firm for development of new product, inspection of Proto type of the material and its clearance, issue of final Proto type clearance certificate after completion of satisfactory stipulated field trial, etc. For all these activities, new vendors must be submitting their request. While dealing these cases, a list needs to be prepared indicating the firm’s request in the chronological order and the same should be followed. If precedence is required to be given in some cases due to urgency/criticality of the item, reason for the same should be recorded while processing such case and approval of concerned HOD should be taken. With this, it is expected that all cases shall be finalized in chronological order without extending undue favour to any vendor.”
3.0 During investigation of a case regarding procurement of an imported material, it was found that as per tender condition, the OEM firm should directly participate in the tender. In case, their authorized agent participates in the tender, the bidder should submit the Tender specific authorization letter of the OEM. In the instant case, it was found that an Indian firm, M/s X had submitted a Tender specific authorization letter issued by M/s Y along with their offer, a Germany based firm. The firm M/s Y had indicated that they had been given license for marketing of the material manufactured by M/s Z, the OEM, based at Germany.
Considering the above documents submitted by M/s X as genuine, the firm’s offer was considered technically suitable for placement of the regular order being a single approved source item. Accordingly, while finalizing the tender, an SAG level TC also considered the Tender specific authorization letter submitted by M/s X as genuine and recommended for placement of regular order. After TC acceptance, the PO was placed on the firm. However, during Vigilance investigation, the material supplied by the firm was not found genuine. Further, when the authorization letters were referred to M/s Z, the Germany based OEM for confirmation of its genuineness, the same were found to be fake ones. The previous tender of the same material was also checked and found that similar Tender specific authorization letter was submitted by another Indian firm on whom the PO was placed. As such, that authorization letter was also not genuine. There has not been found a system of confirmation of authorization letter in the tender case where Tender specific authorization letter is must if the OEM does not participate in the tender. This indicates that had there been a system of getting confirmation of such vital documents from the OEMs, the fraudulent activities committed by the purported authorized firms would have been avoided. In view of this, the following System Improvement has been suggested:
“In a tender case, the OEMs should be insisted for their direct participation in the tender for procurement of the material. If approved suppliers/OEMs do not participate directly, the firms submit their offer indicating themselves as authorized agent of the OEMs and also enclose Tender specific authorization letter along with their offers. For confirmation of such letters, the OEMs must be approached and after getting their confirmation only, the offer of the authorized agents should be considered for finalization of the tender.”
4.0 There is a well laid down procedure for vendor development in CLW. Accordingly, the Works Instructions have been issued vide CLW WI No.CLW/MLSA/EL/WI(Rev.3) dated 30.12.17 which is amended time to time. Para-5.3 of the WI deals with vendor assessment procedure and accordingly, when assessment of a new firm is done, a JA Grade officer is nominated for verification of various M&Ps, testing facilities and other statutory requirements. After compliance of all these requirements, firm is approved by the competent authority and registration certificate is issued. Para-12.5 of the WI deals with additional works set up by an already approved vendor. As per Clause 12.5.1 of the WI, if any approved firm apply for inclusion of their additional Unit, it should be dealt with as a fresh case for which the firm’s assessment should be done by deputing a JAG officer who verifies the availability of M&Ps as per Standard Technical Requirement (STR), testing facilities, other requirements. However, the vendor may use some of the facilities of the original works, as required. But testing and laboratory facilities required for the final inspection of the product shall be available in the additional works.
During a complaint investigation, it was found that an approved firm had applied for inclusion of their additional Unit for manufacturing of a loco material. In this case, as per procedure, the firm was asked to submit the M&Ps details and other required information for the assessment. The firm submitted the required details including M&Ps and the same were compared with the STR. The firm was asked to submit the compliance against deficient items which was done by firm. After this, a nominated officer visited the firm’s premises and submitted his report mentioning that the firm was having all M&Ps as per STR. Subsequently, during STR verification, it was found that many M&Ps were not available in original Unit as well as the additional Unit as indicated in the Assessment report. However, combining the M&Ps available at the original Unit and proposed additional Unit, the firm had fulfilled the M&Ps requirement as per STR. This indicates that firm’s assessment was not done correctly by the nominated officers. In view of this, the following System Improvement has been suggested:
“For registration of a new firm, the firm is asked to submit the M&Ps details and testing facilities as per STR of the concerned item including other relevant details. Once the firm submits these details, the same are compared with the STR. After comparison, if something is found deficient, the firm is asked for its compliance. After compliance, an officer is nominated for assessment of the firm for which he visits the firm premises. The assessing officer should clearly indicate about each M&Ps available with the firm w.r.t. STR. Further, if any item is found deficient, the same should be clearly mentioned in the report. In case of approval of additional Unit of an already approved firm, the firm’s assessment should be done indicating availability of the M&Ps as per STR at the additional Unit. If the firm indicates that they would avail some of the M&Ps of their original Unit, the same should be clearly mentioned in the assessment report and also while processing the case for approval of the competent authority”.
5.0 During Preventive Check done for procurement for loco material, it was found that as per CLW Approved list of vendors, there were 03 firms for the subject material. But 02 out of these 03 firms were not participating for the last many years and were delisted from the Approved list very late. Further, the lone approved firm was participating in the tender and was offering relatively higher rate taking advantage of the situation. It was also noted that 11 developmental orders were placed during year 2016-20.
During scrutiny of above developmental cases, in one case it was found that the firm was not having M&Ps and other facilities as per STR. But the case was closed after one year, which should have been closed long back. Further, in other cases also, some delay has been found at different stages both at CLW as well as the firms developing the material. Considering practically a single source item, for expediting the firm’s development, the following System Improvement has been suggested:
“For procurement of the material at reasonable rate, adequate vendor base should be available for ensuring competition among the vendors. If number of approved sources are less than 03 for any item, vendor development process consisting of registration of the firm, their capability-cum-capacity assessment, Proto type inspection of the material, fitment of the material in the loco for fitment report as well as field performance report etc. need to be monitored closely with the view to avoid undue delay at different stages. Further, if firms do not respond within reasonable time, they should be sent reminders for taking expeditious action from their side. If still they do not respond, such cases may be closed at the earliest. Besides, a suitable check list should be prepared for monitoring developmental activities in proper way with special focus on the cases having less than 03 sources”.