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CONFIDENTIAL
Tele/ 25244051
/Fax 080 25246936

, (),
/Government Of India,Min. of Def.(Fin.) Defence Accounts
Department
, (. .), /Office Of The
Controller Of Defence Accounts (R&D)
, / C.V.Raman Nagar, Bangalore 560093
0 1/1002/1/ No. IA/1002/MFAI
/Dated: -7-2015
/To,
/SA to RM
(. .)/DG (R&D)
/ South Block
/New Delhi - 110001
: 03/2015
....
Sub:- Quarterly MFAI Report for QE 03/2015.
*******

/ 03/2015


Report on the above subject for QE03/2015 in respect of Labs/Estt coming under
the audit jurisdiction of this office is
forwarded herewith for necessary action.

1/Part 1

/Fr
esh Cases
/Secti
on A
/Secti
on B

2/Part II /O
ld Cases
/Secti
on A
/Secti


/Cash Irregularity

/Stor
es Irregularity
/Total

---


/Cash Irregularity

07

03
______________

03
______

05

on B

/Stor
es Irregularity
/Total

___________

12
_____

-sd( /K.
Ravi Kumar)

(. .)/CDA (R&D)
1.
2.
3.
4.
5.

/Copy to:
...., /CGDA, New Delhi
...(), ,
/DDA(AF), Kendriya Sadan, B'lore
The Director, DEBEL, Bangalore
The Director, LRDE, Bangalore
The Director, CABS, Bangalore

---------
/ For information

ACDA
(.../IA)

OFFICE OF THE CDA (R&D) C.V.RAMAN NAGAR BANGLORE


REPORT ON MAJOR FINANCIAL & ACCOUNTANCY IRREGULARITY FOR QE 06/2015
PART I SECTION A & B
STORES & CASH IRREGULARITIES (FRESH CASES)
Section A : Cash Irregularity
S.No Name of
Particulars of Irregularity
Financial
Period When
was
Latest
unit/
effect
of
irregularity
position
formatio
Accoun first noticed
n
t
in Audit & to
Affecte whom it was
d
reported
1
2
3
4
5
6
7
1 CVRDE, An anonymous complaint in connection with cash
Interest on
10/13
Jan 2014
Avadi
irregularities received in CDA(R&D) Bangalore. Rs.2249538/- to Dec
CDA office
Based on the above a team was sent for verification of Misappropria
13
came to know
the facts.
Accordingly a case of public fund tion of funds
only due to a
embezzlement has come to the notice. The alleged
is a serious
complaint
fraud has taken place during the period between Oct13 irregularity.
to Dec 13. Putting on enquiry by the audit team it is
noticed that a major penalty of Removal from Service
has been imposed on an employee of CVRDE Avadi as
per Rule 11(viii) of CCS (CCA) rules, 1965 with effect
from 15-10-2014. On perusal of records the following
observations are noticed.
1. CVRDE is not maintaining the Cash book in
the prescribed form.
2. Cash book is not closed on day to day basis.
3. Huge surplus/unspent balance was found in the
PF account
4. Amount credited to the personal account of the
cashier Sh. B.Venkataraman, AA through ECS
in 15(19 illegitimate payments) transactions
and ECs mandates during the period were not
signed by AO(Cash)
5. Monthly surprise check of cash book is not
being carried out.
6. Payment voucher Nos mentioned in cash book
and those noted in vouchers are not tallied
7. Bank statement has not been downloaded
periodically from the internet banking from
10/2013 to 7/2014.

Remarks

8. Only in Jan 2014 Rs.2250766/- has been


remitted back by the cashier partially through
cheque and partially through cash.
9. Lab has not intimated CDA(R&D) Bangalore
immediately
on
detection
of
the
misappropriation of funds in accordance with
Rule 37(f) of FR.
10. Court of Inquiry proceedings & FIR not
produced to audit.
11. The amount deposited by the ex cashier has
not been brought into cash book till Jan 2015.
Replies received from CVRDE
1. Police complaint not lodged as individual
accepted the mistake and remitted the amount.
2. Verification of cash accounts not done in time
due to large volume of transactions
3. One man committee was constituted for action
against the individual. Dismissal action taken
4. Oral advice to AO(Cash) to be more careful.
In this connection audit is of the view that
1. Not reporting to CDA (R&D) Bangalore in
accordance with Rule 37(f) of FR I is a
clear procedural violation of the existing
rules.
2. Non filing of FIR with civil police
authorities in accordance with Rule 34 of
GFR, is once again not acceptable in audit
as the same is very essential in cases of
cash embezzlements which exposes the
criminal intension of the individual.
3. Conducting one man committee for a
serious cash irregularity without ordering
court of Inquiry is not a acceptable to audit
therefore DRDO HQrs to intervene and
order for fresh court of enquiry by a BOO
rather than by a single officer to pave way
for thorough and impartial inquiry and
suggestions thereof.
4. Dismissal of the individual with a scope of
re-employment in Govt service despite the
individual
was
involved
in

misappropriation/embezzlement of public
funds with malicious intention is appear to
be a soft stand taken by the administrative
authorities. Similarly, oral advice to AO
(Cash) despite failing to prevent and detect
the irregularity also appears to be a soft
stand and the case has not been taken
seriously/given due importance. Sharing of
login id and password by the officer is to be
treated as a serious offence as it has paved
way for such a serious embezzlement.
5. Non maintenance of Cash book in proper
format
having huge balances,
not
following the ECS procedure, non
conducting of surprise checks are to be
regularized
as serious procedural
irregularity by GoI

OFFICE OF THE CDA (R&D), C.V.RAMAN NAGAR, BANGLORE


REPORT ON MAJOR FINANCIAL & ACCOUNTING IRREGULARITY FOR QE 06/2015
PART I SECTION A & B
STORES (FRESH CASES)
Section B - Stores irregularity
S.No

Name of
unit/
formation

Particulars of Irregularity

Financial
effect
Rs.

1
1.

2
DEBEL,
Bangalore

Procurement of extreme environment simulation walk in Rs.


11962137/chamberDEBEL has placed a purchase order bearing No. DEBEL/
MMG/PO/FE/LIC-24/01/2014-15 dated 28-5-2014 on M/s
Global Technosoft PTE Ltd , Singapore for procurement of
extreme environment simulation walk in chamber at total DDP
Bangalore Airport price of USD188850/-. The delivery date
was 6 months from the date of confirmed purchase order and
PBG for 10% of the order value valid for the warranty period
from date of acceptance. (CIF Rs. 11962137/-). The P.O was
placed based on the justification that the prototypes of
Personal cooling system for LIC Ops is required to be
developed and the evaluation of the prototypes developed to
be done in simulated environments. For the simulation of
harsh conditions, testing and fine tuning of the developed
prototypes walk in chambers are required.
Hence, the PO was placed in the end of May 2014, vendor
acknowledged on 9-6-2014 which implies that the delivery
date was 27-11-2014. Items shipped on 25-10-2014 from
South Korea. Based on the facts stated above, following
observations are made.
1. Demand for procurement was raised on 5-10-2012. There
has been procedural delay due to which TPC was

Period of When
was
Account irregularity first
Affected noticed in Audit
& to whom it
was reported

5
201415

6
During Local
audit for the
period 10/14
to 3/2015

Latest position Remarks

7
Reply from
the lab is
awaited.

conducted in Jan 2014 and order placed in May 2014. Ie,


fag end of the project.
2. Though the machine was delivered in Nov 2014 and
engineers from vendor side visited in Dec 2014, the lab
could not utilize the machinery due to technical glitch till
30.4.2015. The lab has not accepted the machine as the
same is not meeting the specifications of the lab.
3. . Lab has stated that the delay in utilization of the chamber
did not affect in achieving the objectives of the project as
the testing was carried outside. On scrutiny of the
documents related to testing of the prototypes,

it is

understood that the same was done at WIPRO(SO


No.DBL/MMG/18/TE/23/14-15 DT 13-5-2014

for Rs.

18000) along with other prototypes


In this connection, the audit of the view that
1. Unusual

delay

in

holding

of

TPC

due

to

administrative lacunae and improper planning lead to


delay in the procurement of the equipment
2. The reasons for purchase of the equipment is not
justified as the same could not be used for the project
even in a solitary occasion and tests necessary for the
project has been carried out by outsourcing.
3.

The purchase order (PO) was placed after the testing


was conducted in WIPRO which implies that the
procurement of the chamber for the project is not
justified and audit is of the opinion that the whole
expenditure incurred on the subject procurement is in
violation of standards of financial propriety. The non
installation of the equipment till date qualifies the
views of the audit.

4. In view of the above the expenditure requires to be


regularized as infructuous expenditure under the
orders of the Govt of India.

2.

LRDE
Bangalore

LRDE has procured a CTAH TEST CHAMBER vide S.O. 45,95,686


No.LRDE/13AT0045/QRG/LP/4/69-2011, dated 26/07/2012
from M/s Structural Solutions, Hyderabad at a cost of
Rs.1,51,55,910/- since the earlier CTAH Test Chamber, which
was procured during 2005 at a cost of Rs.81,12,000/-, was not
working since November, 2012. LRDE had already purchased
a HALT-HASS chamber in Nov 2012.
During Local audit, an objection was raised regarding
premature condemnation of the earlier machine at LRDE and
this office had sought clarification from the lab on the
following observations,
a.

Reasons for not going for repair or retrofitting of the


old machine.

b. Reasons for machine becoming unusable within a short


span of 8 years
c. Whether any AMC was concluded for the old machine.
In reply, LRDE stated that due to wear& tear and extensive
usage, the machine became Beyond Economical Repair (BER)
and for this reason a new machine was procured. The process
of condemnation of the machine by LRDE has not been
completed so far.
In view of the above, it is opined that
a.

CTAH Chamber is almost similar to HALT/HASS


Chamber with regard to capacity & functions and
procurement of both the machines by LRDE is due to
improper planning which is against the principles of
canons of financial propriety.

b. In this context, it is brought out that the procurement


of HALT HASS Chamber by LRDE, CABS and
DARE had already been objected and included in

201213

During Local
audit for the
period 10/13
03/14

Reply
from labs
is
awaited.

MFAI as Cash Irregularity for QE 09/2014.

Some

clarifications have been called for on the replies


received from CABS & DARE. No reply has been
received from LRDE even after repeated reminders.
c. CTAH Chamber already exists in ADE which is in
vicinity to LRDE (stated in the justification for
procurement LRDE), procurement of the same
machines by LRDE without consulting ADE on
sharing of facility for their research activity has to be
considered as violating the stipulated procedure
mentioned at para 4.4.2 (c) of PM 2006 and nonsharing of database as per para 10.18.1 of PM 2006
resulting in excess expenditure to the state.
d. LRDE initiated the demand for procurement of CTAH
chamber during June, 2011, supply order placed on
26/7/2012 with delivery date 15/3/2013. (It is pertinent
to mention that LRDE placed order for HALT/HASS
on 30/04/2012 with delivery schedule 07/11/2012
which is evident from the above that both the
procurements taken place simultaneously) When LAO
raised an objection regarding procurement of new
machine, LRDE has stated that the new machine was
purchased as the old one was BER. However, as per
the justification the old machine was being used by
LRDE when the demand was raised. The chamber was
delivered at LRDE during Sept, 2013.
e. Further, LRDE had stated that the chamber will be
purchased from identified reliable foreign sources as it
is understood from the justification that ADE, MTRDC
and other labs have stated that locally procured altitude

chambers are not reliable and needs frequent


maintenance. However, the item was procured from
M/s Stuctural solutions Pvt Ltd, Hyderabad for
Rs.1,51,55,910/-. The justification of LRDE was not
followed during purchase and the purchase from
Indian

vendor

has

led

to

extra

payment

of

Rs.45,95,686/- compared to CABS purchase cost and


hence the same is required to be regularized as loss to

CABS,
Bangalore

the state due to neglect as per Rule 160 of FR Part I.


CABS has procured CTAH Chamber during October, 2013
vide Purchase Order No. CABS/FPO/2012-0010/Lgs dated
26/12/2012 from M/s Envirotronics Inc, USA at a cost of
Rs.1,05,60,223/- which is yet to be commissioned due to
technical problems. The delay in commissioning/installing has
been objected by the Test Audit also.

Further, it is also

observed from the Justification for procurement of CTAH


chamber

issued by CABS that the lab was having one

HALT/HASS CHAMBER of volume 1000 Litres and with a


varied temperature from -700 C to 1800 C and is being used for
the evaluation of the sub-systems. The HALT/HASS chamber
was procured in 2008-09. Considering current and futuristic
project requirements, CABS has procured CTAH Chamber of
volume 1400 Litres with temperature variation from -70 0 C to
1800 C. In this context, it is brought out that the procurement
of HALT HASS Chamber by LRDE, CABS and DARE had
already been objected and included in MFAI as Cash
Irregularity for QE 09/2014. Some clarifications have been
called for on the replies received from CABS.
CABS has initiated for the procurement during February, 2012
and placed purchase order dated 26/12/2012 on M/s
Envirotronics Inc, USA for USD 1,97,100 (CIF Cost of

73,92,157/-

201213

During Local
audit for the
period 10/13
03/14

Reply
from labs
is
awaited.

Rs.1,05,60,224/-) with date of delivery as 15/10/2013 and


warranty of 2 years from the date of receipt, installation,
commissioning and acceptance of items at CABS.

In this

connection, it is also brought out that though CABS purchased


the HALT/HASS Chamber in 2008-09. Within a span of 4
years the lab has decided to purchase another machine. In the
TPC delivery schedule was reflected as 7 months from the date
of LOI. The item was delivered by the vendor on 28/10/2013,
but was not installed till April, 2014 due to delay in completion
of civil works. Audit has enquired as to how the requirement
of CTAH Chamber was met during the period from 2012 to
2014. In reply, CABS have stated that the procurement of the
test chamber was a part of general lab facility for testing
avionics systems, sub systems and LRUs taking into account
the labs current and future requirement (AWACS). CABS has
stated that the chamber was purchased for retesting at the site
in case of failure of sub systems and LRUs during flight test
trails and the LRUs being received are pretested in the factory.
CABS has also stated that the necessity of the chamber did not
arise as CTAH tests are integral part of the sub systems and
LRUs supplies and no failure of the subsystems or LRUs
happened. However, this is in contradiction to the justification
given in demand that since HALT-HASS chamber is fully
utilized, CTAH chamber is required to test LRUs to meet the
time schedules of projects.

This clearly indicates that

procurement of the test chamber was not a very urgent


requirement. LRUs are being received from the inception of
the project (2008-09) and the necessity of usage of the
chamber did not arise till 2014 as no problems arose.
Procurement of a machine worth a crore and non-installation of

the same for 2 years and not finding the necessity of the same
for 3 years indicates that the item was procured without proper
assessment of necessity.
As per the payment terms mentioned in TPC/NC minutes,
90% payment is to be made on receipt, inspection, installation,
commissioning and acceptance of items at CABS and balance
10% payment to be released after completion of warranty
period. The payment terms, which are a standard condition of
RFP, have been negotiated and changed after TPC & LoI
through Review TPC, dated 20/03/2013 to 70% of the order
value against proof of shipment, 20% of order value after
receipt, installation and commissioning and acceptance of the
item at CABS & balance 10% of the order value after warranty
period or against submission of PBG.
The above amendment in payment terms led to payment of
70%

of

the

purchase

order

value,i.e.,USD

137970

(Rs.7392157/-), which may be treated as infructuous since


installation and commissioning of machine has not been
completed till date and vendor is also not responding.

OFFICE OF THE CDA (R&D), C.V.RAMAN NAGAR, BANGALORE


Part II Section A & B MFAI QE- 03/2015
List of cases reported and still outstanding (Old cases)
Section A - Cash Irregularity
Sr.
No.

Name of
Unit/Lab/
Formation

GTRE,
Bangalore

Period
or
quarter
of
Reporti
ng with
item
No.
No.1
03/07

Period to
which
items
pertains
(year)

03/2007

Brief gist of the irregularity

Pending advance payments


Gas Turbine Research Establishment (GTRE) Bangalore
had placed a number of fabrication contracts under
KAVERI Project on private vendors for manufacture of
various engine parts leading to assembly/development
of Kaveri engine suitable for LCA.
The following three fabrication contracts placed on M/s
KOBASHI MACHINE TOOLS PVT LTD; Hyderabad
provide for payment 30% advance of total contractual
value against bank guarantee executed by the supplier.
Contract No.
Date of
payment
MMKV / LPC / 7166 / 98-99
Dt.27-10-1998
MMKV / LPC / 7181 / 98-99
Dt. 31-10-1998

Aug 1999

Aug 1999
Feb 2002

MMKV / LPC / 7274 / 01-02

Latest position

Remarks

GTRE has stated vide


its letter dt.22/09/2009
that two advances have
already been cleared
and for another amount
only partial amount of
Rs. 23800/- has been
recovered.
TPC has
been conducted for the
same. CRV for receipt
of TI alloy worth
Rs.7,00,000/is
awaited from GTRE.
The same will be
verified and further
pursued with the lab.

The case is being


pursued for finalization.
The matter has been
taken up by the test
audit authorities also

Dt. 12-01-2002
It was observed that the above advances made to the
supplier by GTRE were not cleared even after lapse of 8
years. In reply to this office observation the R&D Estt.
had stated that the matter is sub judice from vendor side
and further communication would follow. It is also not
clear as to whether the Bank Guarantees executed by the
supplier are valid as on date because the R&D labs take
responsibility of obtaining / renewal / encashment etc of
Bank Guarantees at their end as per extant practice.
Besides, the above vendor was supplied with free raw
material (titanium alloy) worth aggregate value of
Rs.7.00 lakhs on indemnity bond. It would be observed
from contracts enclosed that the details of total quantity
of material issued to the vendor have not been indicated
to enable audit to check charging off in respective by bin
card / SSRC during their inspection as per material
estimate arrived at by production planning and control
section at lab level.
3

MTRDC,
ADE,
GTRE,
LRDE,
CEMILAC
,
CABS,
DARE,
DEBEL,
CAIR
Bangalore
& DFRL
Mysore

02
06/07

2004-05

Excess holding of man-power


During scale audit of pay & allowances in respect of all
the labs/establishments it was revealed that there is an
excess holding of manpower in nearly all the
labs/establishments. A review carried out of the paid
establishment of September 2004 revealed that 457
posts of officers and staff were held in excess of
authorized establishment even after transfer of large
number of posts from corporate pool to individual
labs/establishments.
DRDS 96 posts
DRTC- 72 posts
ADMN 168 posts
Allied Category 121 posts
TOTAL 457 posts
The excess holding of manpower was placed under
objection.

The matter has been


referred to Additional
Director HRD vide UO
Note No.
AT/IAR/13376/12-2004
dated
02.07.2007.Comments of
DGR&D was received
and our views forwarded
to CGDA under No.
FA/1061/Vol-II dt.
08.10.08 . The mat
ter
is
under
correspondence
with
PCDA(R&D), New Delhi
under intimation to HQrs
vide
letter
No
FA/1061/Vol -II DT 11-209,19-1-2010, 12-9-2011
AND 17-7-2012. Reply
from PCDA (R&D) is
awaited.
Matter has

GTRE
Bangalore

01
of
03/2010

2008-09

again been referred to


Hqrs
vide
IA/1005/IAR/PC dt 2812-2012. This office has
requested CGDA to settle
the IAR item No.14 of
12/2004 against excess
holding of man-power.
Reply is yet to be
received.
Irregularities in TPC
Lab authorities in the
GTRE, Bangalore floated an open tender for reply dated 13.05.2009
procurement of CPCO based KADECU Ground check and 30.09.2009 has stated
out system and KADECS monitoring system at an that payment terms in TE
estimated cost of Rs. 1.20Cr .
were routine and it is the
prerogative of the TPC to
TE conditions stipulated among others
accept/impose payment
a) Payment terms on 95% on receipt inspection terms and the TPC was
installation commissioning & acceptance of stores and constituted with senior
balance 5% within 30days, b) Three year warranty and officers with expertise to
c) 10% security deposit TE further stipulated that in deliberate on procedural
case, equipment maintenance after expiry of warranty aspects.
CDEC
period form shall indicate approximate cost of processing was done as
comprehensive and on call basis maintenance.
per laid down procedure.
AM clause was not
Two (M/S Trident Infosol and M/s Park Controls) had
incorporated in the TE
quoted 15% of the system cost as AMC charges beyond
and hence the AMC cost
warranty period that has M/s Trident Infosol, M/s
was not taken into
Datasol and M/s Sigma control had quoted 7%, 8-10%
consideration for arriving
and 10% respectively.
at L1 further, The AMC
M/s SLN technologies had quoted the requirement of clause
was
not
custom duty exemption not beyond Rs. 1320000/incorporated
in
the
supply order and there is
TPC has determined M/s SLN technologies as L1 and
a scope for negotiation
has placed order on them.
with the vendor after the
The following irregularities have been noticed.
expiry of the warranty.
As per para 13.10.2 of DPM and Para 10.10.02 of
DRDO PMD2006 discounted cash flows technique is to
be made use of to facilitated determination of L1 when
the firms quote different payment terms. This technique
to be used to deal with cases where entering into AMC
over a period of 10-11 years is a part of the contract.
In the case under observation no such procedure was
followed.
1. TPC has also not paid attention for the

Reason
for
Customs
duty
exemption
certificate for a
higher value than
the stores procured
is still awaited from
the lab

consequences of high AMC rates quoted by M/s


SLN technologies and that agreed for 15% per
annum for 5years on quarterly payment basis.
Keeping in view the AMC quoted by other firms where
in the range of 7-10% TPC determining the L1 in which
case, M/s SLN could be L3 at a price approximately
33.23 Lakhs higher and taking into consideration the
AMC for 5years as per TPC decision.
2. Customs duty exemption certificate was provided to
M/s SLN technologies to the tune of Rs. 17 Lakhs
where as the firms has sort CDEC not beyond
Rs.13.2 Lakhs in their quotation.
Financial effect
3.8Lakhs(CDEC)
5

ADE,
Bangalore

No.1 of
09/2014

Rs.

33.23

(AMC)

and

Rs.

2005-06 ADE, Bangalore had placed a supply order on


WEBEL TOOLS IND LTD, Kolkatta bearing
No.1120/ADE/MM/9054/P-188/241, dt.22/6/2005
for procurement of 10 No. of Rotary ElectroMechanical actuators at Rs.19 Lakhs for Project
SUDARSHAN with payment terms as 30%
advance against Indemnity Bond and balance 70%
within 30-45 days on receipt, inspection and
acceptance of stores against PBG for 10% of order
value covering the warranty period of 1 year. This
office had made payment of Rs.569950/- during
03/2006 and one No. of Rotary electro mechanical
actuator worth Rs.190000/- was received by the
Lab vide DC dt.29/7/2006 which was accepted by
the inspecting officer on 13/02/2007.
As per the West Bengal state government
decision,
the
firm
was
closed
down
w.e.f.31/08/2006. Accordingly, ADE requested the
firm to refund the outstanding Advance paid. In
response, the firm has stated that the advance
amount would be refunded to the lab against final
settlement of accounts but it has not yet been
refunded.
ADE, Bangalore has referred the matter to DRDO
Hqrs. As per the directions of DRDO Hqrs, ADE
has taken up the matter with appropriate authority
of West Bengal Government for recovery of
advance.

Lab has forwarded the

Loss statement
awaited
from the lab.
reply without enclosing
courts of enquiry and
audit report. Hence, this
office

vide

letter

No.IA/1002/MFAI dated
31/03/2015 has advised
the lab to forward courts
of enquiry as well as
audit report from audit
authorities for the loss.
Reply is awaited from the
lab.

In this connection, it is observed that


ADE has rejected the item vide ltr
No.ADE/14613/3/SDN/C, dt.16/1/2007 and has
requested the firm to collect the unit and stated
that they are interested in procurement of the
actuators if proper controller is developed.
However, as per RIN, SIR No.0804/2006-07,
dt.05/2/2007, the item was accepted by the
Inspecting Officer on 13/2/2007.
In this
connection, it is not clear as to how the same
items were rejected at first instance and
accepted at later stage without any evidence on
the records related to repair or replacement done
by the firm. Incidentally, the firm had closed
w.e.f. November, 2006.
b. ADE had received the letter regarding closure
of the firm w.e.f. 31/08/2006 on 19/8/2006.
However, the item was inspected in January,
2007 only which implies that the closure of the
firm was not taken seriously. Hence, audit is of
the opinion that the loss due to negligence.
c. When procurement has been made on TPC basis
a review TPC should have been conducted and
the status regarding the closure and recovery of
advance also should have been taken on fast
track procedure to avoid loss and secure the
public money.
d. This office vide D.O.No.S/I/ADE/Demands,
dt.10/07/2013 advised ADE to intimate
regularization of the same as Cash loss to state
under the order of Govt. of India, MoD.
DARE has procured HALT HASS chamber at a cost
of USD 3,25,000(Rs.1,65,05,775/-) in March 2010
from M/s Qualmark Corporation, USA (Indian agent
M/s Mel Systems and Services Ltd, Chennai) for
conducting tests at accelerated conditions to reveal
the design and process weakness of a product very
quickly during its development and production
phases respectively. During the scrutiny of log book
during Local audit, it is observed that the machine is
being sparingly used (3 occasions during 12-13).
a.

DARE,
CABS &
LRDE,
Bangalore

No.2 of 2010
09/2014

This office has made


certain observations on
the

replies

received

from the labs. Matter is


under correspondence.

Reply awaited.

Based on the suggestion by Local audit, DARE has


intimated all DRDO Labs in Bangalore regarding
availability of HALT/HASS Chamber at DARE and
inviting them to utilize the test facility as and when
required(September, 2013). Further, DARE has
rejected the proposal of LAO of providing these
facility to private/public enterprises which could
otherwise generate revenue to the state. DARE has
now entered into another contract for AMC with
Mel Systems and Services Ltd, Chennai towards
AMC for HALT/HASS for 1 year at a cost of
Rs.12,24,724/vide
contract
No.DARE/15AM003/MED/LP, dt.01/7/2014.
Similarly LRDE has procured a HALT HASS
machine during April,
2012 at a cost of
Rs.1,90,99,920/- from MEL Systems and services
Ltd, Secunderabad and the utilization of the same
has been very low i.e., almost 23 times in a year.
Incidentally a rep of DARE has attended the SPC
meeting as associate/Co-opted member. In the
absence of the deliberation in the TPC regarding the
availability of the equipment at DARE audit would
be of a conclusion that the point of utilization of the
equipment has not come up for deliberation. As the
usage of the equipment is very minimal at DARE
and had LRDE utilized their test facility the above
expenditure could have been clearly avoided.
CABS have also procured a similar machine with
Stress Screening (HASS) facility during 2010 at a cost of
USD 147265 and being used by the lab. Non

following of stipulated procedure vide para 4.4.2 of


PM 2006 and non sharing of data base maintained at
DMM DRDO HQrs as per para 10.18.1 PM 2006 is
thus placed under objection.
1. Utilization of the item by DARE, Bangalore
is minimal and hence treated as non
utilization/under utilization of costly
equipment the HALT HASS chamber.
Further, sharing of information as per DRDO
Hqrs. orders, with sister labs has not been
done by DARE, Bangalore, leading to
creation of additional assets and recurring

liability in the same station.


2. Due to non enquiry with sister labs on
existence
of
infrastructure,
LRDE,
Bangalore has also created an asset of high
cost again with recurring liability and under
utilization.
Hence the total cost of Rs. 1,90,99,920 spent by
LRDE for purchase of the chamber could have been
avoided and savings achieved to the state, if proper
assessment and consultation would have been taken
among DRDO labs situated at Bangalore before
purchasing the same. Even if the necessity of the
procurement at LRDE is justified, the pre
consultation with DARE and the procurement
procedure as outlined in para 10.18.1 & 4.4.2(c) of
PM 2006 have not at all been taken into
consideration as could be seen on the records.
Hence the entire expenditure is required to be
regularized as infructuous and non implementation
of procedure as per PM2006 by DRDO need to be
regularized as procedural irregularity
7

CAIR,
Bangalore

No.1 of 2013
12/2014

CAIR, Bangalore has been sanctioned a


project named C4I-ELITE/CAIR 29 in Feb 2010
with PDC as Feb 2014 for development of
C4I and Electronics Integration Technologies
for Lower Echelon of Land Forces.
A handheld device with an indigenous
Operating System(OS) with customized apps
and features like text, Global Positioning
System, camera, touch display etc to be used
by soldiers across various vertical & peer
levels of command to receive and send info,
instructions etc. was required for the project.
Hence, CAIR placed a development contract
for Development of 'Device OS with Energy
Efficient Communication System' on M/s
ICOMM, Hyd for Rs.87,15,000/-. The contract
was short closed with the completion of 2
milestones out of 3.
The genesis for Development of 'Device
OS with Energy Efficient Communication
System was the discussions in the Prelim

Reply has been received


from lab and the same is
under examination.

Design Review Committee held in Sep 2011.


It was felt that involving a reputed Indian firm
as Development Partner would help the
activity completion within the main project
deadline. The demand was raised on 31st Oct
2011 and a RFP was also prepared by the
task coordinator in CAIR.
The cost estimate was worked out by
CAIR based upon Budgetary Quote received
from M/s ICOMM, which came around to
approximately Rs. 90 Lakhs. The Stores
Purchase
Committee
and
Equipment
Procurement Committee approval was given
around Dec 2011. EPC approval for Limited
Tender
Enquiry
was
also
obtained.
Accordingly, LTE on 11 firms was floated on
26/12/2011 and date of closure was
11/01/2012 (only 2 weeks).
The Technical evaluation Committee
met on 29 Feb 2012 and opened the tech
bids of 3 firms and all 3 qualified. The Tender
Purchase Committee met on 23/04/2012 and
M/s ICOMM emerged as L1, with a net cost of
Rs. 91,50,750. The Development Contract
(DC No. CAIR/FWSID/2012-13/DC-19) was
signed on 22/10/2012 (delay of 5 months)
and the activity was to be completed and
products delivered within 12 months
(21/10/2013). This was to be done in 3
milestones, as explained below. Further, the
activities under the DC would be monitored
at regular intervals by a Progress Review
Committee (PRC), with members from CAIR &
the Development Partner (M/s ICOMM, Hyd).
Sta
ge

Deliverables

%
of
total
amount

MS
1(

Hard ware(HW)3 COTS platform


with
external

30 %
Rs.
27,45,2

Du
e
dat
e
of
co
mp
leti
on
21/
1/1
3

Actual date
of
completion

15/02/13

Mil
e
sto
ne)

MS
-2

MS
-3

peripherals
Soft Ware(SW) Device OS & Linux
source code &
binaries, Apps for
mapping,
VoIP,
speech
processing,
camera
gallery,
music, browser &
their test reports
HW5
Customized
platform
with
peripherals on the
board as modules
or
chipsets
(Prototype)
SW - Device OS &
Linux source code
& binaries, MS-1
apps plus app for
secure
commn
using
FPGA,
Network Commn
Mgmt (NCM) app,
multimedia apps,
C4I framework &
their test reports
HW - 8 Form
factor
devices
(i.e. final product
with
req
size,
configuration,
energy
consumption etc)
based
on
prototype of MS-2
SW - C4I specific
apps
like
GIS,
Navigation,
localization, adv
mapping, sensor
data processing,
video streaming,
messaging,
enhanced
NCM,
unified
communication

25

30 %
Rs.
27,45,2
25

21/
06/
13
ext
en
de
d
by
am
en
dm
ent
to
21/
08/
13

15/01/14

40
%
(10 %
PBG)
Rs.
36,60,3
00

21/
10/
13

Not
completed

As is seen from the above table, the


Development Partner delivered MS-1 after a
delay of 4 weeks and MS-2 after a delay of
nearly 5 months from the extended DP (7
months from original Milestone DP). Since the
PDC of the main project C4I-ELITE was
01/02/2014, it was felt by the PRC & an
independent Technical Review Committee
that the vendor will not be able to deliver MS3
by
01/02/2014.
Hence,
it
was
recommended to short-close the DC.
It is also observed that
1. Project Design Review Committee
found the necessity of the item in Sept
2011, while the whole administrative
process to enter into a contract took
more than a year and contract was
placed in Oct 2012.
2. the firm delivered MS-1 after a delay of
4 weeks and MS-2 after a delay of
nearly 5 months from the extended DP
(7 months from original Milestone DP).
The case came to CDA (R&D) for short
closure by way of review TPC during which
under mentioned queries were raised while
recommending for short closure
Ex-post facto Delivery Period
extension till 15/01/2014,
Imposing the 4 % penalty on
undelivered part as mentioned
in Para 19 of General Conditions
of Contract and
Encashing the Security Deposit,
held by the lab
Recovery of Rs.3,38,577/- has
been made towards recovery of
Liquidated Damages for delay in
MS1 & MS2 and 4% penalty due
to short closure based on the
observations raised by this
office
Discussions were held with the user
head to ascertain the utility of the current
deliverables with respect to the final

deliverables as envisaged in the project. The


user is of the opinion that the DC has
resulted in CAIR having a working prototype
of the device (HW, OS & desired
applications). The device has been wellappreciated in DRDO forums. The DRDO is
waiting for detailed SQRs from the user
(Indian Army), which it hopes will be easier to
achieve since the technology capability has
already been achieved by DRDO with this DC.
As to the queries regarding the failure
to not develop the final form factor board and
detailed apps, the user contends that the
transition from the prototype in hand and
those required as per user SQRs will not be a
difficult one.
Further, the user brought to notice the
efforts logged in by M/s ICOMM to develop
the product, the delay due to long lead times
in procuring certain specialized electronic
items. The user contends that the firm has
already incurred losses by this DC as given
by M/s ICOMM's project cost.
However as per para 22.3 of the
contract, in case the Government complete
the work, the cost of such completion to be
taken into account in determining the excess
cost to be charged from the contractor.
In this connection audit is of the view
that the final output of this contract, which
were an essential aspect in the project C4IELITE, were not delivered by the vendor in
the required form-factor (size, shape, power
consumption etc.) and with all the required
features (GIS, Navigation, mapping, sensor
data processing, video streaming etc..).
Hence, the entire expenditure of Rs.
54,90,450 paid to the vendor towards MS-1 &
MS-2 in addition to the other expenditure
incurred towards completion of the project by
the lab to be treated as infructuous and Rs
Rs.8,71,500/- towards non encashment of
security deposit have to be treated as Cash
loss to the state.
The justification of the user that the

output of MS-2 is sufficient is not acceptable


in audit as requirement of MS3 was foreseen
and was a crucial milestone in the project. As
per project appraisal, the end result has not
been achieved and therefore in the opinion of
audit, the whole process to be treated as
improper planning and requires condonation
by Government of India inter alia regularizing
the expenditure as infructuous.

ACDA (IA)

OFFICE OF THE CDA (R&D), C.V.RAMAN NAGAR, BANGALORE


Part II Section A & B MFAI QE- 03/2015 (Old Cases)

Section B- Stores Irregularities


Sl.
No
.

Name of
Unit/Lab/
Formation

Period or
quarter of
Reporting
with item
No.

1 ADE,
01 of
(inclusive of 06/07
ADA
Deposit
Works)
MTRDC,
DARE,
GTRE
Bangalore

2 GTRE,
Bangalore

1 OF
6/2013

Period to
which
items
pertains
(yr)
2003-04
2004-05
2005-06
200607

2011-12

Brief list of the irregularity

Procurement of imported stores


Purchase orders placed against firms by ADE, (inclusive of ADA
Deposit Works) MTRDC, DARE & GTRE, Bangalore for
procurement of imported stores. In all the cases LC/Sight drafts
have been authorized. Bank advices have also been received in
respect of all the cases but the CRVs for having brought on charge
these stores, have not been received so far.

GTRE, Bangalore placed S.O No


GTRE/MMG/FEBM/3506/10/FPO/A/10 DATED 30-5-2010 ON m/S
Carl Zeiss Industrielle Messtechnik, Germany for procurement of CNC 3
D Coordinate measuring machine with embedded rotary table for Euro
729752.00 equivalent to Rs.4,42,66,756.00 , The payment terms as per
Supply order was that 85% of the cost of equipment and freight charges
totaling to Euro 582614.20 and balance 15% after installation,
commissioning and acceptance. The warranty period was 18 months
from the date of shipment or 12 months from the date of installation
whichever is earlier. 85% was paid to the vendor on 10-5-2011 and the
machine was received in GTRE on 27-5-2011. GTRE could not install
the machine as the building could not be completed and handing /taking
over to GTRE by MES was delayed. The machine was installed on 8-112012 after lapse of warranty period.
In this connection, it is stated that the TPC for the procurement was held
on 28-10-2010 and when the finance member questioned the necessity of

Latest position

Remarks

The matter has again been Matter is being


brought to the notice of all
pursued
Directors of Labs through a
with
DO letter from Controller
Labs
vide No. S/I/FE/397/Gen for clearance of
Corr dated 30.05.2007. The
the
Labs has been further
cases.
reminded vide letter dated
15-12-2011, 20-6-2012 to
forward a copy of the CRVs.
Store section has taken up
with
ADE
to
issue
amendment to purchase
order for short closure vide
letter No. S/I/FE/397 dt 192-2013. Similarly replies
received from DARE and
MTRDC are forwarded to
store section for their linking
and remarks. The matter has
been taken up at IDAS level
as it is included in Super
review.
Referred to Director, GTRE
vide
letter
No.S/I/FE/397/GenCorr dated
6-11-2012. Clarifications called
for the reply received from
GTRE

10% of the order


value
Rs.4426676/requires to be
written off under
the orders of MOD

the machine when a Purchase order was placed for the same, GTRE had
stated that the proposed machine would be installed in the newly built
assembly hanger and inspection for the full engines like Lagu Shakti,
Sagar shakti and other engines under development will be carried out.
However, later the lab has stated that installation was delayed due to
delay in completion of building. It is clear that the machine did not work
during the whole warranty period as installation was done just before
lapse of warranty period.
Improper planning and supervision and suppression of facts from TPC,
has led to delay in installation, commissioning of
the equipment
resulted in lapse of warranty period before commissioning and the loss
therein i.e., cost of warranty that would normally be 10% of the cost of
equipment/order value requires to be written off under the orders of MOD

GTRE,
LRDE,
ADE,
Bangalore,
CVRDE,
Avadi

1 of
9/2013

2011-12

These Establishments are registered as factories under the


factories Act 1948 and as per DRDO Hqrs dated 23-4-1992are
authorized to provide safety clothing/shoes to the entitled workers.
Accordingly the labs are providing the same to its employees,
however, it is seen that the Establishments are procuring
safety/protective clothing for all the non gazetted
staff
irrespective of designation or place of working. The Staff
provided with liveries, staff serving in admin, hindi translators,
cooks, drivers etc are also are being provided with protective
clothing. The terms and conditions as per DRDO Hqrs letter No
are not adhered to. It is seen that all the staff in the labs in
Bangalore are providing leather shoes with steel toe cap to all the
staff while in CVRDE, Avadi female employees are provided with
chappals and male employees are provided with leather shoes with
moulded soles.
As per DRDO Hqrs letter dated 23-7-2004, CDA representative
should be a part of the safety committee which decides the
necessity of protective clothing and even decides about disposal of
the old ones as salvage. However CDA representative is not being
invited and all meetings are held in the absence of the CDA
representative.
Also as per DRDO Hqrs letter dated 23-4-1992, protective
clothing will be provided to employees who are exposed to
Hazards and will be kept in the work centres and issued on need
to have on day to day basis and employees provided with liveries
will not be entitled to personal protective clothing. People working
in different areas are to be provided protective clothing based on
the area and nature of work as per the annexure to the above letter.
In the first instance, there has been a procedural irregularity due to
non inclusion of CDA representative in the safety committee.
Secondly, There has been cash loss due to
1non convening of condemnation board and taking back of salvage
and disposal of the used ones and

Labs like ADE, GTRE have Matter is being


called CDA representatives
pursued
for the safety committee
with
meetings but minutes have
Labs.
not been signed and supply
Labs are
orders not placed so far for
now
the current financial year.
inviting
Proper Procedure to be
CDA
adopted. For the amount
members
incurred
till
date
for
Regularization from MOD
safety
required.
procure
ment
meetings
. Further
progress
in
the
matter to
be
watched.
.

4 GTRE

2 OF
9/2013

2010-11

2.Providing protective shoes/chapels/socks and aprons to non


entitled staff
3. Providing the non entitled type safety shoes to staff ie., leather
shoes/chappals to staff working in wet canteen/MI room wherein
gumboots/white canvas shoes are to be provided. The same has to
be regularized by MOD.
GTRE is authorized for 6 passenger vehicles, 2 load carriers, 2
ambulances, 1 fork lift truck and one motor cycle. However, the
under mentioned vehicles were held in GTRE without
authorization,
Vehicle
Authorized Hel Inducted into Hours
d
service
run
HMT
1
23-3-1987
4212
Tractor
Fork lift 1
29-7-1976
3155
3 ton
Fork lift 1
8-3-1987
2550
5 ton
Objection was raised due to which GTRE took up the matter with
DRDO
Hqrs
.
DRDO
Hqrs
vide
letter
dated
DHRD/76682/GTRE/VEH/C/M/01 dated 13-2-2012 and 2-4-2012
have refused to regularize stating that Hqrs will regularize
vehicles only in cases where vehicles procured is against
replacement of condemned vehicles held against actual
authorization in the RE.
GTRE vide letter No.GTRE/KPg/(FIN)/0504/AUDIT/4/09-10
dated 29-7-2013 has stated the inability to furnish either the
details of source of receipt of vehicles or trace information
regarding the mode of procurement, reason for procurement and
authority under which the vehicles were procured. The lab has
stated that one fork lifter truck is authorized against two fork
lifters. The vehicles are not authorized in the revised RE issued by
DRDO
Hqrs
vide
letter
No.DHRD/76682/RE/40/GTRE(VI)/C/M/01 dated 31-12-2012 .
Hence excess holding of vehicle over RE requires regularization
under the orders of GOI interalia taking action for reappropriation
of the same to the needy units.
The expenditure of approximately Rs.4,33,713/- incurred towards
fuel and repair of the three vehicles requires to be regularized as
infructuous expenditure under the orders of GOI.

GTRE is not able to trace Matter is being


the relevant documents.
pursued
The
expenditure
of
with Lab
approximately Rs.4,33,713/incurred towards fuel and
repair of the three vehicles
requires to be regularized as
infructuous
expenditure
under the orders of GOI.
Excess holding of vehicle
over
RE
requires
regularization under the
orders of GOI interalia
taking
action
for
reappropriation of the same
to the needy units.

1. All
Labs in
Bangalor
e
2. NPOL,
Kochi.
3.
CVRDE,
Avadi
4. DFRL,
Mysore

EXCESS HOLDING OF MT VEHICLES:DRDO scientists are engaged in development of contemporary


state of the art Defence weapons and equipments required for the
Defence service. The project assigned for the DRDO aim at
development of very high quality products. In this connection, it is
desirable to provide matching level of support services, logistics
and other necessities.
To meet the assigned objectives and target it is essential
for DRDO to operate and maintain transport fleet to support the
necessities of scientists. There are few guidelines for DRDO for
procurement; repair, maintenance, running and disposal of the
mechanical transport (MT) vehicle issued in the form of DRDO
transport policy 2008. The notification of transport policy was an
attempt to provide more autonomy and flexibility to the labs/Estt
as far as the MT is concerned.
As per DRDO transport policy 2008 Government of India have
authorized DRDO for use of vehicles for bona fide official duties.
Normally, the vehicle fleet used for transportation of men and
material for bona fide purpose and project activities. In view of
the above MOD has authorized PE/RE (peace Estt/Regular Estt) to
all the labs to maintain a fleet of vehicles for authorized use. In
addition to above, provisions made in project to purchase new
transport vehicles, technical vehicles to cater to the needs of
DRDO labs. However, on closure of the project these project
vehicles need to transferred to buildup(i.e. general fleet of lab
vehicles in accordance with the instructions contained in letter No
R&DHQ/87146/RD-26/791 (R&D) Dated 01/02/1977 under
following procedure:
1) The MT vehicles will, as first priority to be reappropriated to new project/programme necessitating such
vehicles with appropriate sanction.
2) in case where the new projects/Programmes do not
require the used vehicles, the same may be transferred to
general pool
3) Efforts to be made to transfer the vehicles to sister
labs/estt who are in need of such vehicles with a sanction
of vehicles sanction committee at DRDO Hqrs. DRDO
labs are also authorized to hire the transport to meet their
necessities as per Chapter 5 of DRDO transport policy.
Hiring of vehicles merits consideration under following
circumstances
(a)
Where the requirement of transportation of men and
material cannot be met by existing transport held at lab

Reply has been received


from some of the labs and
the

same

is

under

examination by this office.

due to shortfall of vehicles and drivers.


To meet the sporadic requirements of transportation
such as
(i)
Conduct of national or international seminar
(ii)
Conduct of celebrations related to DRDO
(iii)
Exhibition with a view to attract industry
(iv)
Visit of official dignitaries of Government of India
eminent Indian /foreign scientists invited for lecture
During local audit , a review of authorization vis-a-vis holding
of vehicles in all the labs under the audit jurisdiction of
CDA(R&D) , Bangalore has been carried out and as a result, under
mentioned excess holding of vehicles in each lab has been noticed
and objected to in audit.
(b)

Sl
n
o

Unit
/lab

Passenger
vehicle
Auth Held
.

Load
carriers
Aut
Held
h.
1

Tech
vehicle
A
He
ut
ld
h.
0
0

Two
wheeler
A
H
ut
el
h.
d
0
1

Specialist
vehicle
A
Hel
ut
d
h.
0
0

DFRL

DEBE
L
MTR
DC
CABS

ADE

10

29

12

29

LRDE

16

28

16

29

DARE

CEMI
LAC
CAIR

GTRE

12

NPOL
,
Kochi
CVR
DE
Avadi

13

18

30

13

12

11

9
1
0
1
1
1
2

As could be seen from the above statement, all the


labs/Estt under the audit jurisdiction of CDA(R&D) Bangalore
are holding passenger vehicles in excess of their authorized regular
establishment (RE). LRDE, CVRDE and GTRE are holding load
carriers in excess of their regular establishment (RE). ADE and
CVRDE are holding Tech Vehicles in excess of their regular

establishment, DFRL ,Mysore is in possession of one two wheeler


without any authorization, Similarly CABS, ADE , LRDE, DARE,
GTRE and NPOL have excess establishment of specialist vehicles
against their authorized(RE) regular establishment. This is a very
clear violation of government authorization. Due to the fact of
excess holding, labs tend to use FOL for the use of excess held
vehicles which otherwise could have been avoided. Similarly, all
such vehicle requires maintenance, which resulted in additional
burden of expenditure to Government exchequer. There are cases
where vehicles are held idle due to non-availability of drivers there
by concluding Contracts for hired transport (CHT) which is further
compounding the burden of expenditure on the state.
Apart from such excess holding labs/estt are entering into
contracts for hiring of transport due to the facts that, there are
provisions in the projects to incur expenditure for hiring of
transport. Expenditure incurred in this connection is also causing
additional burden on government resources. It is also seen from the
justification for hiring of transport in respect of GTRE and ADE
the reasons placed in the justification are very routine and
repetition every year and there is no proof for action initiated for
increasing the regular establishment. On closer examination of the
contracts placed for hiring of transport with reference to their
regular establishments , the procedure has not been scrupulously
followed, which resulted in extra expenditure to the state, despite
holding of vehicle in excess of establishment thus a gross
violation of standards of financial propriety.
As per the extant orders labs should have initiated
proposals for obtaining the approval of the VEHICLE SANCTION
COMMITTEE at DRDO Hqrs to transfer these vehicles to other
needy establishments or any other Defence units wherein need for
such vehicles are essential. But audit finds that there is no such
mechanism exists at lab level and there is no proper control system
at DRDO Hqrs level to watch that vehicles are held as per RE
(Regular establishment) and desired action is initiated for disposal
of vehicles after closure of the respective projects. The exact
irregularity in terms of monitory value could not be assessed due
to difficulties in identification of the vehicle held irregularly nonavailability of vehicle wise expenditure in the registers.
In view of the above, audit is of the opinion that DRDO HQrs
to take following initiatives;i.
Review of Authorization & holding strength of
MT vehicles (irrespective of the nature of
vehicles) in all the labs under the jurisdiction
of DRDO.
ii.
Issue instruction to maintain vehicles as per

2014-15

During
Local
audit for
the
period
04/13 to
09/13

authorized regular establishment (RE) scales


or fix scales as prescribed.
iii.
Re-appropriate the vehicles on completion of
projects/closure of projects on need basis.
iv.
Condone the procedural lapse of vehicles
which are held in excess form the date of such
excess holding.
v.
To issue stringent policy on hiring of transport
to avoid infructuous expenditure due to
deviation while concluding the CHT.
DEBEL has placed the following two supply orders against M/s
Anil Kumar Associates, Bangalore for Hiring of Technical
services.
a.

DEBEL/14AT0027/ETG/13-14/LP, dated 12/8/2013 for


Rs.7,96,554/- (for the period from 12/8/2013 to 11/8/2014
for 4 persons)

b. DEBEL/14AT0033/AMT-13-14/LP, dated 13/9/2013 for


Rs.8,11,176/- (for the period from 17/9/2013 to 16/9/2014
for 4 persons)
The above supply orders were placed for Hiring of Technical
services under Project ADA-GSE, within a period of one month
for the same purpose (without consulting TPC/PNC). Further the
service charges levied by the same vendor against above
mentioned supply orders at (a) and (b) are 9% and 11%
respectively. The reasons for agreeing for different service charges
by the same vendor and negotiation in this regard being not
conducted upon are not satisfactory.
In reply, the lab has stated that requirement of manpower could
not be envisaged which resulted in placing of two similar SOs for
same services for the same project within a short span of 33 days.
It is clear from the above reply that the lab has placed two supply
orders without proper assessment of the need of manpower, which
resulted in splitting of sanction, payment of 2% service charges
more than the other and non-negotiation with the L1.

Though monetary loss cannot be assessed in relation with nonnegotiation and splitting of supply orders, the clear procedural
irregularity is very much established. Further, the lab has not
followed the procedure of forecasting & assessment of the
requirement of manpower before budget estimations.
In this connection, audit is of the view that
a.

The failure of lab in assessment and forecasting the exact


need of manpower requirement for the said project
resulted in placement of two supply orders. If both the
jobs were to be combined, there would have been chances
of competition among the vendors and reduction of
contract value due to more quantity of services.

b. The above irregularity is a clear case of splitting of


sanction to avoid TPC formalities. Hence, these require to
be regularized as procedural irregularity.
Excess payment of 2% service charge due to splitting order
required to be regularized as Loss due to negligence.

AC D A (IA)