Purchase of Capital Equipment / Machineries
3.0 Brief Introduction:
MDL had entered into a high value contract to the tune of Rs. 65 Cr (as per AIP) for the capital equipment/machineries to ensure better working environment during summer and monsoon and to improve productivity.
During the CTE type examination of the contract, Vigilance Department noticed the lapses and discrepancies during the procurement process and the contract execution stage.
It was noticed that a lot of constraints were faced during the execution stage like the obstruction in operation of the cranes in adjacent areas, movement and erection of blocks of ships at the construction site, positioning of scaffolding, operation of forklifts etc. The installation of the newly procured capital item/machinery to improve productivity would require meticulous micro plan and a lot of operational movements creating hindrances in erection of ship’s blocks and the launching activities as well. As a result, the procured items were not installed in full quantity as procured. On investigation it was found that the feasibility study was not carried out before deciding to go ahead for such a huge capital expenditure.
The following Systemic Improvements were suggested by Vigilance Department and a memorandum to this effect was issued by CMD for compliance by all concerned.
(i) Feasibility study and cost benefit analysis are to be carried out mandatorily for all capital equipment / machinery / facility purchases above Rs. 1 Crore value.
(ii) All such AIPs for capital purchase approvals shall invariably contain compliance of technical feasibility study & cost benefit analysis.
(iii) All proposals for placement of order should include compliance of technical feasibility study and cost benefit analysis.
3.3 Impact and Benefits:
With the mandatory requirement of Feasibility study and cost benefit analysis at pre-tender stage, for all capital items/facility services the possibility of delay in execution of contract and subsequent wastage of manpower and avoidable increase in cost were prevented.