CAG finds e-Procurement system allowed offline bidding and collusive tenders in Haryana

The audit covered the period 2022-23, along with earlier unreported instances and subsequent periods where necessary.

Who it concerns: Government of Haryana (Finance Department and Excise Department)

What the auditor found

• Non-execution of agreement with National Informatics Centre (NIC) for the e-Procurement project.
• Deficiencies in the functioning of the Project Monitoring Unit and non-monitoring of portal implementation.
• Inadequate implementation of the Government e-Marketplace (GeM) and inefficient portal utilization due to inadequate training.
• Instances of collusive bidding and cartelization, including multiple bids from the same IP address, mobile number, email, GSTIN, or PAN.
• Irregularities in tendering such as inadequate time for bid submission, splitting of work, and non-linking of re-invited tenders with original ones.
• Security lapses including absence of password policies, non-segregation of duties, and unauthorized actions related to user roles.
• Financial irregularities including non-reconciliation of pool accounts, irregular GST remittance, and loss due to erroneous refunds.
• In the Excise Department, non-automation of liquor production, dispatch, and export processes, and missing functionality for calculating penalties and interest.
• Short computation of additional excise duty and issuance of passes for quantities exceeding approved permits.
• Absence of validation checks in the liquor system, leading to issuance of passes during lockdowns and for cancelled permits.

Also in the document

• CAG found that the e-Procurement system was deficient because some activities were performed offline, defeating the objectives of transparency and competition.
• CAG observed instances indicative of collusive bidding where multiple bids were submitted from the same IP address or procuring entity computers within close time intervals.
• CAG noted that the liquor distribution system lacked automation for key processes like stock transfer fee computation and penalty calculation, leading to manual errors and potential revenue loss.
• CAG reported that the system allowed the issuance of liquor passes during the COVID lockdown and against cancelled permits due to missing validation checks.