DOCUMENT OF THE WORLD BANK FOR OFFICIAL USE ONLY Punjab: Building Fiscal and Institutional Resilience Program (P175261) Fiduciary Systems Assessment (FSA) May 16, 2022 Official Use ABBREVIATIONS AND ACRONYMS PP Procurement Plan BE Budget Estimate CA Chartered Accountant CAG Comptroller and Auditor General DDO Drawing and Disbursing Officer DLI Disbursement Linked Indicator DoF Department of Finance DoP Department of Planning DGR&PG Department of Governance Reforms & Public Grievance DLG Department of Local Government DSSW&CD Department of Social Security and Women & Child Development EEP Eligible Expenditure Program PSeGS Punjab State e-Governance Society FM Financial Management FSA Fiduciary Systems Assessment FY Financial Year [ 1 April – 31 March] of GoI or GoP GeM Government e-Market Place GoI Government of India GoP Government of Punjab IA Implementing Agency IBRD International Bank for Reconstruction and Development IFMIS Integrated Financial Management Information System IT Information Technology KPI Key Performance Indicator OPRC Operational Procurement Review Committee PAP Program Action Plan PFM Public Financial Management PforR Program for Results PIU Project Implementing Unit PMIDC Punjab Municipal Infrastructure Development Company POM Program Operations Manual PFR Punjab Finance Rule TA Technical Assistance TOR Terms of Reference Official Use Contents 1. CONCLUSION ..................................................................................................................... 4 2. SCOPE ................................................................................................................................ 4 3. PROGRAM OBJECTIVES, RESULTS AREAS & DLIS & PROGRAM EXPENDITURE FRAMEWORK................................................................................................................... 5 4. REVIEW OF PUBLIC FINANCIAL MANAGEMENT CYCLE ........................................ 8 5. BUDGET EXECUTION.................................................................................................... 11 6. RISK MITIGATION ACTION PLAN, TYPE OF ACTION (PAP, DLI, ETC.) AND TIMING ............................................................................................................................ 20 7. IMPLEMENTATION SUPPORT: .................................................................................... 25 ANNEXURE 1: DEPARTMENT-WISE LIST OF BUDGET HEADS INCLUDED IN THE PROGRAM EXPENDITURE FRAMEWORK (P) ......................................... 27 ANNEXURE 2: YEAR-WISE PROGRAM EXPENDITURE ................................................... 29 ANNEXURE 3: HISTORICAL PROCUREMENT DATA ....................................................... 30 ANNEXURE 4: PUNJAB’S CONSOLIDATED PROCUREMENT STATISTICS ................... 32 Official Use 1. Conclusion 1. Reasonable Assurance: The Fiduciary System Assessment (FSA) of the GoP’s Public Financial Management (PFM) and Procurement Systems, capacity and performance, as applicable to the proposed PforR Operation “Building Fiscal and Institutional Resilience for Growth (BFAIR)� , concludes that the present systems, together with proposed mitigation measures, will meet the requirements of the Bank’s Policy for PforR financing dated November 10, 2017, and would be adequate to provide reasonable assurance that Financing proceeds will be used for the intended purposes with due attention to the principles of economy, efficiency, effectiveness, transparency, and accountability without regard to political or other non-economic influences or considerations. The FSA also concludes that the Program Fiduciary Arrangements will meet the requirements of the Bank’s Policy for PforR financing dated November 10 , 2017 and would be adequate for supporting the Implementing Agencies (IAs) in achieving the Program Development Objectives. 2. Risk Assessment: The fiduciary risks of the Program is assessed as ‘Moderate’. The FSA identifies the key fiduciary risks that may affect the program development outcomes and outlines measures to mitigate the risks during the program implementation. The risk mitigation actions 1 have been included in the Program Action Plan (PAP) as appropriate. Some of the systems, process and capacity constraints are also addressed through Disbursement linked results that GoP envisages to achieve under this Operation. The detailed risk and mitigation matrix is provided in Section 5 of this Report. 3. Procurement exclusions: The Program is not expected to procure any large contracts valued at or above the Operational Procurement Review Committee (OPRC) thresholds (US$115 million for Works, US$75 million for Goods and Non-Consulting Services, and US$30 million for Consultancy Services), which are based on a “Moderate� risk rating. This conclusion is drawn based on a broad list of procurable expenditures for IAs. The Program is not expected to include any large�value contracts. High value contracts, if any, under the Program shall be monitored during the supervision missions to ensure that the Program is in conformity with the Bank’s policy on high value contracts in Program for -Results Financing. 2. Scope 2.1. The FSA covered FM, Procurement, and Fraud & Anti-Corruption (F&C) aspects: For PforR Program, GoP’s Public Financial Management (PFM) and Procurement systems will be applicable to BFAIR. This assessment, therefore, integrates our findings in three areas: • The Public financial management system, capacity and performance, as applicable for the PforR Program, was assessed to determine the degree to which the relevant planning, budgeting, funds flow, internal controls, accounting, financial reporting and auditing arrangements provide a reasonable assurance on the appropriate use of program funds for intended purposes and safeguarding of its assets. • The procurement system of GoP was assessed to determine the degree to which the planning, bidding, evaluation, contract award and contract management arrangements and practices provide a reasonable assurance that its procurement processes and procedures will support the program to achieve intended results with due regard to economy and efficiency. • The governance systems were assessed to determine how the risks of fraud and corruption are handled by GoP, including the use of complaint mechanisms, and how such risks are managed and mitigated in light of the government’s commitments under the World Bank Guidelines on Preven ting and Combating Fraud and Corruption in PforR Financing (Anti-Corruption Guidelines or ACGs). 2.2. Institutional Framework for Program Implementation: The BFAIR operation is fully integrated in the GoP administration, and implementation is designed to promote the use of existing GoP structures. Anchoring implementation within the departments and giving them full responsibility for management and execution of activities, the operation will have a positive effect on building capacity and experience within these departments. Where institutional capacity is limited, and special skills are required, outside expertise including technical assistance and consulting services will be acquired. 2.3. The proposed PforR will support the governance and institutional reform agenda of the GoP. It encompasses implementation of related initiatives of the five administrative departments of the GoP – 1 Pls. refer Section 5 of this document for the Risk Mitigation Action Plan, Official Use (i) Finance (DoF), (ii) Governance Reforms (DGR) (ii) Planning (DoP) (iv) Local Government (DoLG) ((including Municipal Corporations of Amritsar and Ludhiana)2, and (v) Social Security Women and Child Development (SSWCD). The Component implemented by (DGR) may cover other Departments. However, those Departments will be identified during implementation. If Program funds expected to flow to Departments identified during implementation, a fiduciary assessment of the departments identified will be necessary to be conducted by the Bank Team before Program Funds flow to those Departments. Each of the participating departments/agency will implement their part of the Program, including procurement of the consultancies and goods, monitoring implementation, and signing off on deliverables. 2.4. The Program Steering Committee (PSC) under the leadership of the Chief Secretary and Secretaries of participating departments will provide strategic leadership, interdepartmental coordination and periodic monitoring for Program implementation. Approval of annual work plan of the Program are vested in the PSC. The DoF supported by a Program Management Unit (PMU) will provide operational level coordination between different stakeholders and facilitate implementation of Program activities. The progress under various Program result areas/components will be monitored by PMU, through quarterly meetings with the PIUs/nominated nodal officers of all relevant participating departments/agencies. 2.5. The Institutional arrangement of the program is assessed to be adequate for implementing the Program activities subject to deployment of dedicated PFM, IT and procurement policy experts at PMU housed in the DoF to manage implementation of RA1. 3. Program Objectives, Results Areas & DLIs & Program Expenditure Framework 3.1. The Program development objective (PDO) of is to strengthen institutional capabilities, accountability and management of public finances to support public service delivery in Punjab. The PDO is expected to be achieved by leveraging synergies across three Results Areas, as given below. Table 1: Summary of Program DLIs (To be finalized during Appraisal Mission) Result Areas DLI DLI Price In Million USD RA1: Strengthening Fiscal and DLI 1: Improved financial planning and budget out-turn in Financial Management 8.25 “Category A� Administrative Departments DLI 2.1 Fiscal Risk Statement included in the Budget and Debt Management Plan adopted 8 DLI 2.2 Strengthened Public Investment Management (PIM) System adopted, and climate-resilience mainstreamed in 6.5 planning process. DLI 2.3 Tax Intelligence Unit operationalized 7.12 DLI 3 Strengthened PFM systems inter-operability to track procurement plans and contractual payment information for 7.5 administrative departments DLI 4 Procurement cycle time reduced and awarded contracts 7 published on e-procurement portal increased. DLI 5 Gender responsive budgeting adopted and beneficiaries for 24 select gender-focused scheme expanded. Sub-total 68.37 RA 2: Improving data- 6.1: Select departments compliant with Punjab State Data Policy systems for policy making and Guidelines and Standards 11.5 support service delivery 6.2: State Data integration platform operational and beneficiaries 24.5 for select schemes verified. Sub-total 36 2 13 Municipal Corporations including Municipal Corporations of Amritsar and Ludhiana will be implementing the DLI on on Performance Grants under Results Area 3. However, all ULBs will receive budget from the Department of Local Government. Official Use RA3: Strengthening local level 7. Introduction of Performance Grants system to demonstrate 30.753 fiscal frameworks and service mechanisms to incentivize improved governance and service delivery. delivery by MCs 8. Improved commercial, operational and financial management 14.5 performance of WSS services demonstrated in AMC and LMC Sub-total 45.25 Total 149.62 Front End Fee 0.38 Grand Total 150 3.2 Program Expenditure Framework4: Table 2 below shows the Results Area and DLI-wise composition of the Program Expenditure. As a standard requirement of GoI, for all Bank Financed State Projects, Bank finances 70% of the total Program Expenditure (P) and the remaining 30% is financed by the State Government. Table 2: Summary of Program Expenditure Framework5 Government Program PforR Program (P) Million USD Percentage of (p) Million USD Total GoP IBRD Expenditure to Results Area DLI USD USD USD USD total Program In INR Crs In INR Crs Million Million Million Million Expenditure 1. Institutional Strengthening of 823.47 111.28 327.96 44.32 19.31 25.01 21% Finance Department 2. Strengthening fiscal 81.80 11.05 41.95 5.67 1.70 3.97 3% RA 1: Strengthening resilience fiscal resilience and 3. Strengthening PFM 27.14 3.67 27.14 3.67 1.10 2.57 2% financial management Information Systems 4. Strengthening public 38.55 5.21 38.55 5.21 1.56 3.65 2% procurement framework 5. Improving gender outcomes 274.02 37.03 253.70 34.28 10.29 24.00 16% Total Of RA 1 1,244.99 168.24 689.30 93.15 33.96 59.19 44% RA2: Improving data Improving data systems for systems for policy policy making and support to 805.89 108.90 504.98 68.24 23.70 44.54 32% making and support to service delivery service delivery Total Of RA 2 805.89 108.90 504.98 68.24 23.70 44.54 32% Introduction of perfromance grant system to demonstrate mechanism to incentivize 297.84 40.25 232.50 31.42 0.65 30.77 14% improved governance and RA 3: Strengthening service delivery by the Local Level fiscal Municipal Corporations. Framework and service Improved commercial, delivery operational and financial management performance of 190.58 25.75 153.27 20.71 6.21 14.50 10% WSS services demonstrated in AMC and LMC. Total Of RA 3 488.41 66.00 385.77 52.13 6.86 45.27 24% Grand Total 2,539.30 343.15 1,580.05 213.52 64.52 149.00 100% Rounded off 342.0 215.0 65.0 150.0 3.3 As is evident from Table 3 below, about 22% of the Program costs comprises salary and establishment costs of the participating Departments, about 29% consultancy costs including contractual staff and for software development, 18% civil works/equipment costs, 14% performance grants, 12% Scheme Expenditure (UDAAN) 2% Training Costs and around 3% Communication/outreach costs etc. 3 This DLI is still being discussed and the DLI price will be finalized by Appraisal Mission. 4 Budget Head-wise break-up of the Program Expenditure is given in Annexure I 5 The size of the Performance Grant Component of the Expenditure Framework is still being discussed and will be finalized by the Appraisal Mission. Official Use Table 3: DLI-wise Expenditure Category Expenditure type Existing salary Individual Consultancies TA for Training Equipments IEC/Com Scheme Performance Total and est. exp consultants Software /Civil / Grants Results Area DLI Developmen Contracts t USD Million 1. Institutional Strengthening of Finance Department 41.22 1.56 0.22 - 1.27 0.06 - - - 44.32 2. Strengthening fiscal RA 1: Strengthening resilience 0.75 1.13 1.65 1.42 0.67 0.05 - - - 5.67 fiscal resilience and 3. Strengthening PFM financial Information Systems - - 0.49 2.70 0.48 - - - - 3.67 management 4. Strengthening public procurement framework 1.25 - 1.60 0.37 1.00 - 0.99 - - 5.21 5. Improving gender outcomes 2.79 0.29 0.41 0.54 0.11 0.02 5.33 24.80 - 34.28 Total Of RA 1 46.00 2.98 4.36 5.03 3.52 0.14 6.32 24.80 - 93.15 RA2: Improving data Improving data systems for systems for policy policy making and support making and support to service delivery to service delivery - 13.31 11.00 25.00 - 18.93 - - - 68.24 Total Of RA 2 - 13.31 11.00 25.00 - 18.93 - - - 68.24 DLI 7 Improved commercial, operational RA 3: Strengthening and financial management local level fiscal performance of WSS frameworks services demonstrated in AMC and LMC and DLI 8 for performance grants 1.56 - 0.61 - - 20.71 - - 29.25 52.13 Total Of RA 3 1.56 0.00 0.61 0.00 0.00 20.71 0.00 0.00 29.25 52.13 Grand Total 47.56 16.29 15.97 30.03 3.52 39.78 6.32 24.80 29.25 213.52 Percentage of Total Expenditure 22% 8% 7% 14% 2% 19% 3% 12% 14% 100% 3.4 Table 4 shows Department-wise estimated allocation of the Program Expenditure and Department-wise DLI price allocation. Key aspects of the Program expenditure framework for the five participating departments are as follows: (to be further refined) • Department of Finance: The Program Expenditure Framework6 primarily includes expenditures towards modernization of systems and processes comprising portion of the establishment cost of the Finance Department including the IFDs and FFDs and new Procurement Directorate to be set up; TA support by way of consultancies; Cost of software development for IFMS and e-Procurement system interface, Contractual Payment information module in IFMS, Procurement Planning Module, State Procurement Portal and Tax Intelligence Unit; Training and Capacity Building; IEC costs for outreach and communication of the new Procurement Law and Rules. • Department of Planning: This comprises portion of the establishment cost of the Planning Department, additional staffing costs of PIM Cell, IT platform, , Consultancy costs for developing PIM Guidelines and implementation of PIM guidelines in selection of at least 20% of public investment project above INR 10 crores, Training costs of DoP and relevant staff of ADs • Department of Social Security and Women and Child Development (SSWCD): The Program Expenditure comprises Cost of the Udaan Scheme for the project tenure, a portion of the establishment cost of the SSWCD, TA support by way of consultancies for institutional support to Mata Tripta Scheme, Cost of gender dashboard, Training and Capacity Building for gender budgeting by all relevant departments. UDAAN is a new state scheme for distribution of free sanitary pads to needy women which the BFAIR Program intends to support by way of (i) 10% increment in number of beneficiaries of the scheme over baseline over the last two years of the Program and (ii) leveraging improved data systems developed under Result Area 2 to administer the scheme. These interventions are covered under RA1 Interventions under Departments of Finance, Planning and SSWCD are covered under RA 1. • Department of Governance Reforms: Consultancy, software development and related hardware costs for implementation of Digital Punjab Scheme which primarily comprises, costs of implementing State data policy in two departments and replicating it in a few other departments. 6 Refer Table 2 and Table 3 of IFSA for the detailed expenditure composition of the Program Expenditure Framework and the type of expenditures Official Use Training, software and related hardware costs for developing Integrated Data Exchange Platform and strengthening the Grievance redressal system. These interventions are covered under RA 2. • Department of Local Government: Performance grants of USD 30.75 Million allocated for 13 MCs to be disbursed on meeting agreed performance standards and incremental costs pertaining to this activity including a portion of the salary and establishment cost of the Directorate of Local Gov. The Performance Grant System establishing the performance standards will be designed during Program implementation. GoP will consult with the Bank on the design of the Performance Grant System, content of the standards and calibration of their baselines. This apart a portion of the salary and establishment cost of the Department of Local GovtThis apart this component also includes cost of providing 24/7 water supply in selected demo zones in Amritsar and Ludhiana MCs. Such costs comprise incremental civil works, cost of consumer and bulk water meters, IT systems and utility database, incremental staff and O&M costs for 4 years. These interventions are covered under RA 3. Table 4: Department wise summary of Program Expenditures Government BFAIR Project (Program) Program (program) IA FY22/23-FY26/27 FY22/23-FY26/27 (Nature of Program Expenditure) US$, millions US$, millions GoP IBRD Total DoF (IT hardware, software development, training, 124 22 36 58 administrative expenses, PMU, consultancies, and IVA) DoP (software development, training, consultancies, 7 1 1 2 and administrative expenses) DoSS&WCD (IT hardware, software development, 37 11 24 35 Udaan scheme, training, consultancies, communication and public awareness, and administrative expenses) DoGR&PG (IT hardware, software development, 109 24 44 68 training, and administrative expenses). DoLG, AMC, and LMC (capital expenditure, 66 7 45 52 performance grants, training, and consultancies) Total 343 65 150 215 The Department wise list of budget heads included in the expenditure framework (P) is given in Annexure 1 and estimated year-wise break-up of the Program Expenditures in Annexure 2. 4. Review of Public Financial Management Cycle The State of Punjab has reasonably good PFM framework. The state’s PFM architecture comprises the Punjab Financial Rules (PFR), the recently enacted Punjab Transparency in Public Procurement (PTPP) Act, the Punjab Treasury Rules, the Public Works Department (PWD) Code and relevant ad hoc Government Orders (GOs). Although these provide a good basis to build upon, there are numerous practical challenges, which include (i) gaps in financial management capability in Administrative Departments and Field Offices (at the level of the fundamental implementation machinery for delivery of services), (ii) a multiplicity of standalone information systems (like IFMS e-procurement), which do not provide a 360 degree view of the transaction cycle, (iii) cash-basis budget management, with no information system for effective commitment tracking , and (iv) fragmented and outdated public procurement rules and practices. The GoP recognizes these challenges, and these are being addressed by GoP through its ongoing reform agenda for the past few years and interventions under the BFAIR Program. Each Component of the Financial Management cycle is discussed in detail below: 4.1 Planning and Budgeting 4.1.1 Budgeting Process & Performance: The framework for planning and budgeting by GoP is fairly elaborate with comprehensively documented rules and processes operating within the overarching Official Use mandate enshrined in the Constitution of India7 The GoP has an established budget preparation and approval process which are working well across Departments. Further, the budget classification system of GoP is well defined and uniformly applied across the state. The Budget documents are made public once approved by the Legislature. The Punjab state budget, like the GoI’s budget or any other State budget, is prepared on a cash basis and therefore does not reflect arrears or receipts due. The annual budget presents estimate of revenue and expenditure for the fiscal year using the administrative, economic, and program (or functional) classification. While past performance is a part of the budget, there is no mandate to provide sectoral/departmental budget information for future year/s. Budget estimates are prepared and approved before the start of the financial year (April 1 – March 31). Budgets are tabled before the State Legislature prior to the commencement of the financial year. The Legislature approves the budget and authorizes withdrawal of both voted and charged expenditure from the Consolidated Fund of the State through the Appropriation Bill. The Table 6 below presents the dates for budget presentation and enactment of budgets: Table 5: Date of Presentation of State Budget and Enactment S. No. Financial Date of Presentation before Date of Enactment Year State Legislature 1. FY 2021-22 08-03-2021 10-03-2021 2. FY 2020-21 28-02-2020 04-03-2020 4.1.2 Budget Reliability: The Budget Outturn for the five departments which will be implementing the Program are shown in the Table below: Table 6: Department-wise Budget Outturn Budget Outturns % [BE based (RE based)] Name of the Program Implementing Department 2019-20 2020-21 2018-19 (Unaudited) (Unaudited) 101 91.98 80.89 Finance Department (98.58) (92.8) (93.67) Governance Reforms 96.72 37.28 23.24 Department (87.31) (60.16) (60.31) 29.83 54.86 47.51 Planning Department (74.41) (74.70) (83.21) 63.77 63.17 83,40 Local Government (63.78) (60.88) (98.17) Social Security, Women and 94.68 99.41 85.43 Child Development (94.06) (92.37) (87.89) The Revised Estimate (RE) based budget outturns are significantly improved as compared to the outturns computed on original Budget Estimates (BE). Improved outturns on RE basis are consequent to in-year revisions of the original budget. The average budget out-turns for the specific budget heads of the participating departments which are included in the Program Expenditure Framework (P) is shown in the Table below. Table 7: Average budget Out-turn for Budget heads included in P FY Average Budget out-turn based on Average Budget out-turn based on B.E. R.E. 2018-19 80.09% 81.18% 2019-20 88.66% 76.76% The PforR Project aims to set up the field units of finance cadres in administrative departments and field offices (Districts). This coupled with capacity building on financial management are expected to bring 7 Article 202-207 of the Constitution of India prescribe procedures in Financial Matters of the States. Official Use rigor and discipline to financial planning and execution at the field level resulting in improved budget outturns. 4.1.3 The budget process has both strengths and weaknesses. Among the strengths are (i) discussions of budget proposals at various levels -within respective Departments and with Finance Department before budget finalization; (ii) adherence to a fixed time frame to ensure passing of the budget and completing all formalities prior to year-end thereby ensuring funds allotment at the beginning of the year to the departments. (iii) Uniform chart of accounts for budgeting and accounting across departments. As a result, budget-head-wise expenditure is easily identifiable (iii) availability of on-line data on budget allotted to each DDO in a department and actual spending against allotted budget through the Integrated Financial Management System (IFMS); 4.1.4 Among the weaknesses are (i) underutilization of the Budget module of IFMS rendering the initial processes of budget estimation paper driven. (ii) Budget ceilings not issued to Departments r when the first circular is distributed at the commencement of the annual budget preparation cycle. Unpredictability of of the budget envelope available affects the quality of budget estimates of the budget units, programs and schemes. Aggregate department-level funds availability is determined on budget finalisation requiring down the line revisions in estimates8. (iii) There are no formal department wide or scheme-wise systems for tracking contractual commitments9 which poses challenges for proper financial planning. A Contractual Payment Information Module will be developed and implemented under Result Area 1 of the BFAIR Program which will allow the Finance and Administrative Departments to track net contractual commitments on a daily basis. However, the system is expected to be operational by Year 4 of the Program. BFAIR Program funding will be based on action plan of participating departments. Till the time this Module is made operational individual departments will track respective contractual commitments under the BFAIR Program through spreadsheets. 4.1.5 As part of the preparation of Program Expenditure Framework year wise estimation of Program expenditures have been prepared in consultation with participating departments. This will be further fine- tuned during implementation. FD will prepare annual consolidated program budget based on work plans and activities prepared by participating departments. The annual work plan and budget so prepared will be reviewed and approved by the Program Steering Committee before it is incorporated in the State budget. 4.1.6 The Program expenditure will be budgeted in annual approved budget of the GoP across multiple demand for grants and budget heads being operated by the implementing departments. As part of the Program expenditure framework a set of budget heads supporting the ongoing activities which are essential for achievement of the program results across the participating departments have been identified. In addition, a new budget head have been opened in each participating department (except Finance Dept.) for supporting the incremental (new) activities essential for achievement of the DLIs. This will allow the Program related expenditures to be separately identified, accounted for and reported in the consolidated accounts prepared for the Program. 4.1.7 Budget Transparency: On adoption by the State Legislature, the GoP makes public the budget document which includes department-wise annual budget allocations for current and previous year and Actual Utilization details of last-to-last year. 4.1.8 Overall, taking into account the program specific arrangements and interventions, the GoP’s framework for planning and budgeting is considered adequate for the BFAIR Program. 4.1.9 Procurement Planning: The IAs initiate procurement activities after obtaining formal approvals (Administrative and Technical Sanction) from officers/ committee based on the Delegation of Financial Powers. The existing Punjab Financial Rules do not spell out the systematic preparation of Procurement Plan (PP) and its disclosure on the official website. Procurement plans are not systematically prepared and linked to budget resulting in indiscriminate floating of tenders which may not be budgeted for. GoP has already enacted the PTPP Act, 2019, which envisages preparation of Annual Procurement Plan (APP) before/at the beginning of every financial year. Also, World Bank has supported 8 Only Planning Department is given an overall budget ceiling, albeit informally, for capital budget of the State. Planning evaluates all capital investment projects of the State. 9 Contractual commitments does not mean payables or obligations to pay. Payments against commitments are contingent upon approval of payment by the employer/contractee on satisfactory execution of the terms of the contract. Official Use GoP in preparing the draft Punjab Transparency in Public Procurement Rules, 2020, which is under finalization and provides guidance for preparing the APP to include the items of Goods, Works or Services (Non-consulting and Consulting) relevant to the public need determined under section (9) of the Procurement Act, 2019 and Rule 11 of the Procurement Rules 2020 to be procured during that financial year and submit it together with the annual budget proposal. All the procurement items to be covered in the annual procurement are then decided based on priorities, budget allocation and availability of funds. Prepare APP by coherent integration of Budget & Annual Workplan, procurement strategy along with the implementation schedule [Chapter III Procurement planning of PTPP Act] 4.1.10 Procurement profile of the Program. The program procurement profile broadly comprised of a selection of consultancies and procurement of goods including ICT equipment and development of customized MIS / software platforms. The procurement expenditure excludes non – procurement expenditure like performance grants, salaries, training and operational cost for program Table 8.: Broad category of procurement Expenditure: Implementing Departments / Agencies Implementing Departments / Agencies Nature of Program Expenditure 1 Department of Finance Consultancies for advisory services and IVA including consultancies for PMU support ;Procurement of IT hardware, software development, training with external agency 2 Department of Social Security, Women and Consultancies (GRB)s, Women Economic Child Development Empowerment Platform and training 3 Planning Department Consultancies, training, software development, 4 Department of Governance Reforms Consultancies, IT hardware, software development, training with external agency 5 Department of Local Government Consultancies, training with external agency 6 Amritsar and Ludhiana Municipal Consultancies, capital investments, Corporations 5. Budget Execution 5.1 Funding Predictability: The Program activities will be pre-financed by the GoP and the Bank funds will be disbursed based on the achievement of DLRs. Funding predictability is high as there is a high level of commitment and ownership for the Program within GoP as the Program is well aligned with the State’s priorities. However, due to the COVID-19 pandemic and with the GST compensation from GoI expected to be end by June 30, 2022, the uncertainties, and vulnerabilities to macro-fiscal situation of the State are likely to prevail over the short to medium term. However, The BFAIR Program cost constitutes less than 2% of the overall budget of the 5 participating departments10. Therefore, risk to the Program funding arising out of budget constraints is moderate in the short to medium term. 5.2 Treasury management and funds flow: The treasury system of the GoP is robust, well established, and have been used under several World Bank operations. Receipts and expenditures transacted at various treasuries are routed to a single treasury account with RBI. At the Departmental level payments of bills are streamlined based on quarterly budgets allotted by the Finance Department against approved annual budgets. There is no physical movement of funds and all the DDOs draw their bills through the IFMS which has online Bill submission, processing, tracking and payments including enhanced refund management process. Over the last decade, the IFMS application was developed organically to cover budget allotment, treasury functions11, accounting, pension processing and debt management. However, a few disjointed systems still exist like e-procurement12. This, coupled with the absence of a structured commitment information system, means that the system does not provide a full view of the transaction cycle and creates operational inefficiencies and weak controls. To address these challenges, the B-FAIR 10 The budget of the 5 implementing departments for FY 21-22 is USD 2.72 billion. Assuming, that the budget for the next 4 years will be maintained at least at the same level as FY 21-22, the Program cost works out to 1.86% of the aggregate departmental budgets for the Program tenure. Voted budgets of Finance, DGR, Planning, Social Security and Women and Child Development and Local Government Departments have been considered. Only, in the case of Finance Department budgetary allocation for Loan Repayment, Interest payment and Pension Payment has been excluded from the voted budget to arrive at the overall budget of the five participating Departments. 11 This includes online submission of bills to treasury, e-payment to vendors, online collection of receipts through a cyber-treasury portal. Cyber Treasury is an online portal or single window to facilitate the payment of state-imposed taxes by citizens and firms. Official Use Program includes interventions to develop an interface between IFMS and e-procurement and also develop a contractual payment information module in IFMS. A Contractual Payment Information Policy along with procedural guidelines will be developed and implemented through the Contractual Payment Information Module. These reforms are expected to result in informed and efficient expenditure planning and management. 5.3 Timeliness of Treasury Payments: In 2019, when the Bank Team was collecting data for the PFM assessment, it was observed that the Treasury bills were not paid on FIFO basis. Due to paucity of funds, there were daily checks and rationing by the treasuries. Payment of bills were often deferred, and payments based on priority. Such discretion was applied by the highest authority in the Finance Department. However, during the current phase of the assessment all participating Departments confirmed that over the last 5/6 months, Treasury Bills were paid within 3- 4 days and there is no deferment in payment of bills. In fact, there was news in the print media that Punjab set a record on March 31, 2021 with zero pendency of bills after 15 years (link provided below). (https://economictimes.indiatimes.com/news/india/punjab-sets-record-with-zero-pendency-of-bills- after-15 years/articleshow/81855483.cms?from=mdr) 5.4 The funds flow arrangements in the Program: The fund flow arrangements of the Program are depicted in the diagram below World Bank GOI GoP Flow of funds Submission of claims Planning Governance Finance Dept. Local Govt. SSWCD Dept. Reforms Dept. Dept Dept. Amritsar Ludhiana 11 Other MCs. MC MC. (Perf Grant) CorpCo Goods/Service Goods/Service Goods/Service Goods/Service Goods/Service Providers Providers Providers Providers/ Providers/ Contractors 5.5 Accounting and Financial Reporting. The Directorate of Treasuries and Accounts (DoTA) is responsible for collection of government receipts, making payments and generation of list of transactions for rendition to the state’s Accountant General (AG) with related supporting vouchers. The DoTA has implemented an Integrated Financial Management Information System (IFMS) which is the backbone of all financial transactions of the Consolidated Fund of the State. The accounts of the State (including works accounts) is compiled by the Office of the State Accountant General13, Accounts and Entitlements Division, based on the reports generated by IFMS and related supporting vouchers. In-year monthly accounts are published with a delay of 2/3 months as is observed across States in India. Accounting is on cash basis as is the existing practice in the public sector in India Mandatory reconciliation of accounts between the State Departments, Treasury and AG (A&E) Regular reconciliation of accounts is done between accounts maintained by AG(A&E) and the Departmental accounts maintained by DDOs. As per letter dated 11-10-2021 from the Office of the Principal Accountant General (A&E), out of a total of 208 Chief Controlling Officers of expenditure in the Government of Punjab, almost all have reconciled their accounts with AG(A&E) up to June 2021. 13 This represents the State branch of the Comptroller and Auditor General (C&AG), the Supreme Audit Institution of India. Official Use 5.6 Procurement processes and procedures: The FSA reviewed the existing PTPP Act, 2019, Rules, policies, procedures and further Draft Punjab Transparency in Public Procurement Rules, 2020 under finalization by GoP . The value of expenditure under the Program would be relatively small when compared to the scale of the annual procurement undertaken by GoP for all the departments put together. GoP has promulgated the PTPP, 2019 in September 2019. All the IAs for the program are bound by the Act and are required to follow the same for all their procurements. In addition, Punjab Financial Rules (PFR) and PWD Code are being followed across the State at present. However, the draft Punjab Transparency in Public Procurement Rules, 2020, have been framed and are under finalization to ensure proper implementation of the Procurement Act, 2019. On finalization of Procurement Rules 2020, GoP is planning to issue guidance notes for sustainanble and gree public procurement and others subject to ease the implementation of PTPP Act and Rules. Also, GoP would have to review the Punjab Financial Rules (PFR) and PWD Code for consistency and alignment. GoP has also entered in an MoU with Ministry of Commerce, Government of India which stipulates use of Government e-Marketplace (GeM) portal of central government for procurement of Goods and Services which are available on the GeM portal. It binds the Procuring Entities (PEs) in the State to use Government e-Marketplace (GeM) portal for procurement of common use items and services available on GeM. In line with the existing procurement policies of GoP, preferences are applicable to Make in Punjab, Start-ups, Co-operative labour and construction Societies registered within the State of Punjab and also for small industries. However, these preferential procurement guidelines are issued by different Departments and get modified or superseded from time to time making it difficult for the PEs to follow. The draft Procurement Rules, 2020 have consolidated all preferences in public procurement at one place for ease of implementation, keeping in view the more inclusive and sustainable procurement aspects. The Delegation of Financial Powers defines various threshold/limits of sanctioning the estimate and according approving the tender award based on the hierarchy in the department. 5.7 Approved procurement methods: Open Tendering is the preferred procurement method used widely by all the Departments, including the IAs for the Program. Other methods of procurement viz. Limited tendering, Request for Quotation, Single tender/Nomination/Direct Contracting, Reverse auction, Spot Purchase committees are available for procurement of Goods and Works. Single stage and two stage bidding provisions are available. Single stage two envelope method is the most widely used method for contracts for most of the procurement of Works and Goods. Expression of Interest (REoI) and Request for Proposal (RFP) are used for procuring Consulting services. Online payment gateway is integrated for receipt of Tender Fee, EMD, processing fee, registration fee and refund & settlement of tender fee, EMD and processing fee etc. 5.8 Standard procurement documents: The PTPP Act mandates the GoP to develop Standard Bidding Documents. GoP is not having universal suit of Procurement documents/templates and these were not disclosed on the website except one Standard Bidding Document (SBD) for procurement of Works which had been finalised by PWD about two years back. However, World Bank has provided technical assistance to GoP in development of the new set of draft SBDs for procurement of Goods, Works (Unit rate basis, Percentage basis and also for EPC type), Consulting Services and Request for Quote (RFQ) taking into account the Procurement Act, 2019 and the draft Procurement Rules 2020 which are under finalization. These draft Standard Bidding Documents (SBDs) include clauses for prevention of Fraud and corruption, complaint handling and dispute resolution based on the provisions in the Procurement Act 2019 and the draft Rules 2020. The IAs will be use these SBDs for all program procurement activities, including reference to applicability of World Bank’s Anti -Corruption Guidelines and no contract award to debarred firms. 5.9 e-Procurement Platform: GoP’s eProcurement Platform is being used for management of Tendering from Publication till award for all procurement categories. The GoP’s e -procurement platform is using GePNIC (Government e-Procurement System of National Informatic Centre) for e-tendering. GoP’s guidelines stipulate mandatory use of e-Procurement beyond a threshold limit of INR 200,000 [US$2,666 @ INR75 per US$] for all the departments except for the DoLG for which this limit is INR 20,000 and above. 5.10 Publication of tender notice: The GoP has issued guidelines for Publication of tender notices in Print and State Government websites which are revised from time to time depending on the estimated value the tenders. For the Tenders with estimated cost up to INR500 lakhs (INR50 million) the tender notice shall be published in two Newspapers having State-wide circulation of vernacular and English/Hindi language giving a minimum of 21 days in the first instance. If the estimated value is beyond this Official Use threshold, then the advertisement shall also be published in Newspapers having circulation in the National Capital Region. In addition, Tender notices shall also be published in departmental websites and the e-procurement portal. 5.11 Evaluation process: Evaluation is done manually by a committee formed with nominated officers . In case of two stage bidding, technical bids are opened first and evaluated. In case there are less than three qualified technical Bids, the process is cancelled and Tender is floated again. The process is repeated for second and third time giving 14 days and 7 days time for opening of the Bids . Despite this process, in case there are less three technically qualified Bids, the tender is processed for opening of financial Bids. The Tender opening and evaluation committees prepare the comparative statement and works out the reasonableness of rates and prepare their recommendations. In case the lowest Bid under consideration is lower by more than 25 percent of estimated cost, the committee may seek detailed analysis for the quoted rates, workability and the methodology. After evaluation, the Committee may seek additional Bank Guarantee @5% so as to protect against financial loss in case of default by the contractor. Negotiations after opening of tenders are exceptions. Under exceptional circumstances if negotiations are allowed to be held, these are held only with lowest or most advantageous bidder. . 5.12 Disclosure of Contract Award: The contract award details on the e-Procurement portal and State Government portal are being made, but all contracts finalized are not being uploaded. The percentage of the contract award published on the portal for State level : 39% in 2019-20 and 42% in 2020-21 respectively. For (Annex 3 and 4 for details). 5.13Performance of Procurement System: KPIs for procurement and contract management are not monitored regularly. The data in the procurement portal was analyzed along with supporting data received from DoGR&PG. Key inferences are: Works tenders constitute a substantial portion of GoP’s procurement spend. The average number of Bids is less than two, indicating that participation needs to be improved, which may likely result in a more economical price. Tenders cancelled stand at 31%, 30% and 25% for FY19, FY20 and FY21 respectively, which is on the higher side. The success rate of tender floated vis-à-vis finalized is around 42%. The average time taken for finalization of procurement has been 160 days, 151 days and 103 days during FY19, FY20, FY21 respectively, for open tenders covering all procurement categories. It shows substantial improvement during FY 2021-21 and needs to be sustained further. Reducing the time taken to finalize the tender after opening the technical/financial evaluation requires improvement. Few other KPIs like price variation between estimated cost and awarded amount, cost and time overrun, and number of amendments, were not computed for non- availability of data (refer Annexures in FSA). Data in eGP system may be used for procurement analytics and derive KPIs. These valuable insights will help to strengthen the PFM decision support system 5.14Contract Management: The PWD code provide guidance for managing the Works and Goods contracts, the contracts were managed as per procedure prescribed in the PWD Code (procedure for acceptance of change in quantities, variation, new quantities and threshold set for each threshold). To streamline these procedures further, the Draft Punjab Transparency in Public Procurement Rules, 2020 which are under review for finalization and implementation includes a Chapter on ‘General Rules relating to Contract and Contract Management’. The provision of Rules require the Procuring entities to proactively manage the contracts throughout the duration of the contract against the Contract Management Plan to be drawn during contract finalisation stage. Key Performance Indicators (KPIs) are to be formulated at the time of contract finalization to ensure that contractor performance is satisfactory, contract requirements are met, and all stakeholders are well informed and satisfied with the Goods, Works, Non- consulting Services, and Consulting Services provided under the contract. An evaluation of the contract execution shall be carried out at the time of contract completion to assess the performance, and if applicable, identify any lessons learned for future contracts. Procuring Entities are required to develop and maintain appropriate electronic tools for management of contracts and record and publish physical and financial progress of large value contracts on such tools. PAP should include these aspects. The draft Procurement Rules, 2020 provides for the Directorate of Procurement Policy and Enforcement (DPPE) to develop a Procurement Management Information System (PMIS) which shall integrate all procurement activities starting from assessment of need, project preparation and evaluation, procurement plan, electronic bidding process on e-procurement portal, Bid evaluation process, finalisation of contract, contract monitoring & management, defect liability periods, maintenance period, completion of contract, dispute resolution, performance monitoring of contractors, rating of contractors, use of data analytics for improvements in procurement processes. It is envisaged to be implemented by Punjab State e- Official Use Governance Society (herein after referred as PSeGS) who is the implementing agency for e-Procurement. 5.15 Internal controls: 5.15.1 The State has reasonably good Internal Control Framework , laid down by the Punjab Financial Rules (PFR), the recently passed Punjab Transparency in Public Procurement Act, the Punjab Treasury Rules, the Public Works Department (PWD) Code and relevant ad hoc Government Orders (GOs). However the C&ag Report on State Finances raise some internal control issues regarding two of the participating Departments. Pls refer the section 5.20.1 for details. 5.15.2 Internal audit: The Internal Audit framework in the Government of Punjab, as in the Government sector of the rest of the country is weak. GoP has a Directorate of Internal Audit Organisation (IAO)in the Finance Department which was setup in 1981 with an objective to conduct revenue audit of 5 major heads, i.e. Sales Tax, Token Tax, Passenger and Goods Tax, Excise duty, Entertainment Tax, Electricity duty and Stamp Duty. The scope of the audit was limited only to the detection of deficiencies in revenue collection so that recoveries can be made within the stipulated period of three years from its due date. Delay beyond the statutory limit leads to permanent loss of revenue to the State. The GoP vide its notification No 1/M/482/91/AI/T&A /9804, dated 12.11.1991 changed the scope of audit from 'revenue' audit to 'expenditure' audit such as GIS, GPF Accounts and funds sanctioned by District Planning Boards etc. Again in 2004, the GoP vide Notification No. 16(1) 19/04 5FE-IV/4344-45, dated 15.6.2004, entrusted both the work of Revenue Audit along with expenditure audit to IAO without any change in its existing staff and structure. Presently, the IAO conducts the audit of plan fund, Grant in aid (primary education), Grant in aid (Secondary education), Grant in aid(colleges), Grant in aid (Technical institutions), GPF (20%), GIS (10%),token tax,excise tax, VAT, Entertainment tax, Electricity duty and stamp duty as per the norms fixed by the Government vide IAO(R). letter no 1524 dated 31.03.2014for conducting the audits. The existing structure of Internal Audit was formed for revenue audit only. Neither the strength of the staff of IAO nor the skill sets need has been reviewed in the context of the changing needs of the Directorate nor all the posts filled (37% vacancy). Currently there is little or no Internal Audit in most of the Administrative Departments. The focus of Internal Audit, if any, is mainly on financial irregularities and misappropriations and corresponding recoveries. Comprehensive review of Internal Controls by the Internal Auditor in the departmental operations is completely missing. 5.15.3 Internal Audit for the PforR Program: As is evident from the above-mentioned assessment, the Internal audit (IA) system of GoP does not appear to be commensurate for getting assurance on internal controls of the Program. Therefore, as a Program mitigation measure it has been agreed that a separate internal audit of the Program covering all implementing agencies will be conducted for getting assurance on the internal controls of the Program based on ToR agreed with the Bank. Internal audit will also include review of the controls related to Procurements. Internal audit will be conducted by a private firm of Chartered Accountants empanelled with the C&AG for audit of major PSUs or by a joint team comprising the audit firm and IAO of Punjab. 5.17 Program governance and anticorruption arrangements: The Vigilance Bureau, Punjab is empowered to enquire into allegation against all public servants, as defined under the Prevention of Corruption Act, 1988. The jurisdiction of Vigilance Bureau was originally restricted to Punjab Government employees and members of All India Services (Para I (B) (ii) instructions dated 15.09.1967). However, it was extended vide instructions dated 15.10.1979 so as to cover employees of autonomous and statutory Boards/ Corporations and Improvement Trusts. At present all the public servants are covered under prevention of Corruption Act, 1988 subject to its jurisdiction. The functions of the Vigilance Bureau covers the following: • To collect intelligence regarding corruption and corrupt public servants. • To conduct enquiries into the complaints of corruption against public servants. • To conduct investigation of criminal cases involving corruption by the public servants. • To assist in prosecution against the defaulter public servants in trial courts. • To conduct raids to catch corrupt Govt. Servants red-handed while accepting bribes. Official Use • To submit information, data and reports to the State Govt. regarding corruption and corrupt public servants. • To suggest measures to check corruption in various Govt. Department. • To keep a watch over departmental proceedings on charges of corruption against public servants entrusted to respective departments. • To conduct joint checking of the ongoing projects in various departments. 5.17.1 Applicability of the Anti-Corruption Guidelines of the World Bank to the operation. The Program will be subject to the World Bank’s Governance and Anti - corruption Guidelines namely the “Guidelines on Preventing and Combating Fraud and Corruption in Program-for-Results Financing, dated February 1, 2012 and revised on July 10, 2015. As there is no distinction between World Bank funded activities and Government funded activities within the Program boundary, these guidelines shall be applied in an unrestricted manner on all activities within the Program boundary. Requirements under these guidelines include but are not limited to – (a) Borrower’s obligation on informing the World Bank about all fraud- and corruption-related allegations and investigations; (b) the World Bank’s right to conduct administrative enquiries; and (c) ineligibility of sanctioned firms by the World Bank for contract awards. In order to operationalize implementation of the various areas covered in the ACGs, the IAs shall: i. Compile and maintain information about all complaints and their resolution status related to the activities under the Program boundary. Share consolidated report with the World Bank on fraud and corruption related allegations and investigations under the activities funded by the Program. ii. Check World Bank’s debarment list and temporary suspended firms’ list before awarding any contract funded under the Program boundary. A firm/individual debarred or suspended by the World Bank is not eligible to get any contract under the Program during the period of such debarment or suspension. This debarment list is available at the following website: http://www.worldbank.org/debarr. Bank’s suspension list that will be obtained from the WB team by the Program Team periodically. iii. report on semi-annual basis stating that none of the contract awards under the Program are made to any of the ineligible/ suspended firm. For every bidding opportunity under the Program, each participating bidder shall submit (as part of the bidding process) a self-declaration that the firm is not subject to ineligibility or has not been sanctioned under the World Bank system of debarment, cross- debarment and temporary suspension. iv. Program audit also review and certify above aspects 5.18 Complaint Handling Mechanism: Currently no clearly laid down mechanism is in place to treat the procurement related complaints in a timely manner. Section 49 and 50 of the Procurement Act, 2019 deals with the Appeals for any grievance by the bidders in regard to a specific procurement. The draft Procurement Rules 2020 has the provision for Publication of the appeals and appeal procedures on the State Public Procurement Portal (SPPP) and also the data on resolution on complaints and decisions on the portal. Thus there is need to put such a mechanism into place as per provisions in the draft Procurement Rules 2020 under finalisation by GoP. 5.19 Debarment process: Currently there is no clearly laid down mechanism in place to debar and/or blacklist the bidders/firms. Section 26 and Section 56 of the Procurement Act, 2019 deals with the blacklisting and debarment respectively. Draft Procurement Rules, which are under finalization requires DPPE to prescribe detailed rules for debarment of bidders. The rules shall inter-alia include the right of bidders to be heard prior to debarment and or blacklisting. DPPE shall publish and maintain debarred/backlisted firms on the State Portal which shall apply to all procurements within the State. 5.20 External Audit: The Constitution of India mandates that the annual State accounts will be audited by Comptroller and Auditor General of India (C&AG 14). The offices of the Accountant General (Audit) at 14 Independent statutory authority and the Supreme Audit Institution of India. C&AG is also a member of International Organization of Supreme Audit Institution (INTOSAI) which operates as an umbrella organization for external government Official Use the state level support the audit of state departments. Accordingly, the Annual Financial statements of the State is audited by the Office of the Principal Accountant General (Audit), Punjab. The C&AG audit is carried out in accordance with the Standards on Auditing issued by the Comptroller and Auditor General of India (C&AG). These standards and methodologies adopted by SAI India are consistent with the fundamental auditing principles elaborated under the International Standards of Supreme Audit Institutions (ISSAI) of International Organisation of Supreme Audit Institutions (INTOSAI). However, there is usually delay in publishing of the Audited State Finance Accounts by more than 12 months. The delays in the past three years is shown below. Table 9: Finance Accounts 2016-17 to 2018-19 S. No 2018-19 2017-18 2016-17 1. Date by which Audited Finance 12-06-2020 07-12-2018 22-11-2017 accounts submitted by AG Punjab 2. Date by which Finance accounts 05-03-2021 22-02-2019 22-03-2018 presented in Punjab Legislative Assembly 2. Date by which Finance accounts 02-03-2121 22-02-2019 22-03-2018 passed by Punjab Legislative Assembly 4. Date on which Finance accounts put 29-04-2021 18-03-2019 16-04-2018 in public domain by FD 5.20.1 Audit Observations: A review of the C&AG’s audit Report State Finance Accounts which covers all five Departments implementing the Program does not reveal any major accountability issues about the participating departments except for the following: (i) Utilization Certificates to the tune of INR 500 million pending for more than 18 months15 for the Department of Local Government as on March 31, 2019(b) Advance bills amounting to INR 543 Million (USD equivalent 7.3 Million) as on March 31, 2019 ) pending for more than 6 months16 for the Department of Social Security and Women and Child Development as on March 31, 2019. 5.20.2 The statutory audits of the Amritsar Municipal Corporation (AMC) and the Ludhiana Municipal Corporation are conducted by the State AG. AG audit for FY 2018-19 has been completed but the final report is yet to be issued. The AG audit reports of the MCs reveal internal control issues like short levy of cess, non-transfer of unclaimed security deposits into corporation bank account after a lapse of three years (as required by the Municipal Act), outstanding recoveries of house tax, non-achievement of income targets etc. The Audit Reports also flag the need for internal audit. There is no system of internal audit in MCs. However, there is a system of pre- audit of expenditures by resident auditors of the Directorate of Local Fund Audit. 5.20.3 Program External audit Arrangements: Considering the delays in publishing of the Audited State Finance Accounts, delays in audit of MCs and the Bank’s requirement of submission of Audited Program Financial Statements within 9 months, the BFAIR Program Financial Statements will be audited by the C&AG based on generic Terms of Reference for C&AG Audit of Bank Assisted Projects agreed between the C&AG, DEA and the World Bank. The audit report will be submitted to the Bank within 9 months from the end of the financial year. The following audit report will be tracked in the Bank’s systems. audit community which provides high quality auditing standards for public sector helping governments in improving performances, good governance, ensuring public accountability and enhanced transparency. 15 Rule 8.14 (b) of the Punjab Financial Rules Volume-I prescribes that the Utilisation Certificate (UC) should be submitted by the sanctioning authority to Accountant General (A&E) not later than eighteen months from the date of sanction of Grants-in-aid. 16 Detailed Countersigned Contingent (DC) bills duly countersigned by the Controlling Officer needs to be submitted to AG (A&E) within six months under Rule 274 of Punjab Treasury Rules. Official Use Table 10: Audit Arrangement Responsibility Audit Report Audit By Due Date for submission to World Bank Department of Consolidated Program C&AG (Office of the December 31. Finance, Government Financial Statements Principal Accountant of Punjab General (Audit), Punjab 5.21 Procurement and Financial Management Capacity 5.21.1 Procurement Capacity: Procurement capacity assessment of DLG: The Department of Local Government (DLG) main functions are to direct, supervise and control the functioning of all the Municipal Corporations, Municipal Councils, Nagar Panchayats and Improvement Trusts in the State, to implement the State/Centrally sponsored schemes through these urban local bodies and other parastatals such as Punjab Water Supply and Sewerage Board (PWSSB), Punjab Municipal Infrastructure Development Company (PMIDC) and State Urban Development Authority (SUDA). It has a well laid down organisational structure as enclosed at Appendix-1. The DLG is responsible for various matters pertaining to the development of various cities and towns of the State. 5.21.2 The assessment noted that procurement framework is on the sound footing. DLG has a Standard Operating Procedure (SOP issued on 02.08.2018, copy at Appendix-2) for execution of all type of development Works, O&M Works, hiring of Machinery etc. and Procurement of Goods in Local Government Department. There are clear authorities defined who are competent to purchase Goods, buy goods through Rate Contracts and GeM, execution of development works and all other maintenance works, and engage Consultants, officers competent to accord Technical sanctions, Administrative approvals. The SOP also include procedure for NIT, Pre- Qualification, Pre-Bid meetings, Tender in two packet system i.e. Technical Bid and Financial Bids, procedure for opening of Bids, procedure for acceptance of Financial Bids including competent authorities etc. GoP has already promulgated the Punjab Transparency in Public Procurement Act, 2019 and all procurement processes by DLG has to abide by the provisions of the Act mandatorily. The draft Punjab Transparency in Public Procurement Rules, 2020 has been formulated for proper implementation of the Procurement Act 2019, However, the said draft Rules are under review by GoP at present. As the Punjab Transparency in Public Procurement Rules, 2020 are yet to be finalized, the departments are still following Punjab Financial Rules and PWD Code for their procurement. The delegation of financial powers governs the procurement through various Orders issued from time to time. The officers and staff are governed by Punjab Civil Services Rules and also Central Civil Services (Conduct) Rules- 1964. It is also noted that procurement under the Program is of relatively small value compared to the total procurements otherwise being carried out by the Government of Punjab by following its own procurement Rules and regulations. Presently, there is no system to identify the procurement staff separately. However, the staff handling the procurement had been involved in carrying out the procurement over the years and have gained sufficient experience. Gaps are observed in the procurement capacity as the staff gets transferred, and the new staff might not have handled the procurement earlier. However, the Punjab Transparency in Public Procurement Act, 2019 and the draft Punjab Transparency in Public Procurement Rules, 2020 have specific provisions for training and capacity building as necessary and also the requirement for certification. It is felt that procurement capacity in DLG, the major Implementing Agency, is adequate, and their procurement systems are found to have processes and procedures for effective implementation of the Program. 5.21.3 Procurement capacity assessment of DGR: As per the historical data sent by DGR for last three financial years (2017-18, 2018-19 & 2019-20), it is seen that the total procurement carried out by DGR has not been much. During past three years, they had processed seven works tenders, out of which only one tender had been finalized. For procurement of services, six cases had been processed and all six cases had been finalized. For procurement of Goods, only 4 tenders had been processed that too during the previous financial year (2019-20) out of which only one tenders had been finalized. All procurement for DGR is processed by Punjab State e-Governance Society (PSeGS hereafter referred as Society). GoP has issued a Memorandum of Association and the Rules which governs formation and working rules and regulations of the Society including hiring of manpower and entering into contracts. An Office Order No. 1/2014/FM/PSeGS dated 27.10.2014 lays down the financial Official Use powers. Member Secretary of the Society has powers upto Rs 50 Lakh beyond which Vice Chairman of the Society (Additional Chief Secretary-DGR) has powers upto Rs 100 Lakh. Any financial activity beyond Rs. 100 Lakh has to have the approval of the Executive Committee of the Society. It also lays down item- wise financial powers for procurement of different categories of items to be followed by society. The Society has a total of 257 outsourced staff and 162 contractual staff on its roll. There are about 50 specialists among the contractual staff. There is no separate procurement unit which carries out the procurement work. However, some of the technical experts have been assigned procurement work as well, and such experts are considered capable of handling procurement work they have been doing in the past. There are two procurement committees, one for processing tenders and the other for evaluating bids and proposals and making recommendations for finalising any procurement undertaken by the Society. As regards to hiring of manpower as individual consultants, the Society is making use of various methods including use of portals like Naukri.com or drawing a panel arrived at through references. The selection is made by formulating internal committees depending on the level of position and the Committee would evaluate and make recommendation. For selection of higher-level Specialists, the committee is formed by drawing experts from other Government Departments as well as from private organizations. It is felt that procurement capacity in DGR is adequate, and the society would be in a position to make required procurement for effective implementation of the Program. 5.21.4 Procurement Capacity of Department of Finance (DoF); Department of Social Service, Women & Child Development (DSSWCD) and Planning Department: As per the historical data made available by DGR for DoF, DSSW&CD as enclosed at Annexure-2, it could be seen that the procurement carried out by the two IAs viz. DoF and DSSW&CD had done little or no procurement during past three Financial years. DoF had finalised only 7 tenders during last three Financial years with less than three Bids per tender on an average. The value of tenders finalised had not been made available except one tender for which the value was Rs. 3 Cr. DSSWCD had not finalised any tender during last three Financial years. No data was available for procurement made by the Department of Planning (DoP) as per the information provided by DGR for all departments of GoP. As regards to the procurement capacity within these IAs, no information and data had been made available by DoF. Also, information could not be collected by making physical visits and meetings with these departments/IAs in regard to the procurement capacity in view of the Covid pandemic. GoP has assured of bringing in suitably qualified procurement staff in DoF, DSSW&CD and DoP for PforR implementation. Keeping all the aspects in view, it is concluded that these three IAs have limited procurement capacity at present. Thus, in view of the enactment of the Punjab Transparency in Public Procurement Act, 2019 by GoP, the draft Punjab Transparency in Public Procurement Rules, 2020 and SBDs under finalization and GoP’s assurance for bringing in procurement staff, the procurement capacity could be considered as adequate. However, it would be necessary to flag the availability of suitably qualified procurement professionals within these IAs for execution of the Program under the Risk factor. 5.21.5 Procurement capacity of Municipal Corporations of Amritsar and Ludhiana (MCA & MCL): Amritsar was declared a city on 29th March 1977 under the Punjab Municipal Corporation Act 1976 and the Municipal Corporation of Amritsar (MCA) was constituted in place of Municipal Committee. As per City Development Report, MCA staff strength is approx. 5100. Of these 119 are in Administration, 123 are technical personnel and 4863 are supporting staff. The officer rank personal include 45 Technical officers and 27 staff of Town planning department. There is no separate department for Procurement in MCA. Civil and O&M departments of MCA do their own procurement. O&M cell of MCA is responsible for operation and maintenance of water and sewerage services in Amritsar which works under the overall control of Superintending Engineer (O&M) with 5 XENs, 10 SDOs and a number of Junior Engineers under them. Civil Cell of MCA is responsible for civil construction works of MCA and is headed by Superintending Engineer with number of XENs, SDOs and JEs with overall strength of 25 technical personnel. Municipal Corporation of Ludhiana (MCL) was constituted on 30th March 1977. MLC has regular employee strength of 5600. There is a B&R Department and O&M Department within MCL. Tenders are invited by concerned executive Engineer / Superintending Engineer. There is a Tender cell of MCL which is headed by either Superintending Engineer or an XEN and other technical support staff. As per statute, a MCL has to perform a set of obligatory and discretionary functions. Some of the these functions are stated below. Official Use • the construction and maintenance of works and means for providing supply of water for public and private purposes; • the construction, maintenance, alteration and improvements of public streets, bridges, culverts, causeways and the like; • the lighting, watering and cleansing of public streets and other public places; • the removal of obstructions and projections in or upon streets, bridges and other public places; • the laying out or the maintenance of public parks, gardens or recreation grounds; • the surveys of buildings and lands: • several other public services MCA and MCL have good inhouse procurement experience for various contracts. 5.22 Financial Management Capacity: The public financial management capacity in the implementing departments as in all other administrative departments in Punjab is constrained by human resources bottlenecks. Basic understanding of various PFM aspects including procurement, budgets and internal controls is limited, especially in the middle and lower level cadre . The limited footprint of finance functionaries in Administrative Departments and Field Offices, coupled with inadequate investment in capacity building and exposure have led to compliance gaps, and insufficient inputs to departmental financial planning and controls. The GoP recognizes this constraint and over the last couple of years the GoP has initiated measures to restructure and strengthen Finance and Planning Departments with the objective of aligning them to future needs and government priorities. A restructuring plan of the Finance Department was approved by the Government in 2018. GoP now wants to implement a part of this Plan with modifications as appropriate to its current requirements. BFAIR will support GoP’s initiative in this regard. The restructuring will allow for the setting-up of Internal Finance Divisions (IFDs) manned by representatives of the finance cadre in all Administrative Departments and Field Offices. The Restructuring will also allow the FD to recruit professional staff on contract basis. This a unique proposition, as few Indian States have inducted finance professionals into its staff strength. Also setting-up field units of finance cadre is expected to bring rigor and discipline to financial planning and execution at the field level. This apart the Finance Department will be supported by a PMU for day to day administrative as well as technical support for BFAIR 6. Risk Mitigation action plan, Type of action (PAP, DLI, etc.) and Timing Table 11: Risks and suggested mitigation actions Major Issues/Risks Mitigation Measures/ Type of Timing Actions Action The Government of Punjab (GoP) passed an Act Notify the Public DLI 1st year of the called the Punjab Transparency and Public Procurement Rules program Procurement Act (PTPP) and Gazetted on 10 Sep 2019 (Punjab Government Gazette). The GoP is finalising the Procurement Rules as a guiding document to various Sections/Clauses prescribed in the Procurement Act. Also, issuing Guidance Notes on Sustainable and Gree Procurement Procurement Practices. The earliest notification of these Procurement Rules will help the Procurement Entities (PE) to implement the PTPP Act and articulate prescribed procurement procedures with ease In the absence of an apex body as a custodian of GoP issued notification DLI 1st year of the the procurement policy, Act, Rules, tools like for setting up the program SBDs, procurement manuals etc., (Procurement Directorate of Framework), various PEs are issuing policy Procurement Policy and instructions/government orders on Public Enforcement (DPPE)17 as Procurement with the concurrence of the Finance custodian of Procurement Department. Some of these may not be Framework in the State. consistent The DPPE needs to fully Official Use Major Issues/Risks Mitigation Measures/ Type of Timing Actions Action functional in line with PTPP Act. [Section 45 of the Procurement Act provides for establishing the Directorate of Procurement Policy and Enforcement (DPPE), drawing officials from various State Administrative departments and the draft Rules also provides for same.] Disclosure of Public Procurement information: (a) Develop and rolling- (a) (The Punjab Financial Rules do not spell out out the e-procurement the systematic preparation of the Annual planning module as Procurement Plan (APP) (Coherent part of the eGP and IFMIS integration DLI (a) Year 2 of integration of Budget & Annual Workplan, (b) Prepare APP by the Program procurement strategy, and the implementation schedule). Also, the upfront coherent integration disclosure of PP on the State Public of Budget & Annual Procurement Portal and the official website Workplan, provides upfront information about procurement strategy indicative procurement opportunities to along with the potential bidders/suppliers and enhance the implementation DLI transparency schedule [Chapter III (b) Though the eGP has provision to disclose the Procurement planning Contract award information, this information of PTPP Act] is not disclosed by all PEs, which improves (c) For the IAs, the PforR (b) Year 2 of transparency and public perception on public Program at the the Program procurement (i.e., Contract award beginning of each information was disclosed for only 39% in financial year on the FY 2019-20 and 42% in FY 2020-21of APP and upgrade. contracts invited through the e-procurement Publish contract system) award information under the Program within two weeks (c) Year 3 of from signing of the the Program contract through the e-procurement platform and APP [Section 9, Clause (5) of Chapter III DLI Procurement planning of PTPP Act] (d) Develop and rolling- out the e-procurement planning module as part of the eGP and IFMIS integration Standard Bidding Documents (SBDs) are not Prepare the Standard PAP Within 1 year available except one SBD for Works which also Bidding documents for all after Program does not have – (i) contract conditions in line the procurement methods effectiveness with the Procurement Act 2019 and the draft prescribed in Chapter VI Official Use Major Issues/Risks Mitigation Measures/ Type of Timing Actions Action Rules 2020; (ii) provisions to deal with fraud and Procurement methods are corruption. in line with the Punjab Transparency in Public Procurement Act, 2019. Issue directive to make these SBDs used mandatorily. Also, publish the suit of SBDs in the State Public Procurement Portal [Chapter VIII of PTPP Act 2019] Development of standard bid document and contract templates for use across Program procurement activities by all IA’s, including reference to applicability of World Bank’s Anti- corruption Guidelines and no contract award to debarred firms. [Draft Standard Bidding Documents (SBDs) have been prepared for Works [unit rate (admeasurement) /percentage rate basis and for Engineering Procurement Construction (EPC) contracts], Goods and draft RFP for Consulting Services in line with the Punjab Transparency in Public Procurement Act, 2019 and the Procurement Rules 2020 (to be notified).] Various Government Policies relating to Consolidate all PoM or Year 1 of the preferential procurement like make in Punjab, preferential procurement Guidance Note Program startups, Co-operative Labour & Construction policies under the Punjab Societies and preferences to small industries etc. Transparency in Public are issued by different Departments and are not Procurement Act, 2019 available at one place, making it difficult to and subsequent Rules. implement. [Government of Punjab has promulgated the Punjab Transparency in Public Procurement Act, 2019 in September 2019. The draft Punjab Transparency in Public Procurement Rules, 2020, have been framed and are Official Use Major Issues/Risks Mitigation Measures/ Type of Timing Actions Action under review by the GoP for finalization to ensure proper implementation of the Act. These draft Rules have consolidated all preferential procurement guidelines into one document which have been made part of the Rules.] The limited presence of finance functionaries in GoP will set-up Internal DLI Year 1-4 of Administrative Departments and Field Offices, Finance Divisions (IFDs) the Program coupled with inadequate investment in capacity manned by representatives building and exposure have led to compliance of the finance cadre in all gaps, and insufficient inputs to departmental Administrative financial planning and controls. Departments and Field Offices as part of a Restructuring of the Finance Department. Training of staff handling finance functions will also be undertaken. This will be covered by DLI 1 for Category A Administrative Departments Absence of adequate technical experts in the Deploy/nominate Other Within 3 Finance Department to deal with IFMS - e- dedicated IT, PFM and months of procurement integration, support procurement procurement policy Program policy aspects including development of standard experts for BFAIR to Effectiveness procurement documents, monitor procurement manage implementation performance of administrative departments and of the DLIs under RA1 other organizations, and financial management aspects. Key Performance Indicator (KPI)s for Measure Key POM Continuous procurement and contract management are not Performance Indicators To share measured and monitored regularly by the IAs of (KPI)s: monitoring the Program. This may pose a risk in delaying the for procurement and report with the achievement of the DLIs/outcomes under the contract management Bank semi- Program. such as (a) procurement annually lead time (tender invitation to award of contract), (b) competition (average number of bidders), (c) percentage of contract award publication, (d) percentage of re-tender, (e) percentage of contracts having cost and time overrun etc. other key parameters throughout the procurement cycle. Official Use Major Issues/Risks Mitigation Measures/ Type of Timing Actions Action PFM information systems namely IFMS and e- BFAIR to support DLI By Year 4 of procurement are standalone platforms. Coupled Develop a seamless the Program with the absence of a structured contractual interface between IFMIS payment information system, the existing systems and eProcurement do not allow 360 degree view of the transaction systems and ensure cycle and create operational inefficiencies and interoperability between weak controls. these systems to exchange common data; and operationalise Contractual Payment Information Module. Expand the e- Procurement covering complete procurement e-Procurement is mainly used for inviting and cycle including the receiving tenders while the Tender evaluation is contract management and offline. Publication of award information are not link payment in IFMIS]. performed mandatorily for all procurements by the Procuring Entities External Audit; Past experiences show that there Separate Audit of Disbursement Annual are substantial delays in publishing of State Program Financial and Financial Finance Accounts. This may delay the Statements will be Information submission of Audited Program Financial conducted by C&AG as Letter Statements to the Bank. per standard ToRs agreed with C&AG for audit of Bank assisted Projects. Audit will also cover procurement aspects as required by the Bank (this is subject to agreement with C&AG). Internal Audit system in Punjab is weak. Half Yearly Internal audit PAP Semi-annual of the Program covering all implementing agencies will be conducted by an independent Audit Firm for getting assurance on the internal controls of the Program based on ToR agreed with the Bank. Internal audit will also include review of the controls related to Procurements including checking of whether any contract has been awarded to any firm/individual sanctioned by the World Bank The procurement-related complaints, if any, will Establish procurement- PAP Year 1 of the be addressed through administrative procedure. related complaint handling Program Absence of dedicated procurement-related mechanism. complaint handling mechanism [Section 49 and 50 of the Procurement Act, 2019 deals with the Appeals for any grievance by the bidders in regard to a Official Use Major Issues/Risks Mitigation Measures/ Type of Timing Actions Action specific procurement. There is no laid down mechanism for appeals and appeal procedures which are required to be put on the State Public Procurement Portal (SPPP). In addition, the data on resolution on complaints and decisions should also be put on the portal.] Compliance with World Bank’s Anti-Corruption Share consolidated report Already Finance Guidelines with the World Bank on covered in the Department to fraud and corruption Legal Covenant share semi- related allegations and annual report investigations under the with the World activities funded by the Bank Program. 7. Implementation Support: The Bank would support GoP in implementing the mitigating actions to address the risks identified in the FSA. Several Bank supported studies and TAs are underway to support the basic analytical grounding for the DLIs. Government of UK (FCDO) is providing grant resources through Bank EFO to support technical assistance and building state capabilities in Punjab. Bank will continue to leverage Trust Funds to support GOP during PforR implementation. Strengthening fiduciary, environmental, and social systems identified under the program assessments, will be financed using trust funds and PforR program. Department Illustrative Capacity Building Activities and TA Support Department of Finance Assessment of Training needs for strengthening financial management and procurement capabilities for Finance Department and key administrative departments. (funded through TF/EFO). Design and delivery of training modules (PforR and leveraging TF sources). Fiscal Sustainability Analysis (FSA) and Debt Management and Planning Analysis (DeMPA) (Bank TA and TF support). Consulting Firm for Debt Management Cell and support for implementing debt management strategy (PforR). Technical study for PFM platform inter-operability (TF/EFO). Design and implementation of integrated IFMIS and procurement model (PforR). TA for developing procurement guidelines (Good practices from Bank team); Development of Procurement Portal (PforR) Department of Social Security and Technical support on gender-responsive budgeting (TF/EFO). Women and Child Development Implementation of GRB, training on GRB, strengthening gender cell, and development of gender dashboard to track gender outcomes (PforR). Department of Governance Reforms Technical assistance on the State Data Integration Platform (TF/EFO) Operationalizing the platform, department training and demonstrating full compliance of data policy in two departments (PforR) Official Use Department of Finance and Department Technical assistance on the design of performance-based grants of Local Government (TF/EFO). Training and workshops for all stakeholders in implementation, testing and institutionalization of performance-based grants, as well as independent audits (PforR). Municipal Corporations of Amritsar and Technical support to introduce metrics to improve the financial and Ludhiana operational management of WSS service delivery. Progress against PAP actions identified would be on the agenda during the Bank Implementation Support Missions. Interactions between the FD and other participating agencies and Bank task teams would be organized to address key knowledge gaps. The Bank Task Team would undertake a review of key activities and documents under the Program such as procurement progress, budget and funds availability, contract management, procurement complaints, adherence to Anti-Corruption Guidelines, policy notes, manuals and give its suggestions for improvement. The Team will Monitor the performance of fiduciary systems through review of Internal and External audit reports and closely monitor resolution of audit issues, if any. The team would also assess, at each Mission, whether there are any significant changes to the assessed fiduciary risks and/or new risks have emerged and work with GoP towards addressing such risks. Official Use Annexure 1: Department-wise list of Budget heads included in the Program Expenditure Framework (P) List of Budget Head USD Millions PforR Program (P) Results DLI Total GoP IBRD Department Budget Heads Area USD Millions RA 1: 1. Institutional 44.32 19.31 25.01 Finance 2054-95-01, 2054-95-98, Strengthenin Strengthening Dept. 2054-97-01, 2054-98- g fiscal of Finance 01,2054-98-98, 2070-01-03, resilience Department 2070-01-98, ,3451-92-01, and financial 3451-800-98, new BFAIR management budget head or sub head for incremental activities to be allotted. Will include budget for the salaries of IFD & FFD. 2. 5.67 1.70 3.97 Planning / Finance Department - 3451- Strengthening Finance 092-01.00.28 Planning fiscal resilience Department 3451-101-01, 3451-101-02, 3451-101-14, 3451-101-26, 3451-789-06, 3451-789-18;5475-112- 22(BFAIR). 3. 3.67 1.10 2.57 Finance new budget head /sub head Strengthening Dept. to be created for BFAIR PFM Information Systems 4. 5.21 1.56 3.65 Finance new budget head or sub Strengthening Dept. head to be allotted for the public Project plus budget head for procurement procurement directorate (to framework be created) 5. Improving 34.28 10.29 24.00 WCD 2235-02-001-01, 2235-02- gender 001-98;2235-02-103-39 outcomes (Mata Tripta Budget head); 2235-60-102-47;4235-02- 800-26(BFAIR). Plus Udaan Budget Head (to be created) Total Of 168.24 93.15 33.96 RA 1 RA2: Improving data 108.90 68.24 23.70 DGR 2052-92-26-00.28, 2052-92- Improving systems for 36-99.28, 2052-92-36- data policy making 99.30, 2052-92-40-99.28, systems for and support to 2052-92-40-99.30, 2052-92- policy service delivery 41-99.28, 2052-92-41- making and 99.30, 2052-92-44-99.30, support to 4070-800-32, 4070-800-34, service 4070-800-37 2052-92-46- delivery 99.28, 2052-92-46-99.30, 2052-92-98-13.28, 2052-92- 98-13.30, 4070-800-31, 2052-92-45-99.28, 2052-92- Official Use 45-99.30;2052-092-46 (BFAIR) Total Of 108.90 68.24 23.70 RA 2 RA 3: DLI 7 Improved 52.13 6.86 45.27 Local Govt. 2217-80-001-02; Strengtheni commercial, ng Local operational and 2217-80-800-02 (BFAIR) Level fiscal financial Framework management and service performance of delivery WSS services demonstrated in AMC and LMC and DLI 8 for performance grants Total Of 52.13 6.86 45.27 RA 3 Grand 213.52 64.52 149.00 Total Official Use Annexure 2: Year-wise Program Expenditure Year Wise Ecpenditure framework(P) Results Area DLI Year 1 Year 2 Year 3 Year 4 Year 5 Total 1. Institutional Strengthening of Finance Department 7.87 8.75 9.00 9.21 9.49 44.32 RA 1: Strengthening 2. Strengthening fiscal resilience 0.63 1.76 1.52 1.20 0.56 5.67 fiscal resilience and 3. Strengthening PFM financial management Information Systems 0.23 2.30 1.02 0.12 - 3.67 4. Strengthening public procurement framework 0.60 1.53 1.29 0.96 0.82 5.20 5. Improving gender outcomes 7.60 7.96 8.31 8.56 1.85 34.28 Total Of RA 1 16.92 22.30 21.15 20.05 12.73 93.15 RA2: Improving data Improving data systems for systems for policy policy making and support to making and support to service delivery service delivery 18.98 25.35 15.25 8.66 - 68.24 Total Of RA 2 18.98 25.35 15.25 8.66 - 68.24 DLI 7: State Performance grant system piloted to incentivize performance of the Municipal RA 3: Strengthening Corporations. 0.62 0.31 10.15 10.16 10.18 31.42 Local Level fiscal DLI 8 Improved commercial, Framework and service operational and financial delivery management performance of WSS services demonstrated in AMC and LMC . 2.78 7.65 6.82 2.58 0.89 20.71 Total Of RA 3 3.40 7.96 16.96 12.74 11.07 52.13 Grand Total 39.30 55.61 53.36 41.45 23.79 213.52 Official Use Annexure 3: Historical Procurement Data Implementing Department of Local Government (DLG) Department of Finance (DoF) Agency F.Y. 2018-19 2019-20 2020-21 2018-19 2019-20 2020-21 Parameter Goods Services Works Goods Services Works Goods Services Works Goods Services Works Goods Services Works Goods Services Works No. of tenders 253 243 23791 206 549 20555 345 632 22450 NA NA 5 5 6 4 3 14 10 issued on e-portal during Value of Tenders 32.25 795.18 4796.81 50.68 150.35 6891.47 135 36.5 6364 NIL NIL Not Not Not 150.76 Not Not 4.8 In Rs. Cr avail avail availa availa avail able able ble ble able Average Tender 15 17 19 18 17 18 20 17 19 NA NA 86 20 29 48 5 40 75 preparation time (days) Average number of 2 2 2 2 2 2 1 3 2 NA NA 1 2 2 0 1 3 2 Bids %age of Tenders 20% 25% 15% 22% 17% 18% 11% 22% 18% NA NA 0% 0% 33% 0% 0% 7% 0% with single Bid Tenders finalized 74 98 7240 59 158 6403 111 188 8418 NA NA 0 2 3 0 1 6 4 Value of Tenders 8.64 36.16 1314.95 14.91 43.48 2065.49 27 80 2241 NA NA 0 Not Not 0 Not Not Not finalized In Rs. Cr. avail availa availa avail avail able ble ble able able Tenders cancelled/ 38% 43% 42% 39% 41% 38% 14% 37% 34% NA NA 20% 60% 0% 25% 66% 35% 0% Re-tendered %age of Awards 29% 28% 30% 28% 28% 31% 32% 30% 37% NA NA NA 40% 50% 0% 33% 42% 40% published Time taken for NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA Payment of Bills (days) Average Time for 140 224 200 129 126 153 110 87 108 NA NA Not 90 119 Not 8 105 162 procurement awar awar process ded ded Official Use Implementing Department of Social Security and Women & Child Development Department of Governance Reforms Agency F.Y. 2018-19 2019-20 2020-21 2018-19 2019-20 2020-21 Parameter Goods Services Works Goods Services Works Goods Services Works Goods Services Works Goods Services Works Goods Services Works No. of tenders 1 1 NIL NIL NIL NIL NIL NIL NIL NIL 7 1 2 5 2 3 13 3 issued on e-portal during Value of Tenders 0.13 Not NA NA NA NA NA NA NA NA Not Not Not Not Not Not 0.05 Not In Rs. Cr availa availa avail avail availa avai avai avail ble ble able able ble labl labl able e e Average Tender 24 22 NA NA NA NA NA NA NA NA 55 9 17 44 14 26 28 22 preparation time (days) Average number of 4 0 NA NA NA NA NA NA NA NA 3 3 4 3 2 3 5 9 Bids %age of Tenders 0% 0% NA NA NA NA NA NA NA NA 14% 0% 0% 40% 0% 0% 15% 33% with single Bid Tenders finalized 0 0 NA NA NA NA NA NA NA NA 3 0 1 3 1 2 10 2 Value of Tenders 0 0 NA NA NA NA NA NA NA NA Not NA Not Not Not Not 0.05 Not finalized In Rs. Cr availa avail availa availab availab avail ble able ble le le able Tenders cancelled/ 100% 100% NA NA NA NA NA NA NA NA 14% 100% 50% 40% 50% 33% 23% 33% Re-tendered %age of Awards NA NA NA NA NA NA NA NA NA NA 42% 0% 50% 60% 50% 66% 76% 66% published Time taken for NA NA NA NA NA NA NA NA NA NA Not NA Not Not Not Not Not Not Payment of Bills availa avail availa availa availa avail avail (days) ble able ble ble ble able able Average Time for Not Not NA NA NA NA NA NA NA NA 84 Not 69 218 68 127 120 54 procurement awar award awar process ded ed ded Official Use Annexure 4: Punjab’s Consolidated Procurement Statistics 2018-19, 2019-20 and 2020-21) from e- Procurement portal Amount is in INR Crore . S. Financial Year 2018-19 2019-20 2020-21 No. Parameter (a) (b) (c) (1) No. of tenders published on e-portal during 38,709 32,440 36,020 (2) Value of Tenders (In Rs. Cr) 18,360.72 15,342.41 17,884.66 (3) Valid Tenders 24,765 21,453 25,807 (4) Value of Valid Tenders (In Rs. Cr) 12,477.28 8,945.59 13,155.19 (5) Number of Tenders cancelled 11,824 9,693 8,901 (6) Value of Tenders cancelled (In Rs. Cr) 5,175.85 5,391.91 4,212.49 (7) Percentage of Tenders Cancelled [(5)/((1)*100] 31% 30% 25% (8) Retenders 2,120 1,294 1,312 (9) Value of Re-tenders (In Rs. Cr) 707.59 1,004.91 516.98 (10) No. of Tenders in which Bids Awarded / Financial 16,718 13,714 15,169 Evaluation Completed (11) Value of Bids Awarded / Financial. Evaluation Completed 7,291.86 7,544.44 9,231.16 (In Rs. Cr) (12) Percentage of Tenders in which Bids Awarded / Financial 43% 42% 42% Evaluation Completed [(10)/((1)*100] (13) Number of Bids Received. 68,920 55,184 71,209 (15) Average number of Bids received in number [(13)/((1)] 1.78 1.70 1.98 (16) Open Tenders (Information below is for open Tenders only) 38,484 32,261 35,759 (17) Value (In Rs. Cr) 18,344 14,964 16,481 (18) Procurement cycle time from publication to award 160 151 103 (19) Average no. of days between Tender Publication to Technical 33 32 28 Bids opening (20) Average no. of days from Financial Bids opening to Bid 89 78 47 awarded (21) Average no. of days between Technical Opening to Bids 131 112 71 Awarded (22) Tenders Awarded within specified Bid Validity Period 58% 57% 69% (%age) (23) Tenders Awarded beyond Bid Validity Period (%age) 39% 40% 29% (24) Percentage of Award Information Published 39% 42% • The average number of Bids is less than two, which indicates nominal competitive tension. Requires improvement in the level of participation, which may likely result in an economical price. • The Tenders cancelled stands at 31%, 30% and 25% for the last three FYs 2018-19, 2019-20, 2020-21 respectively and is considered high. • The percentage of Tenders in which Bids awarded is only about 42% of the total tenders floated. The success rate needs to be improved by reducing the number of tenders cancelled for various reasons. • The average procurement lead time (from Publication to the award) has been 160 days, 151 days, and 103 days during FY 2018-19, 2019-20, 2020-21 for all the Open Tenders. However, it shows substantial improvement during FY 2020-21, which may be attributed to the COVID Pandemic (reduced publication period and expeditious evaluation to address the emergency). • In the absence of computation details for disclosure of contract award data, the entity level data may be considered. Works tenders constituted a major part of the procurement for the State. In the Program, Annexure 3: for DLG, one of the IA. Official Use