Home and Tribal Affairs Department of Khyber-Pakhtunkhwa made an overpayment of Rs 774 million in two weapons' purchases/ deals in financial years 2009-10 and 2008-09, said Audit Report on Accounts of Government of Khyber- Pakhtunkhwa Audit Year 2010-11.
In weapons' purchase made during the financial year 2009-10, the Home and Tribal Affairs Department made an overpayment up to Rs 438 million due to purchase of weapons on higher rates during the financial year 2009-10.
During the financial year 2009-10, the Provincial Police Officer, Khyber-Pakhtunkhwa purchased heavy ammunition through supply order from M/S Majeed & Sons and payment for Rs 355.972 million was made through a cheque No 333379 dated October 29, 2009.
The lowest rates offered by other dealers were rejected due to the reason that they had put condition of no objection certificate (NoC) to be arranged by the Police Department. So the contract was awarded to M/S Majeed & Sons, and the department extended support in the issuance of NoC to M/S Majeed & Sons, and from the Ministry of Interior Division.
The awarding of the contract was the violation of the para 145 of General Finance Rules (DFR) Vol-I, which says that purchase should be made in most economical manner and in accordance with the defined requirements. Moreover, tender notice should be very clean and precise so as to secure government interest.
In another case, ie, purchase of 9MM and 69,000 magazines of SMG (7.62X 39 MM) valuing Rs 82.8 million, the NoC was also arranged by the Police Department. Thus the contractor was overpaid Rs 438.772 million on account of accepting higher rates, which needs to be recovered.
The audit held that the cause of overpayment was weak financial control on the part of management.
The overpayment was pointed in October 2010. However, the management furnished no reply. In the Departmental Audit Committee (DAC) the meeting held on January 20, 2011, the department replied that the police department purchased various weapons/ammunitions and other store from M/S NORINCO China through his agent M/S Majeed & Sons, which were selected after completion of all formalities. The rates of M/S Shahid Traders representing M/S SINSHIDIA Company China were rejected due to the reason that the brand and quality of the manufacturer was not known.
The lowest rates of M/S Zafar Azfar representing M/S Poly Technologies China were also not considered due to its poor performance in the previous contract and restriction imposed by the Ministry of Commerce for not awarding contract to the third party. The police department extended its support to issue NoC in favour of M/S NORINCO from Ministry of Interior in accordance with Clause I of para 16 (A) of the Import Policy Order 2008. The chariman of the DAC recommended settling the para. However, audit did not agree to the recommendations of the chairman on the grounds that when NoC was arranged by the Police Department in favour of M/S Majeed & Sons, which such facility was extended to the other lowest bidders.
The contention of the Police Department was that the performance of M/S Zafar Azfar was not satisfactory in the past, is not only contradictory, but also incorrect, as payment of Rs 21.313 million was made to the said firm for the supply of ammunition. The lowest rates offered by other firms were not accepted in violation of rules. The audit had recommended investigation into the matter and fixation of responsibility on the officials concerned.
The audit has also pinpointed another overpayment of Rs 336 million due purchases on higher rates. The expenditure of Rs 447.580 million was incurred by Provincial Police Officer (IGP) Khyber-Pakhtunkhwa on purchase of 23,000 SMG (762x39 MM) @ Rs 19, 460 per SMG from M/S Happy Traders Quetta during the year 2008-09. However, the scrutiny of record revealed that M/S NORINCO North Ind: Corporation China has offered rate of US $58 equal to Pakistan Rs 4,872 vide their proforma invoice to the Provincial Police Officer, Peshawar which was ignored and purchase had been made through M/S Happy Traders that resulted in an overpayment of Rs 336 million.
The audit held that the cause of overpayment was weak financial controls on the part of management. The overpayment was pointed out in October 2010. However, the management furnished no reply. In the DAC Meeting held the department replied that police department purchased 23,000 SMGs @ 19460 duly approved by the Inter-Departmental purchase committee in accordance with the standard specification and quality. The purchases were made on FOR basis as the department has no foreign exchange reserve budget. The chairman DAC recommended the para for settlement. Audit, however, did not agree to the recommendation of chairman DAC on the grounds of the ignoring of lowest rates without any recorded reasons, mentioning of nothing in NIT about supply on FOR, violation of procurement rules. The audit had recommended the recovery of the overpayment.