Integrity Pact and IEMs

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Integrity Pact (IP) is an important tool of preventive vigilance which is aimed at preventing corruption and ensuring integrity in public procurement. The Central Vigilance Commission is the nodal authority for the implementation of Integrity Pact in India. It addresses not only bribery, but also other corrupt practices such as collusion and bid-rigging. IP is a written agreement between the Government / Government Department / Government Company, etc and all the bidders agreeing to refrain themselves from bribery, collusion, etc. If the written agreement is violated, the pact describes the sanctions that shall apply. These include:-

Integrity Pact has a monitoring system which provides for independent oversight. The Central Vigilance Commission nominates Independent External Monitors (IEMs) to monitor implementation of Integrity Pact.

Thus, IP in its present form has three players:

In order to ensure transparency, equity and competitiveness in public procurement, the Commission has been recommending adoption of Integrity Pact (IP) and implementation by Government organisations. CVC through its Office Order No.41/12/07 dated 04.12.2007 and No. 43/12/07dated 28.12.2007 as well as Circular and No.24/08/08 dated 05.08.2008, recommended adoption of Integrity Pact by all the organisations and provided basic guidelines for its implementation in respect of major procurements in Government Organisations. A Standard Operating Procedure (SOP) was issued by the Commission vide Office Order No.10/5/09 dated 18.05.2009.

Adoption of Integrity Pact–Standard Operating Procedure; Independent External Monitor

The Commission appointed a Committee in December 2015, under the Chairmanship of Shri P. Shankar, the former Central Vigilance Commissioner, to review the entire scheme of Integrity Pact. After considering the report of the Committee, the Commission has issued a revised Standard Operating Procedure for adoption of Integrity Pact in Government Departments / Organisations vide Circular No. 02/01/2017dated 13.01.2017. The salient points are as under:

The Pact essentially envisages an agreement between the prospective vendors / bidders and the buyer, committing the persons / officials of both sides, not to resort to any corrupt practices in any aspect / stage of the contract. Only those vendors / bidders, who commit themselves to such a Pact with the buyer, would be considered competent to participate in the bidding process. In other words, entering into this Pact would be a preliminary qualification. The essential ingredients of the Pact include:
Promise on the part of the Principal not to seek or accept any benefit, which is not legally available
Principal to treat all bidders with equity and reason
Promise on the part of bidders not to offer any benefit to the employees of the Principal not available legally.
Bidders not to enter into any undisclosed agreement or understanding with other bidders with respect to prices, specifications, certifications, subsidiary contracts, etc.
Bidders not to pass any information provided by Principal as part of business relationship to others and not to commit any offence under PC Act or IPC.
Foreign bidders to disclose the name and address of agents and representatives in India and Indian Bidders to disclose their foreign Principals or associates.
Bidders to disclose the payments to be made by them to agents / brokers or any other intermediary.
Bidders to disclose any transgressions with any other company that may impinge on the anti-corruption principle.
Integrity Pact, in respect of a particular contract, would be operative from the date IP is signed by both the parties till the final completion of the contract. Any violation of the same would entail disqualification of the bidders and exclusion from future business dealings.

Implementation procedure

As stated in Department of Expenditure O.M. dated 20.07.2011, Ministries / Departments may, in consultation with the respective Financial Advisor and with the approval of the Minister-in-Charge, decide on and lay down the nature of procurements / contracts and the threshold value above which the Integrity Pact would be used in respect of procurement transactions / contracts concluded by them or their attached / sub-ordinate offices.

The above provision is also applied for procurements made by autonomous bodies for which also the concerned administrative Ministry / Department may lay down the nature of procurements / contracts and the threshold value above which the Integrity Pact would be used.
The above provision is also applied for procurements made by autonomous bodies for which also the concerned administrative Ministry / Department may lay down the nature of procurements / contracts and the threshold value above which the Integrity Pact would be used.
The provision for the Integrity Pact is to be included in all Requests for Proposal / Tender documents issued in future in respect of the procurements / contracts that meet the criteria decided in terms of subpara (a) and (b) above.
Tenders should specify that IEMs have been appointed by the Commission. In all tenders, particulars of all IEMs should be mentioned instead of nominating a single IEM in the tender as far as possible.
The purchase / procurement wing of the organisation would be the focal point for the implementation of IP.
The Vigilance Department would be responsible for review, enforcement,and reporting on all related vigilance issues.
It has to be ensured, through an appropriate provision in the contract,that IP is deemed as part of the contract so that the parties concerned are bound by its provisions.
IP would be implemented through a panel of Independent External Monitors (IEMs), appointed by the organisation. The IEM would review independently and objectively, whether and to what extent parties have complied with their obligations under the Pact.2
Periodical Vendors' meets, as a familiarization and confidence building measure, would be desirable for a wider and realistic compliance of the principles of IP.
A clause should be included in the IP that a person signing IP shall not approach the Courts while representing the matters to IEMs and he / she will await their decision in the matter.
In case of sub-contracting, the principal contractor shall take the responsibility of the adoption of IP by the sub-contractor.
Information relating to procurements / contracts covered under IP andits progress / status would need to be shared with the IEMs on monthly basis.
The final responsibility for implementation of IP vests with the CMD / CEO of the organisation.

Role and Duties of IEMs

The IEMs would have access to all contract documents, whenever required.
It would be desirable to have structured meetings of the IEMs with the Chief Executive of the Organisation on a quarterly basis including an annual meeting to discuss / review the information on tenders awarded during the previous quarter. Additional sittings, however, can be held as per requirement.
The IEMs would examine all complaints received by them and give their recommendations / views to the Chief Executive of the organisation, at the earliest. They may also send their report directly to the CVO and the Commission, in case of suspicion of serious irregularities requiring legal / administrative action. IEMs are expected to tender their advice on the complaints within 10 days as far as possible.
For ensuring the desired transparency and objectivity in dealing with the complaints arising out of any tendering process, the matter should be examined by the full panel of IEMs jointly as far as possible, who would look into the records, conduct an investigation, and submit their joint recommendations to the Management.
IEM should examine the process integrity. They are not expected to concern themselves with fixing of responsibility of officers. Complaints alleging malafide on the part of any officer of the organisation should be looked into by the CVO of the concerned organisation.
The role of IEMs is advisory, would not be legally binding and it is restricted to resolving issues raised by an intending bidder regarding any aspect of the tender which allegedly restricts competition or bias towards some bidders. At the same time, it must be understood that IEMs are not consultants to the Management. Their role is independent in nature and the advice once tendered would not be subject to review at the request of the organisation.
Issues like warranty / guarantee, etc. should be outside the purview of IEMs.
All IEMs should sign non-disclosure agreements with the organisation in which they are appointed. They would also be required to sign a declaration of absence of conflict of interest.
A person acting as an IEM shall not be debarred from taking up other assignments such as consultancy with other organisations or agencies subject to declaring that his / her additional assignment does not involve any conflict of interest with existing assignment. In case of any conflict of interest arising at a later date from an entity wherein he is or has been a consultant, the IEM should inform the CEO and recuse himself / herself from that case.
All organisations may provide secretarial assistance to IEM for rendering his / her job as IEM.
In case of any misconduct by an IEM, the CMD / CEO should bring it to the notice of the Commission detailing the specific misconduct for appropriate action at the Commission’s end.

The role of the CVO of the organisation shall remain unaffected by the presence of IEMs. A matter being examined by the IEMs can be separately investigated by the CVO in terms of the provisions of the CVC Act or Vigilance Manual, if a complaint is received by him / her or directed to him / her by the Commission.

IEMs of BEL

BEL has implemented Integrity Pact in compliance with CVC guidelines and as per its recommendation, appointed the following as Independent External Monitors.

Contact details of IEMs are as follows:

1. Shri Sanjay Kumar Srivastava, IAS (Retd)

Apartment T-06 B, Windsor Court,

DLF Phase-IV, Gurgaon – 122009

E-Mail: sksrivastava_7854[at]rediffmail[dot]com

2. Shri Rajiva Ranjan Verma, IPS (Retd)

111 Block I, Arrah Garden Residences, South to Pillars 3&4,

Bailey Road, Sheikhpura, Patna – 800014

E-Mail: rajivaranjanin[at]yahoo[dot]co[dot]in

3. Shri Ashwani Kumar, Former CMD, Dena Bank

Flat No. 22-B, Turf View, Seth Motilal G Sanghi Marg,

Worli (Lotus), Mumbai – 400 018

E-Mail: ashwani[dot]ashwani282[at]gmail[dot]com

Note: For procurement related queries/clarifications, BEL Purchase officer need to be contacted. However vendor can contact IEMs in case there is substantive issue related to the Tender.