District Education Office: Splitting Procurement to Avoid Open Competitive Bidding

Test to apply. The question is not how the requirement was divided but whether there was a single requirement that should have been competed as a whole. Here it plainly was: one budget line of Rs 210 million, one specification, one delivery deadline, one end user. Dividing it into four orders of Rs 4.75 million is splitting designed to sit just below the Rs 5 million open-bidding threshold.

Why it is not lot-wise procurement. Genuine lotting happens when the subject matter is technically divisible and each lot is commercially viable and independently competed - for example, tablets for four different districts with separate delivery points. Here the four orders are identical in size, issued on the same day, for a single homogeneous item, and the total exceeds the threshold 42 times over. The artificial structure is evident.

Correct route. An open competitive tender for the full Rs 210 million requirement, advertised, with a proper pre-qualification assessment for the supplier's capacity to deliver 1,800 units, and a bid security and performance security proportionate to the value. Limited bidding was never available, because the aggregate value exceeds Rs 5 million; splitting to enter the Rs 1-5 million band is contrary to the delegation of financial powers and to the principle that procurement thresholds attach to the requirement, not to the invoice.

Consequences. The contracts are voidable at the discretion of the competent authority, expenditure against them is a financial irregularity and is likely to be held unauthorised in the audit report with a directive for recovery where loss is established. The prescribed annual audit will report it as misprocurement, and it is referable for disciplinary and, where collusion or personal gain is shown, criminal investigation.

Red flags.

1. Family interest. The district officer's nephew represents two winning firms. This is a direct conflict of interest requiring written declaration and recusal; none has been recorded.
2. Non-competitive pattern. The same three firms were invited every time; each submitted one quotation. A single quotation per firm, repeated across four orders, indicates a closed panel or price-sharing arrangement rather than competition.
3. Threshold clustering. Four orders within 5% of the same value, all under the limit, is a classic signature of splitting.
4. Payment before delivery. Payment against a self-signed certificate for goods not yet received removes the only control over whether the tablets exist. There is a real risk of payment for undelivered or substandard goods, and subsequent recovery would be difficult.
5. Year-end compression. A June deadline creates artificial urgency that is used to justify deviation from normal procedures.
6. Segregation of duties. The same officer requisitions, approves, receives and certifies.

Conflict of interest assessment. The relationship is close enough that a reasonable observer would question the officer's impartiality. Even if the officer gained nothing, the failure to declare and recuse is itself a breach of the code of conduct and of the procurement rules, and it destroys the audit trail of integrity on which the award depends.

What the accounts officer must do: refuse to process payment without documented receipt of the goods (a joint inspection committee or third-party verification, goods received note, asset tagging against the 1,800 units), record the refusal in writing and in the payment register, and report the procurement to the head of department in writing, then to internal audit and the district audit committee. Because the amounts are material and the indicators point to collusion, the matter should also go to the anti-corruption authorities. The accounts officer's duty is to protect public funds, and a verbal objection that is later ignored provides no protection.

Evaluate the justification. Neither ground is legally available here. Direct contracting or deviation is permitted only below Rs 0.5 million or in a declared emergency - a formal determination by the competent authority, not an internal view that the deadline is tight. A deadline that was internally imposed on 12 June for delivery by 30 June is a self-created urgency, and urgency created by the procuring entity's own delay is not an emergency. On the budget argument, the rule is that unspent funds lapse; a lapsed balance is an inconvenience, whereas paying Rs 210 million for goods that may never arrive, or at prices inflated by an absence of competition, is a loss that cannot be recovered. The correct response to a lapse risk is a surrender and a re-appropriation in the next year, not a procurement shortcut.

Control improvements required.

1. Annual procurement plan approved before the year begins, aggregating all requirements so the threshold is applied to a single requirement value.
2. Splitting check in the financial system: block the creation of a second purchase order above 50% of the threshold to the same supplier or specification within the same financial year without a written justification and approval by the next higher authority.
3. Conflict of interest declarations from all staff involved in procurement, refreshed annually, and mandatory recusal of any officer whose relatives are bidders.
4. Payment only against verified receipt, with receiving handled by a committee that excludes the requisitioning officer, and three-way matching of purchase order, goods received note and invoice.
5. Quarterly reporting of all contracts between 80% and 100% of the open-bidding threshold to the audit committee - the population where splitting hides.
6. Retrospective review of this year's four contracts and a suspense/asset verification of the 1,800 tablets, with recovery action if they cannot be traced.