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INTEGRITY PACT PROGRAMME ONGC’S EXPERIENCE 07 th July,2008 Hyderabad PowerPoint Presentation
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INTEGRITY PACT PROGRAMME ONGC’S EXPERIENCE 07 th July,2008 Hyderabad. VISION OF ONGC To be a world-class Oil & Gas Company Integrated in energy business with dominant Indian leadership and global presence. BACKGROUND.

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slide1

INTEGRITY PACT PROGRAMME

ONGC’S EXPERIENCE

07th July,2008 Hyderabad

slide2
VISION OF ONGC

To be

a world-class Oil & Gas Company

Integrated in energy business

with

dominant Indian leadership

and

global presence

background
BACKGROUND
  • CVC in consultation with TI-I organized a presentation on INTEGRITY PACT during May 2005 at Bangalore.
  • ONGC decided to incorporate the Integrity Pact in its tenders after modifying the draft IP document with Indian / ONGC specifics
ongc action steps
ONGC – ACTION STEPS
  • CMD, ONGC covered the IP concept in his presentation during ONGC’s Annual Vendor Meet held on 16th May 2005 at Mumbai and invited comments from vendors by 10th June 2005.
  • Feedback was received from companies like Halliburton, ISMTL, Global Offshore, Transocean , Worley-Australia etc.
  • The draft IP was vetted by Shri G.E. Vahanvati, Solicitor General of India on 22ndJune2005, after considering the vendors’ feedback.
ongc action steps5
ONGC – ACTION STEPS
  • Guidelines issued on IP implementation on 30th June 2005.
  • All the bidders sign IP (pre-signed by ONGC’sauthorized representative) while submitting Bids
  • As on today, one and all bidders sign the IP in all ONGC tenders. Some examples: GCA, Schlumberger, Gesco, Halliburton, Transocean , Jindal Drilling, CIPL, CDSS, ISMTL, OCTL, BHEL, BPCL, HSL, B&L, HPCL,HAL, All Engineering EPC contractors etc.
vendors response
VENDORS’ RESPONSE
  • IP was rolled out across ONGC in all tenders for Works, Services & Purchases from 01st August, 2005.
  • So far about 5000 vendors have signed the IP while submitting their Bids.
  • These vendors included PSUs , NSICregistered vendors and Foreign vendors .
  • However, some OEMs/ Proprietary Article Manufacturers like M/s Altair Filter Technology, UK, M/s GE International Inc, Dubai, M/s Haskel (Asia) Pte., Ltd, Singapore and M/s Indian Ordnance Factory, Pune have been given dispensation from signing IP.
ongc and ti i
ONGC and TI-I
  • TI-I proposed ONGC to promote IP as aprogramme and to enter MOU with TI-I for process review and improvements
  • ONGC and TI-I sign MOU on 17th April 2006.
  • ONGC Board has approved the proposed MOU between ONGC and TII.
features of ongc s ip program
Features of ONGC’s IP Program
  • Commitments and Obligations of ONGC and Vendors
  • Violation and Consequences
  • Monitoring by Independent External Monitors
  • Implementation Guidelines
  • Periodic Review and Evaluation
pact duration
Pact Duration

The Pact begins when both parties have signed it. It expires for the Contractor 12 months after the last payment under the respective Contract and for all other Bidders 6 months after the contract has been awarded.

independent external monitors iem
INDEPENDENT EXTERNAL MONITORS (IEM )
  • As per IP programme, ONGC engaged Independent External Monitors (IEMs) on 6th March, 2006
  • CMD, ONGC after informal consultation with CVC identified the following IEMs

1.Shri V.K. Shunglu , former CAG of India

2.Shri V.K. Agarwal, former Chairman

Railway Board

3.Shri Arvind Varma, former Secretary to

the GOI.

  • All of them kindly consented to become IEMs for ONGC
status review by cvc
STATUS REVIEW BY CVC
  • CMD ONGC informed the status of implementation of IP in ONGC to the Secretary, CVC vide letter dated 28th December, 2005.
  • Presentation on implementation of Integrity Pact in ONGC was given to CVC by CMD ONGC again on 09th March, 2006.
  • On 15th November,2006 status of IP implementation in ONGC was appraised to CVC.
expected benefits from ip
EXPECTED BENEFITS FROM IP
  • Improved Transparency, image and reputation as an ethical organisation.
  • Speed up of Tender and Procurement Process.
  • Reduced External interference.
  • Reduced frivolous lawsuits and complaints from Vendors.
  • Representations referred to IEMs for consideration.
  • Improved vendors satisfaction
  • Lower the cost of procurement
appraisal to mop ng
Appraisal to MOP&NG
  • ONGC gave a presentation on 17th July,2007 to the Secretary, MOP&NG on status of Implementation of Integrity Pact in ONGC which was attended by the C&MDs of Oil Sector PSUs.
  • Secretary, MOP&NG appreciated ONGC’s efforts and encouraged all PSUs in MOP&NG to implement this programme.
publicity of successful implementation of i p programme in ongc
Publicity of successful Implementation of I.P. Programme in ONGC
  • A press clipping in Business Line dated 19th April 2006.
  • Presentation to CVC on 21st Aug 2007 attended by various PSUs
  • A half page press clipping in Times Of India dated 12th Nov 2007 on commencement of Vigilance Awareness Week.
  • Article published in ONGC In-house journal “Vigilance Overview” which was also sent to OIL, IOC, GAIL, HPCL, BPCL and EIL on 20th Nov 2007.
  • A detailed article on “Integrity Pact with Bidders / Contractors – ONGC’s Experience “ has been published on “ Candour 2007 “ Magazine of Power Grid Corporation .
publicity of successful implementation of i p programme in ongc15
Publicity of successful Implementation of I.P. Programme in ONGC
  • Guidance given to PSUs in various sectors, such as GAIL, IOCL, HPCL, BPCL, OIL India, POWER GRID CORPN., BHEL, BSNL ,MTNL, Airport Authority, &SAIL for smooth IP implementation in their Organization.
  • Presentation given at PETROFED conference at Delhi on 6th Dec 2007 chaired by Shri Prabh Das then Joint Secy. & CVO, MOP&NG under UNGC (United Nation’s Global Compact) during the session on Anti Corruption Practices
  • Presentation given at National Aviation Company India Ltd., Mumbai during the NACIL Vendors Meet held on 08th Feb 2008. The meeting was attended by Secretary, Min. of Civil Aviation and other dignitaries
  • During “Global Contract Risk Management Conference “ held at Barcelona,Spain during 21-22 April,2008 presentation was given on “Transparency in business processes through Integrity Pact “ which was attended by representatives from more then 50 countries.
contract specific nomination of iems
Contract Specific Nomination of IEMs
  • Curriculum Vitea of IEMs are placed permanently on the home page of ONGC’s web site www.tenders.ongc.co.in
  • Orders issued on 12th May 2006 that particular IEM as approved by Director(Onshore)I/C-MM shall be pre- nominated by turn for Tendersvaluing Rs 150 Crores and above .
  • Till date in 58 cases IEMs have been pre-nominated.
status of iem pre nominated cases 30th may 2006 onwards
STATUS OF IEM PRE NOMINATED CASES(30th May,2006 onwards)

First IEM pre- nomination done on 30th May, 2006

Pre-nomination has been done for 58 cases valuing Rs 73337 Cr .

Contracts has been awarded/supply order(s) placed for 27 Cases valuing Rs 25006 Cr

17

improvements in i p implementation
Improvements in I.P Implementation

Based on interaction with TII & IEMs and feedback from vendors following improvements have been made in IP:

  • Threshold limit for Tenders for signing of IP valuing above Rs 1 crore only has been fixed which forms 95 % of Tenders by value.
  • IP to be executed on plain paper, irrespective of whether it is from foreign or Indian bidders.
  • IP proforma revised and notified vide PMC circular No. 08/2007 dated 07th June 2007 and suitable amendment issued.
complaints referred to iems
Complaints referred to IEMs

1.M/s Trishakti Electronics & Industries Ltd., Kolkata represented that there was violation of IP by other bidders as these bidders have formed a cartel and quoted rates.

  • Case value : Rs. 87.58 Cr.
  • No IEM pre-nominated.
  • In the joint report dated 10.8.06 , IEMs (Shri V.K.Agrawal and Shri Arvind Varma) concluded that no action appears to be warranted in respect of the representation.
complaints referred to iems21
Complaints referred to IEMs

2.M/s Weihai Sunfull Electronics Group Co. Ltd., China represented against Technical rejection of their bid on account poor performance of their supplies against past order.

  • Case Value: Rs. 18.8 Cr.
  • No IEM was pre nominated
  • In the report dated 14.11.06, IEM Shri Arvind Varma concluded that the representation does not have any merit and ONGC may proceed to decide the tender in accordance with its rules and procedures.
complaints referred to iems22
Complaints referred to IEMs
  • 3. M/s Sercel, France after opening of the price bid on 24.08.06, represented raising various issues related with procedural lapses, different specifications, submission of prices after tender closing time.
  • Case Value: Rs.417 Cr.
  • Shri V.K.Agarwal was pre-nominated .
  • The IEM in his report dt. 28.11.06 observed that Geo. services , ONGC processed the tender in a fair & transparent manner giving equitable opportunity to both the bidders , as per policy of ONGC..
complaints referred to iems23
Complaints referred to IEMs

4.M/s Baoding Earth Science Technology Co. Ltd, China represented against Technical rejection of their bid for Geophone String Model 20DS10(B) though satisfactory performance certificate from oil cos. were submitted. The bidder also represented that one of the other bidders has not furnished documents to support that their past supplies were of oil field Marsh casing.

  • Case Value: Rs. 18.8 Cr
  • No IEM was pre-nominated.
  • In the report dt. 12.01.07, IEM Shri Arvind Varma concluded that it appears the representation under consideration does not have any merit. Accordingly ONGC may proceed to take a decision in respect of the tender in accordance with its rules and procedures.
complaints referred to iems24
Complaints referred to IEMs

5. Four Hon'ble MPs complained that while evaluating the commercial responsiveness , unwanted relaxations were granted to the Consortium bidder lead by M/s Great Offshore and another bidder M/s Nafrogaz. M/s Sub Ocean one of the consortium partners with M/s Great Offshore was stated to be not meeting the Financial criterion regarding Turn over. Whereas in case of M/s Nafrogaz the Statutory Auditors expressed doubt about the financial position of their Parent company. Hence the representationist sought that the above two bids ought to be rejected. Priced bids were opened on 24.08.07.

  • Case Value: Rs 725 Cr.
  • In the Joint Report dtd 08.10.07, the panel of 3 IEMs opined that the relaxation granted to the consortium of M/s Great Offshore in the matter of turnover criteria in relation to M/s Subocean seems to be in order and does not bestow any undue advantage. In case of other bidder M/s Nafrogaz, the Balance Sheet of 2006 (not available during evaluation) resolves the issues raised by the earlier BS of 2005. Presently, the BS of 2006 is available and demonstrates that the financial position of the parent co.M/s Nafro Gaz, Ukraine is sound and consequentially, Nafrogaz India is commercially responsive.
complaints referred to iems25
Complaints referred to IEMs

6. Contract with M/s Liaohe Petroleum Exploration Bureau (LPEB) China for 3D Data acquisition was terminated by ONGC due to delay in mobilization and un-preparedness of contractor for execution of contract. Contractor represented against termination of contract on non justified grounds in spite of the fact that LPEB has fulfilled their contractual obligation.

  • Case Value: Rs. 240Cr
  • In their record of proceedings dtd 27.11.07, the panel of 3 IEMs noted that the contract was terminated by ONGC on 08.11.07, it was also brought to their notice that the representationist is contemplating Arbitration proceedings in respect of the termination of the contract. In the totality of the circumstances, IEMs felt this was essentially a matter of arbitration.
complaints referred to iems26
Complaints referred to IEMs

7.M/s L&T represented that as per tender provisions bids shall be submitted only in the name of bidder or a consortium/ joint venture lead by the bidder in whose name bidding documents were issued by ONGC. M/s L& T contented regarding responsiveness and admissibility of bid submitted by M/s Ramunia Fabricators Sdn. Bhd. Malaysia in whose name bid documents were not issued but in the name of M/s Ramunia International Services Ltd, Kuala Lumbur

  • Case Value: Rs 2323 Cr
  • In the Record of Proceedings dtd 30.11.07, the panel of 3 IEMs opined that since the consequence of the factual position is that the bid submitted by RFSB does not successfully meet the requirement stipulated in Clause 10.1 of ITB, hence the bid seems to be incapable of being regarded as admissible under clause A-4 of BEC. Therefore the bid of RFSB does not merit consideration .
periodic review evaluation
Periodic review & Evaluation

Review the effectiveness of Integrity Pact program by the following:

  • The Independent Monitor and senior leadership of organisation to conduct an annual assessment of Integrity Pact Program effectiveness with CVC and TI and identify areas/ways to improve it.
  • The Independent Monitor shall submit an annual report on the progress/effectiveness of Integrity Pact Program to the Board of Directors of Organization.