X-ray machines at Rs 33 lakh each against an actual cost of around Rs 10 lakh, linen bedsheets at Rs 450 a piece against its original price of Rs 150, and ORS sachets at Rs 15 each against a market rate of around Rs 2.5 were among alleged procurements made by the Central Procurement Agency (CPA) under the Directorate General of Health Services (DGHS) earlier this year.
In connection with the alleged scam involving inflated procurement bills — that the Anti-Corruption Branch (ACB) has so far estimated to be worth around Rs 700 crore — the agency on Sunday arrested former DGHS Director, Dr Vatsala Aggarwal, and former Deputy Controller of Accounts (DCA), CPA, Neeraj Chopra, after they allegedly failed to provide “satisfactory explanations”. ACB officials also found that several files related to expenditure and procurement were “missing”.
The agency earlier on June 18 arrested Dr Vinod Kumar Ranga, former Head of Office of the CPA. Dr Ranga is currently in judicial custody.
According to official sources, around 10 more government officials associated with the CPA, whose names have surfaced during the investigation, are on the ACB’s radar. Some have already been summoned for questioning. Besides, more than half a dozen individuals, including contractors and bidders, are also being questioned in connection with the alleged scam.
The alleged irregularities first came to light in May this year when the Delhi Directorate of Vigilance conducted raids at the CPA office over two nights following complaints regarding procurement tenders for medicines, surgical items and medical equipment. On June 2, acting on a complaint from the vigilance department, the ACB registered an FIR under provisions of the Prevention of Corruption Act.
According to the complaint, official sources said, Dr Ranga, a supplier-operator, several unidentified officials and private persons allegedly operated a cartel that manipulated procurement by drafting tailor-made tender specifications, floating fake or front companies and submitting collusive bids to ensure favoured suppliers secured contracts at grossly inflated rates.
The complaint stated that the amount misappropriated could run into several hundred crores of rupees. It was also alleged that CPA officials repeatedly obstructed the vigilance department’s attempts to obtain procurement-related files.
The vigilance department also alleged that manufacturers first agreed among themselves to nominate specific distributors. These distributors allegedly drafted restrictive technical specifications and tender conditions suited to their nominees. According to sources, the complaint stated that the documents were then submitted to Dr Ranga and approved by DGHS officials.
The complaint further alleged that several companies were effectively controlled by a single distributor who was allegedly close to the officials under investigation. It also claimed that approvals were granted on the same day, financial bids were opened secretly, and purchase orders were issued without publishing contract awards on the Government e-Marketplace (GeM) or other e-procurement portals.
It was also alleged that the CPA deliberately kept the status of several tenders marked as ‘Active’ on procurement portals even after contracts had been awarded and payments released, thereby preventing competitors and the public from accessing the final contract details and rates, official sources said.
Sources also said that vigilance officers visited the CPA office on May 18 to collect procurement records only to find that key files were unavailable. CPA officials allegedly told them that the records were in the custody of Dr Ranga, who, they said, could not be contacted. Although the CPA later supplied some folders, vigilance officials found that the principal procurement files remained missing, sources added.
Siphoning of funds, illicit gains
Portable X-ray machines: Billed to the CPA at Rs 33 lakh each against a market price of around Rs 10 lakh per unit. The vigilance department estimates excess payment of around Rs 100 crore under this contract alone.
Linen and bedsheets: Retail price of hospital linen are estimated at around Rs 150 per piece. Vigilance department says the CPA paid Rs 450 per sheet through three linked suppliers.
Rs 75 crore was allegedly paid in total against an estimated cost of only Rs 25 crore. The remaining amount was allegedly siphoned off.
C-arm and anaesthesia workstations: Vigilance department cited GeM bids for C-arm units and anaesthesia workstations in which technical specifications were allegedly tailored to favour particular models. The equipment available in the market for only a few lakh rupees was invoiced to the CPA at several times the actual cost, resulting in alleged illicit gains worth crores
ORS and surgical consumables: 50 lakh ORS sachets were procured at Rs 15 each against a market price of about Rs 2.5 per sachet. Surgical dressings, sutures, cannulas and gloves were allegedly procured at highly inflated rates. The vigilance department says procurement worth around Rs 400 crore was made via hospital-level local chemist tenders. Funds worth nearly Rs 300 crore were diverted
The agency earlier on June 18 arrested Dr Vinod Kumar Ranga, former Head of Office of the CPA. Dr Ranga is currently in judicial custody. 
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