The purchase of AI-enabled road surveillance cameras is not the first time that Keltron's (Kerala State Electronics Development Corporation Limited) purchase agreements have come under the scanner.
In 2015, Kerala Police had tasked Keltron, a Kerala government enterprise, with the procurement of 53 tablets with Wi-Fi and 3G sim slot along with docking station and chargers for Rs 55.66 lakh. The absence of IT experts in the Police Department was cited as the reason for handing over the procurement to Keltron. Further, Keltron was considered a reputed total solutions provider with capabilities in the survey, technical assessment, procurement, installation, integration, training, maintenance and upgradation.
Here is what Keltron did. It put out a very specific requirement: Panasonic Rugged 7 tablet with Wi-Fi and 3G sim slot – FZ B2. This was a clear mockery of the Central Vigilance Commission recommendation that the specifications should be generic in nature.
By naming Panasonic even before the bids were invited, Keltron effectively shut out other suppliers. In fact, a supplier, Pantel Technologies, mailed Keltron saying it could not participate as its brand and model were different. Keltron ignored the mail.
The Comptroller and Auditor General, too, found this odd. "The tender was tailored to ensure that the work was awarded only to Panasonic India Pvt. Ltd.," it said in a 2020 report.
The CAG discovered graver anomalies. It was found that Keltron was in touch with Panasonic even before Kerala Police officially handed over the procurement to Keltron.
Email correspondences revealed that Keltron, even before it received the work order, was helping Panasonic to quote the right price for its touchpad. And this 'right price', Keltron was particular, should include their margin.
This is what Keltron tells Panasonic in an email sent in February 2015: "The target price we are looking at is given below so that we can get a contribution of 5.60 per cent by adding 6 per cent to the actual input price from Panasonic. By adding KVAT as five per cent for FZ-B2 and 14.50 per cent for the other two items, we can sell it at Rs 1,00,000 per unit."
The then State Police Chief Loknath Behra was not happy with the price and so Keltron quickly sent Panasonic another mail asking for a downward revision. Even here, Keltron is so concerned about its cut that it wants Panasonic to recalibrate the price in such a way that its margin is unchanged.
"The testing of the new Tablet is in progress. Now it is being taken to Mr. Loknath Behra IPS along with the Docking Station. Regarding the price quoted by you, Loknath Behra (the then DGP) is expecting an End User Price (EUP) with tax below Rs one lakh. Otherwise, he will not purchase the same. So please rework your price keeping our margin percentage intact," the mail said.
These correspondences had taken place even before Keltron was given the go-ahead to begin the procurement process.
When confronted, Keltron said it had evaluated the products of two other vendors before settling on the Panasonic brand. The CAG then looked for proof of these evaluations but could not find any.
The CAG termed the e-tender notification issued by Keltron as "a sham" as it was done after Panasonic was assured of the purchase order.
If the purchase of the Panasonic tablets was in the interest of Keltron, it was found that Keltron had bought voice loggers from suppliers preferred by the top brass of the Kerala Police.
By around the same time that the Panasonic tablets were purchased, the Kerala Police had informed Keltron that it had Rs 90 lakh for the purchase of 30 voice loggers. Meaning, Keltron had to procure the equipment at less than Rs three lakh a piece. A voice logger is a device for storing audio data in a computer's hard drive or any such removable media.
When Keltron's documents were checked by the CAG, it was found that it had received a quotation from Third Entity Security Solutions Pvt. Ltd. for the supply of 30 voice loggers for Rs 2.60 lakh a unit. Keltron negotiated and brought this down to Rs 2.07 lakh a unit.
A week after Third Entity's quotation was received, the ADGP (Modernisation) forwarded to Keltron a commercial proposal he had received from Law Abiding Technologies (LAT), New Delhi. The LAT had quoted Rs 1.72 lakh a unit without taxes. This was considered higher than the market rates.
However, realising that the ADGP was interested in the LAT, Keltron dumped Third Entity. It re-negotiated with the LAT for the purchase of a larger 16-port voice logger at Rs 2.40 lakh a unit; the deal with the third Entity was for an 8-port voice logger.
The number of units to be purchased came down to 10. Then, factoring in its margin, Keltron sold 10 units of the larger voice loggers to Kerala Police at Rs 3 lakh a piece. This margin was higher than the profit a total solutions provider was eligible to pocket.
It was found that Keltron made no efforts to obtain competitive rates from other vendors including the initial vendor, Third Entity Security Solutions Pvt. Ltd. before finalising the deal with the LAT. The open tender process was also done away with. Once again, there was a violation of the transparency conditions set forth by the Central Vigilance Commission.
Here is what the CAG noted: "Collusion between the ADGP (Modernisation), LAT and Keltron in procuring the Voice Loggers without complying with the various stipulations mandated by the CVC for public procurement, vitiated the procurement process."
