INDIA: UTTAR PRADESH HEALTH SYSTEMS STRENGTHENING PROJECT

Implementation Support Mission, April 17-21, 2017

Aide-Mémoire

I. Summary

A World Bank team1 visited Uttar Pradesh to conduct the tenth implementation support mission

for the Uttar Pradesh Health Systems Strengthening Project (UPHSSP) on April 17-21, 2017. The

team met with and de-briefed Mr. Sidharth Nath Singh, Honorable Minster of Health and Mr.

Arun Kumar Sinha, Additional Chief Secretary of Medical, Health and Family Welfare,

Government of Uttar Pradesh (GOUP). The team worked closely with Ms. V. Hekali Zhimomi,

Project Director, Dr. Harsh Sharma, Additional Project Director and staff of the Project

Management Unit (PMU) of UPHSSP, the Technical Assistance Provider (TAP) and other

consultants. The team also undertook field visits to Hardoi and Lucknow districts to review the

progress made on various project activities. We would like to extend our sincere appreciation to

the Government of Uttar Pradesh (GOUP), the project team and all other stakeholders for the

warm hospitality extended to the Bank team. We also acknowledge the keen interest expressed by

the Minister of Health in continuing World Bank support for health systems strengthening beyond

2019 through an Additional Financing.

The Project continues to make steady progress towards achievement of its Development Objective.

All but one of the six outcome indicators achieved their FY 2016-2017 targets and three indicators

have surpassed their end-of-project targets. End-of-project targets have been achieved for five of

the seven intermediate results indicators and the remaining two are on track to be achieved by the

Closing Date.

The accelerated pace of implementation reported during the last mission has been maintained and

disbursement during the GoUP financial year ended on March 2017 was equivalent to

disbursement during the first four years of project implementation. Seven DLI targets have been

achieved since the last mission but verification and reporting has been very slow and was only

being concluded at the time of the mission. Management of key contracts has improved

significantly and major payment delays, especially to the Human Resource (HR) Agency that posts

nurses and paramedical staff to the 53 district hospitals supported by the project, have now been

resolved. However, contract management and financial reporting by districts still has significant

room to be improved. Similarly, while procurement of consultancy and non-consultancy services

has improved significantly, procurement of goods, especially medical equipment continues to be

slow. The project has engaged a new procurement agent and started e-procurement so substantial

improvements are expected by the next mission.

The activities under Component 1 have made good progress since the last mission. Both the Data

Resource Center (DRC) and the Strategic Planning cells in the Directorate of Medical Health

(DMH, the Directorate) have become valuable assets to the state government and are fulfilling the

objective of strengthening evidence-based decision making in the health sector and improving the

overall health system beyond the activities directly financed by the project. The social

1 Mr. Jorge Coarasa (Sr. Economist and Task Team Leader), Dr. Suresh Mohammed (Sr. Health Specialist), Mr. Amith Nagaraj

(Operations Officer), Mr. Dhirendra Kumar (Consultant Procurement Specialist), Mr. Arvind Prasad Mantha (Financial

Management Specialist), and Dr. A. Venkat Raman (Consultant, PPP Expert).

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accountability interventions continue to be implemented in 72 Block Primary Health Centers

across 12 districts and have resulted in thousands of service delivery issues raised by communities

and addressed by local governments and service providers through the innovative use of

technology.

Component 2 continues to make good progress. The project now supports improvements towards

National Accreditation Board for Hospitals & Healthcare Providers (NABH) accreditation,

performance-based outsourcing of clinical and non-clinical services and environmental

management directly in 53 district hospitals. In addition, the project is providing technical support

to the National Health Mission (NHM) for scaling-up these activities across all 75 districts and 174

district hospitals in the state. Furthermore, these activities are being mainstreamed into the state

health system through knowledge transfer and support to the Public Private Partnership (PPP) and

Quality Assurance (QA) cells in the Directorate.

II. Implementation Progress

Component 1: Strengthening the Department of Health's management and accountability

systems

Strategic Planning: The faster pace of implementation achieved as of the last mission has been

maintained and the Strategic Planning Cell in the Directorate has become a valuable asset for the

Department of Health and Family Welfare. With support from the TAP and the PMU, the Cell is

providing analytical support and serving as the secretariat for the 15 thematic groups that are

currently deliberating on the first ever UP State Health Policy. UP has taken the lead in rolling out

the State Health Index developed by Niti Aayog to benchmark performance on health outcomes

across the states. The sub-component has also supported the Directorate in the evaluation of the

flagship immunization program Mission Indradhanush, the development of a Human Resources

Transfer Policy and a Dengue Action Plan. The partnership with King George Medical University

to conduct two studies on Non Communicable Disease (NCD) continues to make progress and

now the focus will shift to advancing the two other research priorities identified (Childhood

Malnutrition and Road Traffic Accidents/Trauma Care). Technical work and stakeholder

discussions on the Financial Dashboard have continued but little progress was made since the last

mission. The Financial Management Specialist in the Bank team has offered to provide technical

support to resolve the pending issues during a follow up visit in June or July, 2017.

Data Resource Center: The Data Resource Center (DRC) cell in the Directorate continues to

make progress and is now fully integrated into the state health system. In the last six months, DRC

has supported the overall program monitoring of DMH and facilitated the process of developing

the State plan and budget for financial year 2017-2018. DRC has developed 17 software

applications to support monitoring and reporting needs of various project activities. These

applications have helped to improve accountability by putting information on grievance redressal,

drug availability, diagnostic services (among others) in the public domain, tracking performance of

various contracts (cleaning and gardening, high end pathology, construction management etc.), and

making data driven policy and implementation decisions. DRC also developed the State Outbreak

Reporting System (SORT) that tracks episodes of key communicable diseases in support of the

Integrated Disease Surveillance program (IDSP). All IDSP district level staff have been trained

and SORT is already providing daily online reports at district and state levels. All the applications

developed by DRC have cleared a security audit and several of them, including the Patient

Diagnostics Information System (PDIS), Cleaning & Gardening Outsourcing System, Construction

Works Monitoring System, Arogya Nidhi Application Tracking System and Facility Health Report

Card have been successfully migrated to the State Data Center. The project has also supported the

NHM by rolling out the Patient Diagnostic Information System (PDIS) down to the Community

Health Center (CHC) level, conducting call efficiency analysis of emergency ambulance services

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(108 and 102), and developing the Quality Management Information System (QMIS) for the

Kayakalp quality assurance program. In the last 6 months, the project has trained hospital

managers and computer operators on applications related to NABH accreditation. However, no

progress was made on training and finding innovative ways of supporting all users, especially staff

at the district level as agreed during the last mission. The project will assess the training needs and

submit the training plan for all project staff at state and district level. Given the applications are

now fully developed, the project shall focus on data completeness and quality to make the best use

of the information collected as well as moving from 17 vertical applications to an integrated

platform that allows interoperability, data validation and enhanced analytical capabilities.

Social Accountability: The pace of progress has picked up considerably since the last mission and

implementation is now being rolled out across 12 districts (including the original 10 and the 2 that

started later where the impact evaluation is conducted). Currently, 316 out of 422 Gram Panchayat

Coordinators (GPCs) have been recruited, trained and deployed to their respective Gram

Panchayats (GPs) to form and activate Village Health Sanitation and Nutrition Committees

(VHSNCs). In addition to GPCs, six out of 31 positions at state, district and block level remain

vacant and need to be filled as soon as possible. By end of March 2017, a total of 22,028 Village

Health and Nutrition Days (VHNDs) and 18,227 VHSNC meetings have been observed as part of

intervention activities in the initial 10 districts. GPCs have generated 2,740 Action Taken Reports

(ATRs) from these meetings and action has been taken on 1,515 of them. As of March 31, 2017,

40 Jan Samvaad (Public Hearing) have been organized at block level. The issues raised by

communities on related to health, sanitation and nutrition have been resolved by the respective

government authorities at district and block level. The number of trained VHSNC members in the

last 6 months has also increased from 14 percent to 83 percent (27072 out of 33904 members are

trained). As of March 2017, social networks interventions have been completed in all but three of

the 80 intervention villages (both the information only and information plus facilitation arms) in

the two districts (Fatehpur and Sultanpur) where the SIEF funded impact evaluation is being

conducted. In general, implementation in Fatehpur lags significantly behind Sultanpur; the three

villages that are still trying to implement information and network interventions are all in

Fatehpur. This could be driven by area-specific community level factors (which will be assessed

empirically) as well as the fact that the HR firm recruited GPCs for Fatehpur from areas further

away, relative to Sultanpur where they recruited locally. The social networks interventions planned

for the information plus facilitation villages are scheduled to be completed by the end of May

2017 and all the intervention villages are expected to continue in a steady state for the rest of the

year.

The State Institute for Rural Development (SIRD), the agency contracted for implementation, has

submitted a proposal to extend the social accountability interventions until March 2019, to

coincide with the revised Closing Date of the project. While this is an important step, several

implementation issues need close attention. First, the extension of these interventions will require

renegotiating the contracts of the GPCs. In the last 3 months, SIRD has made efforts to streamline

the payment of salaries to field staff. While salaries are paid directly by SIRD through electronic

transfers, this depends on the HR agency submitting attendance information on time so close

coordination and sound contract management of the HR agency will be required to avoid delays in

the future. It will be very important that the contracts are extended promptly to avoid turnover of

staff that would in turn require retraining, cause delays and potentially reverse the progress

achieved so far. During the course of implementation, SIRD and UPHSSP have recognized that

despite the best intentions, the GPCs have not been able to submit timely reports on the electronic

data collection platforms and fill out all the forms that were designed in the early stages of the

project. SIRD will streamline reporting requirements to ensure that GPCs are able to transmit data

on time. It will also work with the impact evaluation team to start collecting key information on

an electronic format as the current paper forms make it hard to extract valuable insights to inform

implementation decisions and identify problems. The mobile application developed by the project

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to reflect simplified electronic formats is currently under use by most of the field staff. A few of

the tablets procured by SIRD for electronic reporting need to be recalibrated or replaced as field

staff reported some efficiency issues with these devices. The current contract with SIRD ended on

May 30, 2017.The project shall expedite the process of extending it till the end of the project and

also revise the terms and conditions discussed during the last mission. The project shall also start

preparing the plan for evaluating the interventions in the 10 districts not covered by the SIEF

funded impact evaluation. The methodology and approach for this should be discussed and agreed

both with the Bank task team and the team conducting the impact evaluation in two districts.

Component 2: Improving the Department of Health’s capacity to perform its quality

assurance role and more effectively engage the private sector

Quality Assurance (QA): The program of district hospital improvement towards NABH

accreditation now covers 53 hospitals and continues to make good progress since the last mission.

Entry-level accreditation has been achieved for seven hospitals and the project expects six more to

be certified by the end of July, 2017. Ten more hospitals will be ready to submit Corrective and

Preventive Action (CAPA) reports by the end of June, 2017. The project has successfully

streamlined the payment of salaries for contractual nurses and paramedical staff posted to NABH

hospitals and salaries are now being paid on time. This is a commendable achievement and fully

addresses one of the key issues raised during the las mission. The PMU is encouraged to continue

further strengthening the contract management of the HR agency to avoid a relapse of delayed

salary payments in the future. Even as hospitals continue at different levels of progress towards

accreditation, it is important to note that the QA interventions (posting and training of hospital

managers, medical and paramedical staff, implementation of process and infrastructure

improvements) are already bringing about visible change at most of the district hospitals in the

program. For example, nursing and paramedical staff shortcomings have been significantly

reduced and as a result in-patients are attended by nurses rather than friends and family and the

overall care environment has been significantly improved for patients, creating in turn a better

working environment for staff. Now that the program is up and running and progress is being

made across most hospitals, the focus of the QA team needs to shift from increasing the coverage

of interventions to improving their quality. For example, while numerous trainings are being

conducted for hospital staff, there has not been an assessment of their effectiveness. Progress in

closing the gaps in medical staff continues to be slow. Despite the fact that the project is offering

the highest salaries of any government program, the number of doctors and specialists who are

willing to work at the district level is limited. As a result, about two thirds of positions remain

vacant which will become a constraint for advancing towards accreditation beyond the entry-level.

The Bank Team has conducted a number of supervision visits to district hospitals in the months

since the last mission as well as during the current mission. One recurrent observation is that the

hospitals with active Chief Medical Superintendents (CMS) are showing outstanding progress in

improving quality of care, while the hospitals with less dynamic and engaged CMS are struggling

to implement even basic interventions. It will be important for the project to design targeted

interventions to improve behavior among CMS, especially at those hospitals that are lagging

behind in order to meet the ambitious targets of the QA sub-component.

Minor civil works are being undertaken in 20 hospitals, including renovation and construction of

operation theatres, labor rooms, casualty rooms, x-ray rooms and other basic amenities. Most of

the works are under implementation but the progress has been slow. The major reasons for delays

are late payments to contractors, lack of ownership and supervision by district junior engineers

(JE), and the slow process of handover from contractors to hospital staff. The frequency of review

meetings with CMS, JEs and contractors to address these challenges should be increased until all

works are on track. Further, the quality of the works needs to be closely monitored by the project.

The Bank team suggested that the project considers appointing an independent consultant to

conduct third party quality reviews of ongoing works to complement the supervision by the project

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team. Lastly, the quality assurance team needs to work closely with JEs and CMS to ensure the

sequence in which works are undertaken reflects their importance to improving quality and

advancing the accreditation progress. During the mission, the Bank team has also agreed with the

project to pilot revamping the Out-Patient Departments (OPD) in 10 of the district hospitals under

the accreditation program. The intervention seeks to deepen quality of care improvements by

introducing process and infrastructure changes that optimize patient flows leading to enhanced

patient safety as well as patient and staff satisfaction.

The detailed report on QA is available in annex 4.

Environment Management: In the last six months, the project has made good progress in

Environment Management. Information, Education and Communication (IEC) activities have been

further strengthened and new materials have been designed to increase emphasis on key issues

related to segregation & collection of Bio-medical waste (BMW), good bio-medical waste

management (BMWM) practices, management of sharps etc. An agency has been hired for

printing & distribution of IEC material developed by the project. An animation film highlighting

the smart data entry system for BMW collection has been developed and disseminated to all

district level staff.

The project has developed training materials both in digital and manual format to provide training

at the Healthcare Facility level in line with the new BMWM Rules, 2016. All the staff from the

hospitals under the accreditation program have been trained in segregation and monitoring of

BMWM. As of March 31, 2017 the project has trained 3451 government personnel (410 doctors,

2274 paramedical & 767 others), 117 Quality Managers of NHM and 51 Hospital Managers posted

to NABH hospitals. Besides one time training, routine training on BMWMIS records has been

provided to 5153 personnel in 70 hospitals (51 NABH & 19 Non-NABH). Data on hospital-level

BMW monitoring and training are being maintained on the BMWMIS, an App on BMWM is

under development and is expected to be launched over the next 3-4 months.

In the last 6 months, the project has supported the Central Medical Stores Department (CMSD) to

tender state-wide contracts for Centralized Biomedical Waste Treatment Facilities (CBMWTF). A

request for proposals (RFP) for contracts to be funded by NHM and managed by the Directorate

was issued for 74 districts while the Lucknow District will be managed and funded by UPHSSP to

demonstrate the application of innovative IT systems for BMWM. The response to the RFP was

encouraging but the prices quoted were higher than the rates fixed by the Government of India and

hence it was decided to make changes to the RFP and re-bid the tender. The project has further

conducted stakeholder consultations, carried out market surveys, and reviewed the scope of work

for both CBMWTF and hospitals and revised the ToR and RFP to reduce the cost burden on

potential providers. The revised RFP will be issued by 20 May, 2017. The project will not only

implement the contract in one district (Lucknow), but also provide technical support to the

Directorate for the implementation of the activity in other districts, and support the development

and implementation of the contract management systems for BMWM across the state. Lastly, the

project has been awarded the Digital India Award 2017 in the category 'Good for India-Innovation

in Digital Environment Solutions' for the innovative smart biomedical waste management solution

developed and tested for technological feasibility.

Two facilities and an existing CBMWTF located in Lucknow were visited by the Bank team.

The CBMWTF has all the requisite environmental clearances and all the necessary equipment was

found in good working condition. The challenge is that waste segregation is not happening at the

facilities and thus the CBMWTF has to do it manually upon receipt of the waste which

significantly delays the process. Further training, sensitization and capacity building is needed at

the facility level to segregate waste at source and collect in the designated color-coded bags.

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Contracting with the Private Sector: Implementation of activities under this subcomponent

continues to progress at a steady pace. As of now, 52 district hospitals in the NABH accreditation

program have performance-based contracts for outsourced high-end pathology services, 50 have

performance-based contracts for cleaning and gardening and 6 for mechanized laundry. The

implementation of performance based contracts under the project has provided a rich set of

experiences and lessons learned which are being used to make adjustments in key clauses during

each round of contract renewal.

Performance-based outsourcing of cleaning and gardening services continues to be implemented

successfully with the exception of a few hospitals that require attention from the project. The

project is using an innovative two-stage monitoring approach for this activity. The first stage is

done through a ‘WhatsApp’ group (‘PPPGroup UPHSSP’) where hospital managers post

photographs from all hospitals on a daily basis. The second stage is through a set of formats that

allow monitoring of quality and performance for payment (including patient satisfaction). The

project has contracted a surveyor to measure the area and draw floor plans of the hospitals

implementing cleaning and gardening outsourcing. This information needs to be utilized by the

project to review all the existing contracts to identify discrepancies in the area stipulated for

cleaning and gardening. Based on this review, the contracts should either be amended to include

new buildings or extensions not previously taken into account or correct measurement errors

reflected in the existing contracts.

In order to continue strengthening this activity the Bank team recommends the following

measures: a) review and improve the process of filling up weekly feedback forms by the matron

and its entry in to the MIS system to make it more about providing substantive performance data

and less about ticking the box so the contractor can get paid; b) Rationalize the staffing pattern of

cleaning and gardening personnel so that staff deployment is commensurate to the revised area

and bed strength of the hospital c) closer supervision on the deployment of sufficient cleaning

staff, frequency of cleaning, use of mechanized equipment for cleaning as per the contract; d)

availability of colored bags and bins for segregation of bio-medical waste at the wards and better

coordination between the cleaning agency and the CBMWTF agency; e) improved security and

safety of hospital premises to limit the entry of visitors; f) Hospital managers should play a greater

role in identifying and following up on these recommendations.

Outsourcing of high-end pathology services in 52 facilities is providing valuable lessons as well as

a case in collaboration with a joint technical committee composed of both government and private

sector experts reviewing and adjusting the performance of this activity. The uptake of high-end

pathology services has increased by 32 percent (from 427,977 tests during April-September 2016

to 562,836 during Oct 2016 - March 2017). Similarly, the percentage of OPD/IPD patients referred

to pathology services has increased by 20 percent (7.6 percent of OPD/IPD during April-

September 2016 to 9.10 percent during Oct 2016 - March 2017). While the project needs to

continue monitoring closely the uptake of services, the Bank team recommended adding a focus on

the appropriateness of the tests being prescribed. A comprehensive study should be undertaken to

review the pattern of utilization of services to assess the degree to which under/over treatment is

observed and ensure the benefits to the target population are being maximized both from a clinical

and a financial protection perspective. There is also a need to conduct Continuous Medical

Education sessions at the hospitals to orient the doctors on the array of tests available. Patient test

data should be uploaded on the laboratory software without delay. Turn-Around-Time schedules

should be prominently displayed outside the sample collection centers for the benefit of the

patients. Location of the sample collection centers in female hospitals should have easy access for

male patients from adjoining male hospitals without inconveniencing the patients.

One of the performance areas included in this outsourcing is the accuracy of tests as measured by

an External Quality Assessment System (EQAS) contracted by the project. Though this is

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functioning well for the majority of contracts, it is based on a program that doesn’t allow

enrolment of new hospitals and laboratories immediately. Therefore, for a few contracts that were

signed after the main batch, the 10 percent payment based on EQAS has not been made. In order

to correct the situation, it was agreed that performance may be assessed through existing third-

party quality assessment schemes in which the service provider is already enrolled. This can be

considered as a proxy until the time these labs get enrolled into the regular EQAS contracted by

the project.

Contracts for outsourcing of laundry services in 6 hospitals were signed with 2 private contractors

in January 2017 and services started in March 2017. The contract is on the principle of gross

weight of linen per bed. The Bank team pointed out that the lack of appropriate electrical and

water supply fittings, storage of water, drainage, and modification in the building (civil work) for

the installation of automated laundry machines are issues that commonly hinder the smooth

operation of outsourced laundry services and the project should pay close attention to ensure this is

not the case as this activity is rolled out.

Staffing of the PPP cell in the Directorate has almost been completed with five out of seven

positions filled. Besides implementation of the private sector contracting activities directly funded

by UPHSSP, the PPP cell has also supported the NHM and the Directorate in the design and

implementation of outsourcing of dialysis services as well as a range of private sector engagement

activities in the state. The monitoring software developed by the project has been customized and

is being used by NHM for cleaning and gardening as well as high-end pathology in all district

hospitals across the state.

During the review mission it was agreed that the following activities will be undertaken in the

coming months: a) review of the state health sector specific PPP Policy, in light of preparation of

the UP state health policy; b) developing guidelines on PPP Policy; c) conduct a comprehensive

review of the functioning of the contracts in the form of case studies; d) conduct detailed analysis

of the data using a data analytics tool; e) develop mobile based patient/ user feedback mechanism

using ‘WhatsApp’ or ‘SMS’ to receive feedback on cleanliness or laboratory services with

adequate publicity and follow-up system; f) review the relevance of PPP contracts in hospitals

where government is purchasing diagnostic/ laboratory equipment; g) explore the option of

additional tests in the existing PPP arrangement with respect to non-communicable diseases

prevention and control.

Project Management and Operational issues (Coordination and logistics)

Coordination with the Directorate and NHM has continued to improve as demonstrated by the

successful scaling-up of activities started in the hospitals supported by UPHSSP to the rest of the

state as well as the impact of the different cells well beyond the activities directly funded by

UPHSSP as described above.

The nature of the challenges faced by the Project has significantly changed in the last 18 months,

which is a positive sign that implementation continues to gather steam. The coordination with

districts to ensure timely payment to various contractors should continue to be monitored closely.

The project has done a commendable job by resolving delays in payment to the HR agency that

provides staff to the 53 NABH hospitals. The Project shall develop a mechanism to track the status

of payments under different contracts at district level that can be reconciled with the payments

done by treasury. Recommendations for this can be found in the Financial Management section of

Aide Memoire.

Supportive supervision by the project (Directorate, PMU and TAP staff) has improved since the

last mission. Though the percentage of staff going to the field and the number of days in the field

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have increased by 79 percent and 12 percent respectively from the last mission, the average

number of days in the field is almost the same (1.8 days per visit in last mission and 1.7 days in

current mission). The mission noted that the process of reimbursement of travel bills has been

streamlined, and as on today, none of the staff have pending bills to be paid. The project has

developed a tool for supportive supervision and documentation of field level findings. The

findings from the field shall be analyzed regularly to prioritize the sites for extensive field visits by

the team. With increasing speed of implementation, the project shall further strengthen supportive

supervision visits to support district teams and coordinate effectively with other stakeholders like

the Directorate and NHM to resolve the issues hampering implementation.

As agreed during the last mission, an offsite team building workshop for all PMU, TAP and

Directorate staff was organized in February with the support of the Bank team. The workshop was

found very useful by the project and a similar exercise was organized in Lucknow for all the

hospital managers to orient them about the common goals and also expose them to high quality

team building sessions. Moving forward, similar events shall be conducted to target CMS, CMOs

and other staff of the Directorate who are critical to successful implementation of the project even

when they are not part of the cells directly supported by UPHSSP.

Progress on Disbursement Linked Indicators (DLIs)

Out of 25 DLI targets, 14 have been achieved, independently verified and claimed (US$28

million), 7 have been achieved and verified but the Independent Verification Agency is yet to

submit its report to the Bank (US$14 million) while progress continues to be made towards

achievement of the remaining 4 milestones. The Bank team noted that achievement of the 7 DLI

targets pending verification was reported by the project already since the last mission. However,

the process of independent verification and reporting to the Bank has been extremely slow. This is

in part due to oversight by the agency but also due to lack of appropriate communication and

follow-up by the project. The Bank team held a joint meeting with the agency and the project to

identify the issues leading to delays and recommend solutions going forward.

III. Safeguards

Social and environmental safeguards are an integral part of the activities under Environmental

management and Social Accountability subcomponents of Component 2.

IV. Procurement and Financial Management

Procurement Agent: The project has hired a new procurement agent M/S HLL Infratech Services

(HITES) NOIDA on single source basis (contract dated 21/03/2017) and they have started working

from April 10, 2017. The contract with the previous procurement agent M/S Accenture was

extended for two months up to May 2, 2017 to enable completion of pending packages and

handover of the files and documentation related to concluded procurements. M/S HITES have

deployed two resource persons (one Contract Manager and one Junior Procurement Officer) who

have been posted to work with the UPHSSP team and help the project in the procurement process.

The contract mentions a list of 15 key professionals and sub-consultants who would be available as

and when required. UPHSSP should ensure that M/S HITES work in close coordination with the

procurement section of the project, provide adequate number of professionals commensurate with

the work load and perform in accordance with the terms and conditions of the contract so that

avoidable delays in procurement management get eliminated.

Procurement Plan: The project is in the process of migration from SEPA to STEP and at present

the project neither has access to SEPA nor STEP (for no fault of the project). As such, they are

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unable to upload the updated procurement plan. The mission recommends that the updated

procurement plan in excel sheets may be prepared with the help of Procurement Agent and sent to

the Bank by June 10, 2017 for obtaining no objection. Once the project gets migrated to STEP, all

future clearance of activities in the procurement plan shall only be through STEP. The Bank is

trying to accelerate the process of migration of the project to STEP.

E-procurement: The bids for HVAC (Heat Ventilation and Air Conditioning) for 21 hospitals

were invited through e-tendering portal (etender.up.nic.in) on August 16, 2016. The work involved

civil work, provision of equipment and fabrication. Three bidders had participated but the

technical bid of one of the bidders (who happened to be the lowest bidder) was not visible during

bid opening and the bid was considered non-responsive. It came to light that the lowest bidder was

not fully conversant with the e-tendering procedure and the procedure for uploading their bid on

the e-portal. He had put the technical bid in “My tender” but did not submit it. The other two bids

were substantially higher than the estimated cost. The evaluation committee had therefore

recommended rebidding after re-estimating the quantities for 50 hospitals and updating the

estimated costs. The project shall review the causes justifying the rejection of all bids and make

appropriate revisions in the bidding documents before re-inviting the bids. As this is a prior review

case, World Bank’s no objection shall be obtained as per the agreed procedure. Digital signatures

have been obtained for four officers of UPHSSP who are now registered with NIC [Dr. Harsh

Sharma, APD; Dr. Shipra Pandey, AD PPP, Dr. A. K. Choudhary AD IT, and Dr. Dheeraj Tiwari

AD EM]. Training on e-procurement has been conducted by UP Electronics Corporation Limited

of the Government of Uttar Pradesh on January 18, 2016. After analyzing the reasons for the

failure of first e-procurement tender in UPHSSP, the mission recommends that UPHSSP may

arrange a one day outreach program for prospective bidders and provide training to them in e-

tendering with the help of NIC and HITES. For this purpose, a brief advertisement may be

published in newspapers. This is necessary because the project has decided to conduct all future

procurement through e-tendering.

Procurement of equipment: Initially, procurement for 99 medical equipments for 40 hospitals

was processed and an IFB was issued for 40 hospitals but only 10 items could be finalized and

contracts were awarded. All 10 types of equipment for 40 hospitals have already been received. In

the meantime, another 10 hospitals were added in UPHSSP and as such the procurement of 99

items for 50 hospitals was required. NCB was issued for these 99 items in 10 bidding documents

but award of contract could be made only for 22 items. For about 47 items, either there were no

bids or only one bid was received. The World Bank’s no objection was obtained by UPHSSP to

change the method of procurement for 42 items from NCB to shopping. As such Invitation for

Quotation (IFQ) for 42 items and NCB for 5 items was issued. Out of the NCB for 5 items, bids

were received only for 2 items and no bids were received for 3 items. Out of the shopping for 42

items, LOA has been issued only for 3 items. Procurement of the remaining 72 items (30 + 3 + 39)

is yet to be started. The mission observes that UPHSSP should analyze the reasons for not being

able to get good responses against their tenders. It is suggested that before going for retendering,

UPHSSP may revisit the technical specifications as well as the other terms and conditions in the

bidding document, try to identify the sources of supply of the required equipment, determine

realistic estimated costs of each equipment and arrange for wide publicity.

PPR FY-16: The issues mentioned in the last Procurement Post Review [PPR-16] Report of

contracts awarded during the period July 1, 2014 - June 30, 2015 were discussed and the position

is:

1. The number of days taken between bid opening and publication of award was rated as

moderately satisfactory.

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2. Quality and consistency of the payment process was considered moderately unsatisfactory

during the last mission.

PPR FY 17: The project had provided a list of 53 contracts below the prior review threshold

awarded during the period July 1, 2015-June 30, 2016 for the purpose of PPR FY17. A sample of

10 contracts was selected and reviewed under PPR FY17. The PPR report shall be shared with the

project for their comments.

Complaint Handling System: The complaint register for procurement related complaints is

maintained by the project. Up to the date of the mission, 11 (eleven) complaints have been entered

in the register and the last complaint is dated April 06, 2017. It was observed that the project has

taken the necessary actions to close all the cases and complaints. To further improve the system of

managing complaints, the project shall also send acknowledgement to the complainant promptly

on receipt of complaint. The complaint should then be analyzed in detail and para wise remarks

sent to the World Bank along with a brief draft reply to the complainant for Bank’s review. All

complaints need to be disclosed on the project website and moving forward the project shall shift

to an electronic system linked to the web site, ensure the system is password protected and has a

feature to let the complainant know the status of the complaint.

A software for Grievance Redressal System exists in UPHSSP and is being updated by DRC. The

mission observed that the system is not being widely used and complaints are being received in

hard copies. The mission advised that while finalizing the bidding document for e-procurement,

UPHSSP may consider inclusion of a suitable clause indicating that any procurement related

complaints should be submitted through the Grievance Redressal System only.

Consultancy contracts: The closing date of the project has been extended from March 31, 2017

to March 30, 2019 during the restructuring held in June 2016 and it became necessary to review

the dates of completion of all critical consultancy contracts. The mission observed that UPHSSP

has taken the following actions in this regard:

o Technical Assistance Provider [M/s. Ecorys]: The original contract cost was INR 1348.63

lakh and the original completion date was September 18, 2015. Extended completion date in

the contract was March 18, 2017 and the contract cost was INR 2209.39 lakh (1348.63 +

INR 855.76). Further, a supplementary agreement has been signed on March 15, 2017,

extending the contract completion date up to March 18, 2019 and the cost for the extended

period is 1302.13 lakh and the total contract cost becomes INR 3506. 52 lakh. The total

payment against this contract so far is INR 1188.30 lakh. The payment has been less than the

value of the contract because of non-utilization of unallocated funds which were included in

the contract price and non-availability of some of the experts.

o Supply Chain Consultants [M/s. Ernst and Young]: Contract completion period expired on

March 3, 2017. All deliverables till March 03, 2017 were delivered and accepted and

payments made. The contract has been closed.

o Social Accountability Consultants [CDA of SIRD]: Original completion date in the

agreement was October 30, 2016, and in order to ensure continuity of services without

disruptions, UPHSSP has extended the completion period up to March 31, 2017 and further

up to May 31, 2017 without any increase in price. UPHSSP is planning a fresh contract for

next two years i. e up to March 19, 2019 after obtaining no objection of the Bank.

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Contract Management Software: The project has developed a contract management software to

track contract renewals, timeliness of payments and spend visibility. The project has multiple

contracts under implementation in a decentralized manner and most of such contracts are managed

by the district level authorities. The software is presently being used by the project office on trial

basis and is not fully functional. The security audit is yet to be done and the project is aiming to

make the software fully functional by May 15, 2017. It is observed that implementation of contract

management system has been pending for quite some time and even in the last mission it was

agreed to implement it by December 31, 2016. The project may ensure that the contract

management software becomes fully functional and reflect accurate and complete contract data for

contracts implemented under the Project and all contract management functions are monitored by

the software, e. g. validity of performance Bank Guarantees, completion dates of the contracts, any

amendments to the contract, any other relevant details and timeliness of payments etc. One of the

features which could be included in the software is that the award of contract gets published on the

website as soon as it is entered in the system.

Procurement division in UPHSSP: The procurement in the project is presently managed by the

AD (PPP), who is supported by one computer operator and one Individual Consultant [PPP

Procurement] at the PMU level, in addition to the support from the personnel of procurement agent

(HITES). With project extension and scaling up of existing activities, the project procurement

implementation and contract management capacity will need to be further strengthened. The

mission observes that there is urgent need for hiring a suitable procurement specialist having

adequate experience in World Bank financed projects and a training program on “Procurement

under World Bank financed projects” as well as on “Contract Management” should be conducted

early. The training may be conducted with resource persons from HITES and World Bank. The

project is requested to advise its procurement subject-specific requirement to the Bank by June 15,

2017.

Record Keeping: The record keeping system in the project is in physical as well as electronic

form. It was observed that the documents related to a given package are kept in more than one file

and also documents related to several contracts are kept in one file. As such, the retrieval of

information for review and analysis is cumbersome and time consuming. Record management

needs a systematic approach, including exploring the possibility of implementing electronic record

keeping.

General: The mission advises the project that the prior review cases related to modification of

contracts as well as the cases for rejection of all bids and seeking new bids need no objection of

the Bank as per agreed procedure.

The procurement performance rating is being retained as moderately satisfactory.

Financial Management

Disbursement: As of April 19, 2017, the disbursement under the project is SDR 38.95 million

(i.e. historically US$ 55.55 million2) that represent 40.61% of IDA Credit allocation. This figure

includes disbursement of USD 28 million against achievement of DLIs. The project has made

significant effort in the last one year to spurt the disbursement numbers. The undisbursed amount

available under the credit is SDR 56.95 million which is approximately US$77.73 million.

Budget release and expenditure: The GoUP has sanctioned and released Rs. 1508 million in FY

2016-17 against which project has spent Rs 1223.10 million. Project is regular in the submission of

2 It includes DA advance of USD 3.73 million

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Interim Financial Reports to the Bank. It has submitted Interim Financial Report and sought

disbursement till quarter ending March 31, 2017. For FY 2017-18, the project budget has been

approved by the State for Rs 450 million on vote of account for first five months. The full year

budget of Rs 3337 million requested by the project for FY 2017-18 is expected to be approved

shortly by the State assembly.

Finance Staff positions: four contractual staff positions (1 Assistant Accounts officer, 2

Accountants and 1 cashier) are vacant at the PMU for a long time. The project has now received

applications and it is expected that the positions will be filled by July 31, 2017.

Accounting: The PMU and district offices presently maintain books of accounts in a manual form.

The PMU has further developed an excel spreadsheet internally which it uses to classify payments

based on project components/sub-components. The excel spreadsheets are used for preparation of

Interim Financial Reports for submission to the Bank. The Bank team is of the opinion that such

practice of maintaining manual accounts with the support of spreadsheets has reporting limitations

and are also prone to human error. Therefore, it is recommended to switch to an off the shelf

computerized accounting system that has the ability to account for financial transactions and

generate accurate financial reports.

Payment: The PMU and District Hospitals through their respective DDO’s submit the treasury

bills together with supporting invoices to the treasury office in Lucknow and Districts for payment.

All project payments are made electronically by the treasury office and expenditures are recorded

by the Treasury under a project specific budget head. The PMU reconciles its monthly accounts

with the treasury office through a process of DDO reconciliation to ensure that project related

expenditures are accounted by Treasury in the budget head. It is pertinent to note that payments

made at the district hospitals on activities relating to minor civil works, high end pathology

services, cleaning and gardening services, NABH licensing fees and laundry services are not

regularly reported by District Hospitals to the PMU. The PMU is instead obtaining the aggregate

value of the payment information made on these services from the district treasury offices for

reporting in Interim Financial Reports. Non-submission of periodic financial reports from Districts

result in: (i) PMU is unable to get disaggregated information on payments made by district

hospitals on project activities to report in the IFR; (ii) PMU is unable to ascertain payment delays

(if any) by district hospitals on services performed under various contracts; and, (iii) PMU is

unable to ensure that DDO reconciliations are timely performed at District hospitals. In order to

strengthen the reporting function at district hospitals, the PMU has recently instructed hospital

managers hired under the project to report expenditures in a pre-defined format. The Bank team

further suggests the PMU to (i) send their accounting staff to district hospitals periodically to

review and collect expenditure information; and, (ii) use the internal auditor to revalidate and

report such expenditure figures in the internal audit report.

Internal Audit: There is a lag noticed in the internal audit of the project. The auditor has recently

completed the internal audit of FY 2015-16 and first half of FY 2016-17 i.e. April 2016 to

September 2016. It has been agreed that audit reports of FY 2015-16 and first half year period of

FY 2016-17 together with action taken report on audit observations of FY 2014-15 will be

submitted to the Bank by May 31, 2017. The internal audit for the second half year period i.e.

October 2016 to March 2016 will be commenced soon and audit report will be shared with the

Bank by July 31, 2017. The present contract of the internal auditor will end after the audit of FY

2016-17 and issuance of final audit report. The project has been suggested to make a decision on

performance of the auditor after receipt of the audit report, to either extend the present services or

go for fresh appointment of new internal auditors. In case the project decides to go for a fresh

recruitment of internal auditors, it may do so through CQS or FBS method. Both the selection

methods are faster and take quality parameters into consideration.

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External Audit: The project has submitted an acceptable audit report for FY 2015-16 before the

due date of December 31, 2016. The auditor has raised audit paras in the audit report to which the

project has submitted a response to the AG. The project has also provided a response on the audit

para of FY 2014-15. The AG will review these responses in the next year audit of FY 2016-17 and

final remarks will be provided together with the audit report of FY 2016-17.

FM Rating: The FM performance rating is maintained as ‘Satisfactory’ mainly because the PMU

is in compliance with the FM legal covenants on submission of IFRs and external audit report.

However, there is an immediate need to strengthen the financial reporting function at district

hospitals and move towards a computerized accounting system to enable the PMU to generate

timely and accurate financial information.