The Comptroller and Auditor General (CAG) of India has pulled up the Kochi Corporation for providing unintended benefits to a contractor and causing loss to the exchequer.
It was while reviewing the water supply project for rehabilitation of distribution and service connections on Sahodaran Ayyappan Road that the CAG found that the civic body provided unintended benefits to the contractor.
The work, which was awarded to M/s Premier Plastics for ₹3.65 crore, was supposed to be completed by August 2012. However, even after several extensions, the contractor could not execute the work. All that the contractor did was to supply 3,230 metres of pipe. After deciding to pre-close the work, the Corporation re-arranged the work in November 2013 through the Kerala Water Authority (KWA) by inviting tenders. It also paid ₹1.14 crore to the contractor in February 2015 towards the cost of pipe as final settlement, pointed out the report.
‘Risk and cost’
The CAG inspections revealed that the “contract provided for the employer to get the works done at the risk and cost of the contractor if the contractor had delayed the work as per the schedule with no justifiable reasons.” The contract also specified that 30% and 20% of the cost of remaining work shall be realised from the contractor towards ‘risk and cost’ and additional administrative cost, which came up to ₹1.26 crore, it said.
The auditors observed that the contractor was paid the money without invoking provisions of risk and cost, resulting in loss of ₹1.26 crore to the State government. The payment also resulted in “unintended benefit to the contractor for which responsibility needs to be fixed,” it said.
The State government had informed the auditors that the “work was hindered due to delay on the part of Corporation in giving road cutting permission. Risk and cost was not realised because the work was terminated on employer’s convenience and not on account of any breach of contract.”
However, the auditors rejected the reply as “not tenable” as it was found that the KWA managing director had negotiated with the contractor in August 2013 and the contractor had “orally agreed to execute the work at 22% above Schedule of Rate prevailing in 2012”. Since the “contractor did not respond to subsequent notices issued for resuming the work, there is breach of contract and the risk and cost provision applies,” the auditors pointed out.
Faulty design
The faulty design prepared by the project consultant of the Corporation for another work relating to water supply project for strengthening the distribution networks in the city too ended up in incurring loss to the exchequer.
The work, which was awarded to M/s Paulson Chacko for ₹2.54 crore, included providing 1200 mm MS Casing pipe for the full length of a culvert. While executing the work, it was found that the diameter of the culvert was less and the casing pipe could not be pushed through the culvert.
Later, the work was carried out after changing the specification of MS Casing pipe to 800 mm. This resulted in the non-usage of pipes worth ₹10.66 lakh. The project consultant, criticised the CAG, prepared the preliminary design for the project without assessing actual field realities. It resulted in wasteful purchase of pipes, it said.
The CAG rejected the State government’s stand that the pipes were wrongly procured by the contractor without proper site investigation and pointed out that the “contractor had purchased the pipes as per the design and it was the fault of the consultant to prepare a faulty design without ascertaining the site conditions.”
The CAG had earlier criticised the civic body for “major lapses in conducting detailed site analysis and surveys at the project formulation stage” of a sewage treatment plant in the city and in getting necessary clearance from environmental agencies. The lapses on the part of the civic body “resulted in certain projects getting located in Coastal Regulation Zone (CRZ)/environmentally sensitive areas, leading to intervention by environmental/judicial authorities and resultant stoppage of works,” it said.
