The Comptroller and Auditor General of India (CAG) has recommended further investigation into Public Works Department (PWD) projects in 2011-’16 after it suspected “possible nexus” between bidders and officers.
In its report Performance Audit on Contract Management in Road Works, the CAG noticed “cartel formation or collusive bidding” in many PWD contracts. It found that in at least 22 contracts, worth Rs 155 crore, there were two or more bidders that had an interest in the other’s business.
The audit found that a large number of biddings were not competitive as they had only one or two bidders. The audit mentions that government did not give any reply on these cases.
“Cartel formation/collusive bidding was noticed in large number of cases. In 128 contracts worth Rs 101.70 crore concluded by Superintendent Engineer, Gorakhpur circle during 2011-2016, only two bidders participated and quoted same rates in the tenders and even after negotiations. Similar, in 62 contracts amounting to Rs 22.41 crore finalised by SE Basti circle, similar pattern of bidding was noticed and contracts were awarded to both bidders,” found the audit.
Citing specific instances of such suspected “cartel formation”, the audit found that in case of Unnao division, the Executive engineer awarded 18 contracts to Kuldeep Singh worth Rs 5.44 crore and 20 contracts to Ram Dayal amounting to Rs 4.02 crore. During the bidding process for these 38 contracts, bids were received only from these two bidders.
It further found, “In 22 contracts valuing Rs 155.50 crore pertaining to seven districts, the bidders were related as partners(s) of firms”
In 17 districts, 110 contracts worth Rs 303 crore, the contracts were awarded on the basis of a single bid; in 488 contracts worth Rs 2997 crore, just two bids were received.
“Audit examined 802 contract bonds costing Rs 4857 crore in selected district and found large scale deviations… with majority of tenders (73 per cent) were not competitive, where only one or two bids were received despite the existence of large number of registered contractors in each district,” reported the audit.
Audit also found that in many places interest-free advance were given to the contractors, without having provision for the same in the tender conditions.
“Rs 204 crore were paid to contractors during 2011-16 without obtaining any proof of purchase of new equipment and their utilisation by the contractor for the awarded works” the audit observed.