THE DEVENDRA Fadnavis-led Maharashtra government’s decision to reduce the cost of the proposed Shivaji Memorial in the Arabian Sea by negotiating with the lowest bidder and changing the scope of work has “vitiated the tendering procedure and defeated the objective of transparency in tendering process”, the Comptroller and Auditor General of India (CAG) has said in a report.
The CAG carried out an audit of Chhatrapati Shivaji Maharaj Memorial Project between April and May 2019. The report, accessed by The Indian Express under the Right to Information (RTI) Act, was sent to state public works department (PWD) in October.
The CAG scrutinised the records pertaining to the state government’s move of reducing the cost of the project by negotiating with lowest bidder, M/s Larsen and Toubro (L&T), which quoted Rs 3,826 crore as project cost, much higher than PWD’s estimated project cost of Rs 2692.50 crore. So, instead of retendering, the government decided to go for cost optimisation measures in February last year to reduce the project cost. Eventually, the cost was reduced to Rs 2,500 crore plus GST.
The report noted that while reducing the cost, the scope of the work was also substantially reduced in every component of the project. “Change in scope of work after opening of bids has vitiated the tendering procedure and defeated the objective of transparency in tendering process,” it said.
It added that introducing change in the scope of work, while negotiating with the lowest bidder, is “tantamount to compromise on transparency, equity and fair treatment to all the participated bidders”.
The PWD, in its response to CAG, stated that the cost optimisation was approved by the High Power Steering Committee (HPSC), headed by the chief minister, after taking legal opinion. “Further, process of retender would have delayed the award of contract and delay in execution of the project,” it added.
However, the CAG report said that some changes in the scope of work after negotiating with lowest bidder may lead to “additional financial burden” on the state government “at later stage”. It added that the clause of training, operation and maintenance was included in the tenders and it is an “integral part of the functioning of the project”.
“The deletion of the said clause may give an undue advantage to the contractor for better negotiation for operation and maintenance of the project, which may also cause for additional financial burden in later stage,” the CAG said.
The report also remarked that modifications and deletion of the clauses while issuing revised work order in September last year to L&T may result in “undue benefit to contractor”. The PWD had deleted the clauses that enforced the contractor to execute the phase II of the project at the same rates as that of the Phase I contract and empowering the department to recover extra payment towards taxes from the contractor.
“Though work has not started yet and no payment to the contractor has been made, changes in the clauses of work order as mentioned above may result in undue benefit to the contractor,” the report stated. However, the department has claimed that the changes in the work order is based on cost optimisation measures.
The findings of the report assumes significance as the previous BJP-led government had denied all irregularities in the project. The Indian Express had published a report on October 6 last year, highlighting the changes introduced in the work order and objections raised by the project’s divisional accountant on cost reduction through negotiation, terming it as violation of norms.
An official from CAG said that it has sought detailed response from PWD. However, Manoj Saunik, Additional Chief Secretary (PWD), said: “We haven’t studied it yet. I can’t comment on it.”
The CAG has further slammed the PWD for “improper planning” of the project, leading to increase in cost by Rs 81 crore. After finalisation of tenders and lowest bidder, the HPSC, in June last year, recommended and approved the increase of height of the statue to 212 m from 210 m without any justification, the report noted. The PWD said the decision was taken at the government level.
“Thus, the change in height of the statue indicated improper planning, which leads to additional financial burden to the tune of Rs 81 crore to the exchequer,” the report remarked.
The CAG has questioned the PWD for not getting required approvals of competent authorities for the project. The report said that invitation of the tenders in October 2016 for the project “on the basis of the estimates, which were not approved by the competent authority was irregular”.
It added that the execution of construction of the project is without “valid administrative approval” of the PWD and without the competent authority’s sanction for detailed estimates of the project and is in violation of PWD norms. The PWD had asked L&T start work on the project from October last year, but the work was stayed in January 2019 on the orders of the Supreme Court.