STATE VIGILANCE ORGANISATION
A REPORT ON
BASED ON STUDY OF CHIEF TECHNICAL EXAMINER, CENTRAL VIGILANCE COMMISSION, GOVERNMENT OF INDIA.
COMMON IRREGULARITIES/LAPSES OBSERVED IN AWARD OF CONTRACTS AND GUIDELINES FOR IMPROVEMENT THEREOF.
This report is based on the study of the Chief Technical Examiner, Central Vigilance Commission, Government of India. Similar experiences of the State Vigilance Organisation have been incorporated at appropriate places. Several illustrations given in this report pertain to Central Government Departments and Public Sector Undertakings. They however are relevant in the overall context.
1.1. Corruption in Engineering Organizations was at a lower level of the hierarchy in the past. Bribes paid at that time were mostly for allowing poor quality during construction. However, the top officials maintained a high level of integrity those days, and had even gone to the extent of ordering dismantling of the defective parts of the structure then and there. As time passed, corrupt practices have not spared even the Chief Executives of the organizations. Inflated estimates are prepared to give sufficient margin for the above purpose. Consultants are appointed arbitrarily. Unnecessary and stringent criteria is prescribed for pre-qualification to reduce competition, to get high rates and to favour certain favourite firms. Ultimately, the works are awarded at high rates to favourite firms at the cost of the exchequer.
The situation has been compounded by inordinate delay in according administrative approval at the highest level at times compelling the executing agencies to undertake executions to meet time and financial dead lines. Similarly technical sanction is more often than not obtained retrospectively, thus defeating the entire purpose of both the administrative approval as well as technical sanction. The element of competition, the only known method of ensuring cost effectiveness and transparency, through the process of tendering while awarding contracts is increasingly vanishing in favour of arbitrary decisions by contract awarding authorities wherein the actual execution is being done through select and favoured few departmentally or on approval basis. The subversion of the tendering process has emerged to be the single most important cause of breeding corruption. Government Departments have been increasingly using Govt. Corporations such as JKPCC, SICOP etc., as a shield and conduit to avoid competition and tendering. The instruments of periodic inspection and supervision, maintenance of records etc., have fallen to disuse. Absence of a work manual as is available for organizations like CPWD, MES of Army, Railways etc., is facilitating the growth of bad practices by unscrupulous elements.
2.1. The award and execution of contracts is a very vast area and it is not possible to discuss the whole gamut of issues involved with this activity in a small booklet. However, an effort has been made to highlight some of the important areas, which are more prone to recurrence of lapses/irregularities, in a large number of organizations. This booklet has been divided into three parts – Part-I deals with award of contracts Part-II with the execution of Civil work and Part-III deals with irregularities / lapses observed in execution of Electrical / Mechanical works. The main emphasis is on objectivity and transparency in award and execution of contracts. A dire need is also felt to inculcate a culture and spirit of professionalism amongst officials managing the contracts so as to ensure high standards of quality and timely completion of works.
3. WORKS MANUAL
3.1. Ideally, the objective of any public contracting is to get the proposed work executed as per bid specifications within a given time schedule and at the most competitive prices. To achieve this objective, it is essential to have well-documented and customized policy guidelines in each organization so that this vital activity is executed in a well-coordinated manner with least time and cost overruns. It is felt that the absence of a proper Works Manual in most organizations constitutes a significant weakness in the system as it not only leads to adhocism & arbitrariness in decision making but also results in a lack of quality supervision in the execution of works as benchmark standards are not available. This also encourages the ‘interested officials’ to indulge in corrupt practices, due to lack of accountability in the system. Surprisingly, some fairly well established organizations have no Works Manual despite awarding contracts for many years. Works executed here may based on the whims of individuals or the responsibility may even be completely abdicated to the consultants. In other organizations, where the manual is available, it is found that the same has not been updated for years. Such a situation is far from satisfactory and needs to be corrected on an urgent basis.
· A codified ‘Works Manual’ containing the detailed tender/contract procedures, guidelines and standards of execution alongwith proper delegation of powers needs to be prepared by all the organizations so that there is a systematic and uniform approach in the organization. Such an integrated approach is not only likely to put a cap on corruption but would also ensure smoother and faster decision-making.
4. NECESSITY AND JUSTIFICATION OF WORK
4.1. In the course of inspection by SVO, it has been noticed that at times, proposals are initiated and executed by the organizations without establishing the need or justification for such works. In some organizations there is a frenzy of activity at the end of the financial year in order to indiscriminately park funds (lest they should lapse), in either frivolous activities or in 2nd and 3rd stage priority proposals. In worst cases, the proposals are initiated in collusion with contractors to buy and install equipments nearing obsolescence resulting in completely infructuous expenditure. The following cases are illustrative:
(i) An organisation initiated a proposal for supply and installation of 2 nos. of 1000 KVA DG sets, without preparing proper justification. There were hardly any power cuts in the preceding 2/3 years. The existing two DG sets of the same rating had sparingly been used as per logbook records and 30% of the organisation’s activity was to be diverted to another organisation. The wastage was further compounded by installing DG sets of obsolete technology (with 2-stroke engines) rendering the whole expenditure infructuous.
(ii) A PSU company installed a large capacity effluent treatment plant to supplement the existing one. However, a study of the past statistics and the projected future profile of effluent generation established that the effluent generation growth was in fact negative and the existing plant was adequate and a new plant was not justified.
(iii) Another case of wasteful expenditure was regarding supply and installation of 8 nos. of 10 tonne and 6 tonne cranes. However the utilization of new cranes was found to be pathetically low (3.3%) and was attributed to the sluggish and interrupted operation of these cranes as also the non-availability of bigger cargo. In fact, the cargo units predominantly handled here fell in the under 3 tonne category.
(iv) While constructing a residential colony, with a calculated load of 1 KW, individual cable of 2 X 16 sqmm were provided by a PSU from the feeder pillar for each flat. These should have been laid from the main Distribution Board from the feeder from a suitable size cable, which would have resulted in substantial savings. Further, the transformers installed were of a total capacity of 3200 KVA (4 X 800 KVA) against a load of 1200 KVA thus increasing the cost of the project by over-designing of whole system. The expenditure on the consultancy charges also increased proportionately.
· Before according administrative approval for any project, it is necessary to establish its techno-commercial viability in terms of rate of return and other benefits and also to evaluate the available alternatives to ensure an optimum utilization of public funds. The tendency to park the funds in frivolous projects to beat the ‘31st March Blues’ needs to be severely discouraged. The inordinate delay caused by the administrative departments without sufficient reason in allotting funds has also been found to be a contributory cause to the problem.
· One time purchase of capital plant and machinery should be justified by reference to the actual intended use. The equipment must conform to the latest specifications and technology available in the market. The obsolescence factor, the life of the equipment, availability of spares, etc. should be kept in view while deciding the procurement.
· Snow cutting machine case
During the investigation of a Vigilance case it was found that Mechanical Engineering Department Kashmir had purchased 27 snow road rollers and snow clearance machines between the year 1998 – 2000. Two such machines purchased from M/S Speed Craft, Patana, Bihar, authorized dealer of M/S BUNCE, a UK based company and BUCHER Rolba, a Swiss based company. While BUCHER Rolba machine performed satisfactorily. The other machine (BUNCE snow cutter) gave trouble from the day one which could not be rectified neither by the supplier nor by the department thereby causing loss to the state exchequer to the tune of Rs. 83.00 lacs.
· Gross over-designing cannot be justified on the basis of unpredictable long-term futuristic demands. The kind of over-designing, particularly in sub-stations, DG sets, etc. not only results in unjustified one time extra expenditure but also results in avoidable recurring expenditure in terms of maintenance costs and higher standing losses. Since over-designing of electrical equipments has rather become a norm, it needs to be given a fresh look as far as optimal designing is concerned.
5. APPOINTMENT OF CONSULTANTS
5.1. Some organizations appoint consultant due to lack of in-house expertise in technical matters. While hiring consultants is justified for such organizations, of late, it has been observed that even the engineering departments and some PSUs, with large technical set-up have indulged in the practice of hiring consultants. It has invariably been noticed that the appointment of consultants is done in an adhoc and non-transparent manner without inviting tenders and without collecting adequate data about their performance, capability and experience. In some cases the consultants were appointed after holding direct discussion with only one firm without clearly establishing the job-content and consultation fee payable to them. Often the scope of work entrusted to the consultant is either not defined properly or the consultant is given a free hand to handle the case so that the experiments with impractical, fanciful and exotic ideals result in unwarranted costs. The organisations display an over-dependence on consultants and invariably abdicate their responsibility completely. The officials do not even oversee the working of the consultants resulting in the latter exploiting the circumstances and at times, in collusion with the contactors, give biased recommendations in favour of a particular firm. It has also been noticed that the consultants recommended acceptance of inferior items/equipments and also give undue benefits to the contractors like non-recovery of penalties for the delayed completion. Following illustrations are relevant to high-light shortcomings in appointment and functioning of consultants.
ILLN: Miss Ranarapijit Singh of proprietor M/S Manasara 76-Sundernagar, New Delhi was appointed consultant for renovation of J&K House at 5-Prithvi Raj, New Delhi without inviting any bids or calling for tenders. Her consultancy fee to the tune of Rs. 15.00 lacs was also fixed on a lump-sump basis without calculating the cost involved. The supervision of the execution was completely handed over to the consultant and JKPCC which were executing the renovation only followed her instructions without assessment of cost competitiveness of the material used in the renovation. The selection of material, make / made etc., was completely done by the consultant irrespective of cost effectiveness. Even the dealers were also selected for supply of material without competitive bidding.
(i) In another case, the organisation invited and short-listed 5 consultants but awarded the contract to the highest bidder on the plea that the bidder had done a very good job in some other project with the organisation. Extra amount on account of travel expenses, boarding and loading was also sanctioned, beyond contractual terms.
(ii) In yet another case the oganisation for construction of its Head Office, invited bids to appoint a consultant for the project. In the pre-qualification clause one unique condition was incorporated which stated that the firm should preferably have branch office in the city where the project was proposed to be implemented. However, this was not a mandatory condition. After receiving the offers, the firm, which was subsequently appointed, was rated better than the others (lower offers) on the grounds that the firm had a branch office in the city where Head Office was proposed to be constructed.
(iii) A bank, for construction of its Head Office short-listed three firms after a thorough scrutiny of offers submitted by a large number of bidders. The price bid part of only three firms were opened, after bringing them at par techno-commercially. But in a surprising manner, the work of consultancy was awarded to an L-2 firm thus compromising all ethics of tendering.
(iv) The payment terms to the consultants are often allowed quite liberally. In one of the cases the consultant’s fee was paid on quarterly basis without linking the same with the progress of the project. Full payments had been authorized even before the completion of the project. In yet another case, the consultant was allowed extra payment on the plea that since the case was re-tendered, the consultant had to generate extra-documents and extra payment was made to them. However, the reasons for re-tendering were found attributable to the consultants but instead of penalizing, consultants were rewarded with extra payment.
(v) Some organizations have of late been indulging in a new practice of appointing multiple consultants. First the main architects/consultants, for initiating and implementing the project, are appointed. Then one more consultant named a project Management Consultant (popularly known as PMC) is appointed ostensibly to monitor the execution of works. In some cases one more body having hired professionals and designated as Appex Management Consultant (AMC) is constituted to monitor the progress of PMC. By appointing so many agencies, the responsibility of the officials of the organization and these outside agencies gets diluted while the role of these officials is reduced to the signing of cheques alone. All such projects with multi-agency involvement invariably suffer from heavy time and cost overruns. Since the self-interest of outside agencies takes precedence over the loyalty towards the organisation , these agencies tend to collude or collide with each other, and both the situations are detrimental to the smooth implementation of the project.
· The appointment of consultants should be absolutely need based and for specialized jobs only. The selection of consultants should be made in a transparent manner through competitive bidding. The scope of work and role of consultants should be clearly defined and the contract should incorporate clauses having adequate provisions for penalizing the consultants in case of defaults by them at any stage of the project including delays attributable to the consultants. As far as possible a Project Implementation Schedule indicating maximum permissible time for each activity should be prepared with a view to arrest time over-runs of the projects. The role of the consultants should be advisory and recommendatory and final authority and responsibility should with the departmental officer only.
6.1. In some cases, it has been observed that the estimated value put to tender is at large variance with the actually accepted value of the contract. The reasons for this can be attributed to either wrong assessment of quantities of items or the sketchy estimates prepared in an unprofessional manner. Sometimes to arrive at the estimated value for a particular item, the rates of lower capacity items are extrapolated or a linear escalation is added to the last accepted rates for similar items. The estimates thus prepared are found to be far from realistic. This results in award of contracts at very high rates vis-à-vis the estimates. In one hydroelectric project, against an estimated cost of about Rs. 300 crores, the contract was awarded at Rs. 600 crores. To justify the rates various factors which were not tenable at all were considered and the estimate cost escalated so as to bring it as close to the quoted rates as possible. The award, despite a padding of the estimate was still at 31% above the justified amount. In some of the big value turnkey projects, it was noticed that the techno-commercial feasibility reports are prepared by some external agencies and the project award and implementation is done by different departments – at times with a considerable time gap. In one such case, in the award of contract for an effluent treatment plant, the implementing agency initially considered the estimated cost in the feasibility report as correct and the bids were also invited based on those estimates. However, the work was subsequently awarded at the rate almost 100% more than the estimated cost and the vast difference was justified on the plea that the estimate was deficient and unrealistic.
· Preparation of estimates for contracts is an area which needs special emphasis. A well-defined scope of work and a realistic market rate estimate can prove to be a vital input for successful execution of a contract with high standards of quality. The estimates should take into consideration all relevant factors based on the prevailing market price of various inputs such as labour, material, equipment, etc. at the concerned locations. The estimates inter-alia should include the basic price, fabrication charges, inspection fees, duties, packing, handling and transportation charges, sales tax on works (WCT), octroi or any other statutory levies and installation, erection, testing and commissioning charges, licence fees, contingencies etc. as applicable at the time of conception of the project. For big project like Hydro-Electric projects and other turnkey contracts where financial assessment of the project is done well in advance, before the finalization of the contracts, the financial amount indicated in Techno-Economic clearance/Techno-Commercial feasibility reports should be duly analyzed and updated before converting the same into a workable estimate. Any deficiency or inadequacy of data (in terms of rates or quantity) found in such reports should be highlighted beforehand in order to prepare a realistic estimates for the tenders.
7. NOTICE INVITING TENDER
7.1. The most preferred, competitive and transparent mode of tendering is to go in for Open/Advertised tenders. However, there is a tendency in some organizations to go in for limited tenders for high value works. The reasons given for this are, either that the work has to be completed in a very short time or that the firms known for carrying out a particular work are very few in number. In the process, the competition is restricted which in turn results in cartel formation, higher rates and favoritism to select firms. At times, even in cases where advertised/global tender notices are issued, the same are published in ‘local’ dailies and not in any national news paper. Surprisingly, in some cases, the notice was published only in the ‘evening’ news papers. There are cases of the tender notice published in a leading national newspaper but not on the page dedicated to the advertisements for tenders, thus partly restricting the competition and defeating the purpose of issuing advertised tenders. Some PSUs routinely follow the limited tendering system for all works and issue tender documents to contractors on their approved list. In one PSU company, limited tenders were issued to 6/7 approved contractors but only one offer was received. Though this was almost 20% higher than the estimated rate, it was accepted and the contract awarded, without any negotiations. On further examination, it was found that the other ‘approved contractors’ had not even bothered to respond or to send a regret letter which establishes that they were either no longer interested in dealing with the organisation or had formed a cartel to divide different works of the said organisation among themselves. Ironically, the ‘approved contractors’ list had been formed a long time back and had not been updated for years – giving credence to the cartel theory.
· In order to generate wide publicity for better competition and to avoid cartel formation and favouritism to select firms, it is imperative that the advertised/global tender notice should be published in select ‘national’ and ‘local’ dailies with a large circulation. Tender notices may also be displayed on the notice boards of other organizations. In case of global tenders, copies of the tender notices should be sent to the Indian Missions/Embassies in major trading countries. In addition to the paper advertisements, the tender notices should also be put on the website indicating all the details of the tender. In case of limited tenders to ‘approved contractors’, due care should be taken to generate adequate competition and reasonableness of rates should be established. The ‘approved’ list should be periodically updated weeding out the non performers and including fresh entrants in the field.
7.2. The Notice Inviting Tenders (NIT) should contain all the relevant information in an explicit and categorical manner. Some organizations do not indicate the estimated value in the tender notices with the apprehension that the bidders will come to know their estimates and who may then give biased offers. Some other organizations put-forth a fraction of estimates in the tenders. And at times such information as may not be relevant and rather may mislead the bidders is also indicated in the tender notice. In one case of supply and installation of a DG set by a hospital, the tender notice indicated an initial security deposit of Rs. one lac This amount was to be deposited by the successful bidder after award of the contract but the bidders after seeing high value as initial security deposit probably mistook this amount to be deposited with tenders in addition to the EMD. As a result some firms refrained from buying the bid documents and only one tender was sold despite repeated extensions and eventually the work was awarded on single offer basis. It has also been noticed that the tender sale and tender opening dates are not indicated in the tender notices and the tender sale is closed much in advance of tender opening date.
7.3. In some cases, the time given for submitting the bids is unrealistically short and only such firms as are acquainted with the functioning of the organisation and with prior preparations are able to participate in the bid. One such case regarding execution of a very large Hydro-Electric project on turnkey basis is illustrative. The large and complex work running into thousands of crores involved a lot of spadework before submitting the bids. But the time given for submitting the bids for such a large project was only 45 days. During the pre-bid conference and through correspondence almost all the firms requested for an extension of the bid submitting date which was not granted to them. Due to abnormally short time given, only two contractors submitted the bids in time. On examination of the case, it was found that these two contractors had participated in the first round of tendering for this work but the tender had to be cancelled due to non-conclusion of the financial tie-up for the project. The re-bids for the same work were invited almost after four years and on the plea of urgency sufficient time was not granted to the bidders to quote. However, these two contractors were fully prepared as they had already done their spade work and were therefore in a position to submit their bids in such a short period. The contract was also awarded at very high rates. Thus the purpose of floating global tenders to give wide publicity and generate sufficient competition seems to have been defeated.
· In order to generate fair and adequate competition, it is important that sufficient time, depending upon the magnitude and complexity of the project should be given to he bidders to submit their bids. For big projects, extensions if asked by a majority of the bidders may be considered in the larger interest of the project. Any corrigenda issued in support of extension of dates or any other information should be individually intimated by various means and also be published in the media for wider publicity.
8. PRE-QUALIFICATION CRITERIA (PQ)
8.1. The pre-qualification criterion is a yardstick to allow or disallow the firms to participate in the bids. A vaguely defined PQ criteria results in stalling the process of finalizing the contract or award of the contract in a non-transparent manner. It has been noticed that organizations, at times pick-up the PQ criteria from some similar work executed in the past, without appropriately amending the different parameters according to the requirements of the present work. One such case of defective PQ criteria which resulted in restriction of competition and apparent favouritism to a particular firm, pertained to design, manufacture and installation of a cooling tower in one of the thermal power units of a PSU. The PQ criteria kept in the bid documents envisaged a condition of minimum capacity (in M3/Hr) of cooling tower to have been executed in past by the prospective bidders. This minimum capacity was taken from the PQ conditions of a similar work but of higher capacity, executed in the past. On examining the case, it was found that this particular threshold value resulted in qualifying only one bidder while a reputed PSU company that was L-1 (Lowest-1) got disqualified by a very narrow margin. Thus, the work was awarded to L-2 (2nd Lowest) firm with a huge difference of amount between L-1 and L-2. Had the threshold value kept in the PQ criteria been amended in proportion to the reduction in capacity of cooling towers, probably L-1 firm would have qualified. Therefore, keeping a threshold value in a manner, which disqualifies the reputed and big firms out of the very few bidding firms not only results in restriction of competition but smacks of non-transparency and favouritism.
8.2. At times the works are re-tendered without adequate justification. While re-tendering, the PQ criteria is revised with a view to facilitate the entry of a particular firm. In one such case for the supply and installation of an AC plant in a PSU’s corporate office building, the tenders were originally called with the condition that prospective bidders with an experience of installing 1000 tonne capacity only were eligible. The case was re-tendered without convincing justification and the experience criterion was reduced from 1000-tonne capacity to 600-tonne capacity. The firm awarded the work finally, had not qualified in the first round of tendering.
8.3. Another important criterian for pre-qualification of bidders is the period for which the work experience is to be considered. The cut off dates regarding work experience are not clearly indicated. In one such case, regarding the hiring of DG sets by a PSU, on an annual basis, the PQ criteria required the prospective bidders to have three years experience in supplying DG sets to any Government/PSU company on a hire basis. Thus the firms that had conducted such a business for 3 years, even 20 years back were qualified. On account of this vague condition, some firms that were currently not even in this business also participated in the tender.
8.4. The most important aspect of the PQ criteria is of course the nature of work for which the experience is required. Invariably the phrase ‘similar work’ is used in the tender notice and bid documents. This ‘similar work’ is interpreted differently by different agencies. In one case surprisingly, the supply and installation of AC ducting and the work of installing a false ceiling in the corporate office building of a PSU were combined in one tender. Such works are normally not executed together as ducting is normally executed as a part of the AC works while false ceiling forms part of civil construction or interior design works. Therefore, strictly speaking no firms can possibly qualify for such work with experience of ‘similar work’. On examination, all the firms which participated in the bid were AC contractors and none of them had any experience of false ceiling work which constituted a large portion of the total work.
· While framing the pre-qualification conditions, the end purpose of doing so should be kept in view. The purpose of any selection procedure is to attract the participation of reputed and capable firms with proven track-records. The PQ conditions should be exhaustive, yet specific. For bigger and new projects, as far as possible a preliminary survey may be conducted to collect relevant data from the market about the firms of repute in the field. The factors that may be kept in view while framing the PQ criteria are.
(a) the nature of the work;
(b) the scope of work involved in the project;
(c) likelihood of availability / experience of firms for such works;
(d) volume/amount of the work;
(e) financial status.
In addition to above, the cut off dates for the period of work experience, the volume in terms of minimum capacity of equipments as well as in terms of monetary amount should be clearly indicated in the pre-qualification criteria so as to avoid any ambiguity at the time of evaluating the bids.
9. TENDER/ BID DOCUMENTS
9.1. It has been noticed that tender documents containing instructions to bidders, or the general and the special conditions of contract are not updated to suit the contract requirement. As a result obsolete, irrelevant and sometimes conflicting, vague and incomplete clauses are incorporated in the bid documents. Sometimes the ambiguities in the contract clauses are detected at the time of execution of works and due to wrong interpretations/disputes, contracts get delayed.
9.2. All the important clauses pertaining to earnest money deposit, completion schedule, factory testing of equipments, performance bank guarantee, payment terms, penalty for delayed completion, comprehensive insurance cover, contractor’s liability, safety arrangements, statutory arrangements for labour welfare, arbitration etc. are at times not properly incorporated in the bid documents resulting in disputes and loss to the organisation. These clauses are important for safeguarding the interest of the organisation and also have an indirect financial bearing on the evaluation of offers and execution of the contracts.
· All the important clauses as brought out above need to be incorporated in the bid documents, in a proper and explicit manner so as to fully safeguard the interest of the organisation. The bidders are required to be made aware of what is expected to be done by them after award of the contract so that all factors may be considered by them while submitting the bids.
9.3. The amount of EMD asked for in some cases was found to be extremely low in comparison to the estimated amount of the work. At times, the limit of EMD had not been revised for 20 years. In such cases, the organisation’s interest is not adequately safeguarded, in case the bidder rescinds the offer. Some organizations entertain bids that are not accompanied with earnest money and at times, the firms are asked to submit EMD after the tender opening. This violates the sanctity of tenders.
9.4. At times, the amount and form in which the EMD is required to be submitted are not mentioned properly or the same is accepted violating the stipulations of bid conditions. In one case, the bid documents did not specify any mode in which the EMD was to be submitted but at the time of opening of tenders, some of the offers were rejected on the plea that the EMD was not submitted in the form of a demand draft which of course was not specifically mentioned in the bid documents. In some other cases where tenders were invited in the two bid system, the EMD was stipulated as percentage of tender cost instead of fixed amount. In the two bid system, if the EMD is taken on the basis of some stated percentage of tender value and with the announcement of the amount of EMD submitted by the bidders at the time of tender opening, the same will give every bidder a good indication of the prices quoted by the competitors by calculating backwards. A bidder can use this information to the disadvantage of his competitor, if prices are subsequently modified.
· The primary objective of submission of EMD is to establish the earnestness of the bidder so that he does not withdraw, impair or modify the offer within the validity of the bid. It also helps in restricting, if not eliminating ‘speculative’, frivolous’ or ‘wait and see’ bids. Since any relaxation regarding submission of EMD has financial implications, the terms and conditions should clearly stipulate that the offers without EMD would be considered as unresponsive and rejected.
· The amount of earnest money deposit particularly in the two bid system needs to be indicated as a fixed and reasonable amount on the basis of an estimated value of the proposed work. Also the form in which EMD is acceptable should be clearly mentioned in the tender documents.
9.5. The evaluation/loading criteria on account of acceptable range of deviations in the commercial terms and conditions viz. payment terms, request for advance, security deposit, completion schedule, performance bank guarantee, etc. are either not incorporated in the bidding documents or even if mentioned, these are not considered, while evaluating the bids and the offers are evaluated simply on the basis of quoted prices. In some cases relating to works involving equipments having minimum guarantee loss, provisions are not made for proportionate loading on account of deviation in minimum guarantee loss. The equipments such as AC plants, transformers, cooling towers, generating stations, etc. come under this category. The comparative assessment of offers in a true sense would be complete only if it is made while taking into account the deviations in terms and conditions, minimum guarantee loss, etc. with unequivocal evaluation criteria specified in the bidding documents, so that the evaluation of bids after tender opening could be made in a transparent manner without any subjectivity.
9.6. In some cases, only the nomenclature and capacity along with some broad technical details of equipments are incorporated in the bid documents and the generic specifications with complete details of performance parameters and the technical evaluation criteria are not mentioned. In the absence of detailed specifications/technical evaluation criteria, the evaluation of offers on an equitable basis and in a transparent manner would not be possible and would be prone to subjectivity. One such case of misinterpretation of specification because of vaguely defined bid conditions relates to the manufacture, supply and transportation of elbow liners required in a hydroelectric project. The elbow liners were to be supplied by properly welding all the segments before transportation to the site. But in the specifications, one clause was incorporated which stipulated that the segments to be dispatched for easy transportability. After dispatching the segments, the contractor claimed the full payment of elbow liners leaving the major portion of welding of segments as part of erection which had to be done departmentally. In another case, the list of preferred ‘makes’ of major equipments was neither included in the bid documents nor was asked from bidders. The specifications included only the names and capacity of equipments and the details of materials, dimensions while other parameters of the equipments were not mentioned, thereby leaving everything to the whims of the contractor/supplier.
· The detailed generic technical specifications along with a list of preferred makes of major equipments, should be incorporated in the bid documents. In addition the performance parameters and the technical evaluation criteria, if any, need to be specified in the bidding documents in unequivocal terms. However, despite all precautions there may be some contradicting and conflicting specifications/ conditions. In order to overcome such crisis, an order of precedence i.e. which part of contract will prevail over the others should also be mentioned in tender documents.
10. RECEIPT OF TENDERS
10.1 The receipt of tenders in some organizations is done in an unorganized and adhoc manner. Sometimes the bidder’s representative leave the tenders with the concerned staff or send these through post addressed to some officer without having proper superscription over the envelopes resulting in the accidental opening of such tenders. This practice is highly objectionable and has to be severely discouraged, as it may cause tampering of offers and leakage of sensitive information.
· A suitable arrangement for receipt of tenders at the scheduled date and time through conspicuously located tender boxes needs to be adopted. The tender notice should categorically contain the information regarding receipt of bids, viz, designation and address of officer to whom the tender should be addressed, the superscription/reference number to be indicated on the envelopes and most importantly, the due date of opening of tenders to be written on the envelope containing tenders.
11. POSTPONEMENT OF TENDER OPENING
11.1. It has been noticed that whenever extension in tender opening is given due to any reason (like change in scope of work or changes in specifications of some of the equipments etc.), the intimation regarding the extension is sent only to such bidders who had purchased tender documents originally even if the extension is regarding opening of first bid like pre-qualification in case of single bid system and techno-commercial bids in case of two bid system. By doing so, the competition is restricted to the firms which had purchased tender documents within the original date of tender sale. The corrigendum for such extension is not being published in newspapers. In some cases, the time given to submit the revised bids is quite insufficient.
· In order to give an equal opportunity to all the bidders and to maintain the sanctity of tendering system, it is of paramount importance that any change in the tender terms and conditions, specifications and tender opening date, etc. be notified to all the bidders sufficiently in advance of the revised tender opening date. In case of the advertised tenders, such notifications should invariably be through the publication of corrigenda in the media and also through individual intimation of those firms which had purchased the tender documents within the original tender sale date. However, in case the extension is regarding submission of first bid like pre-qualification documents in case of single bid system and techno-commercial bid in case of two-bid system, the tender sale date should also be extended suitably so as to allow new participants in the bid, in order to increase the competition.
12. OPENING OF TENDERS
12.1. In some organisatinos, the tenders are not opened in the presence of the bidders’ representatives on the plea of maintaining absolute secrecy. Such a practice of not opening tenders in public and of not disclosing the rates quoted by all bidders to other firms is against the sanctity of the tendering system, and is a non-transparent method of handling tenders. The possibility of tampering and interpolations of offers, after opening of tenders, in such cases cannot be ruled out. Some organizations do not even maintain tender opening registers. The rates at times are not quoted both in figures and words, cuttings / overwritings are not attested by bidders.
· The opening of tenders in presence of the bidders’ representatives needs to be scrupulously followed. While opening the tenders it needs to be ensured that each page of tender, particularly the price and important terms and conditions should be encircled and initialed with the date. Any cutting/ overwriting should be encircled and initialed in red ink by the tender opening officer/committee. The tender opening officer/committee should also prepare an ‘on the spot statement’ giving details of the quotations received and other particulars like the prices, taxes/duties, EMD, any rebates etc. as read out during the opening of tenders. A proper tender opening register in a printed format should be maintained containing information viz. date of opening including extensions, if any, names and signature of all the persons present to witness the tender opening which should include the bidders representatives also.
12.2. In case of the two bid system, it has been noticed that after opening of the technical bids, the price bids, which are to be opened subsequently, are kept as loose envelops. In such cases, the possibility of tampering of bids prior to tender opening can not be ruled out.
· In order to make the system fool-proof it needs to be ensured that the tender opening officer/committee should sign on the envelopes containing the price bids and the due date of opening of price bids should be clearly mentioned on the envelops and should again be placed in the tender box.
13. TECHNO-COMMERCIAL EVALUATION OF TENDERS
13.1 OPEN ADVERTISE TENDERS:
13.1.1. There have been some cases in which the tenders were issued to the technically pre-qualified firms and, after receiving their offers on single bid basis, the offer of lowest bidder was rejected on technical grounds. In a case of supply and installation of Local Area Networking (LAN) system by PS bank, the offers were asked in a single bid and the firms were required to enter their rates against the formatted BOQ (Bill of Quantities) sheet. Six offers were received. Five firms had quoted their rates against each item of BOQ. But one firm, in addition to furnishing rates against the pre-existing BOQ items, also added some more items and quoted against them, with the plea to equip the system with state-of-the-art technology. The bank officials, while evaluating the offers, not only considered the bid of the sixth firm which was the highest bidder but also awarded the work to them on the grounds that the offer given by the firm is technically superior to their own specification.
· The single bid system is normally resorted to when the specifications are adequately defined and also the items being procured are standard equipments, designed and manufactured as per general industry standards. However, even for such items, there may be certain deviations in tender specifications vis-a-viz bidders offers. In order to compensate for such deviations, a loading criteria, to be adopted for evaluation purpose should invariably be indicated in the bid documents.
13.1.2. In some cases of the two bid system, it was noticed that the makes and technical specifications offered by various bidders are accepted without properly analyzing the techno-commercial equivalence of such offers and in the process the bidders offering inferior specifications/makes get undue advantage. Similarly distribution of work is done in an ad-hoc and arbitrary manner.
(i) In a case for supply and installation of computer system the work was distributed among three firms for similar equipments at three different rates and surprisingly the largest quantity (40%) was given to the highest bidder. Even worse, the repeat order was also placed on the highest bidder only.
· In case of the two bid system, techno-commercial negotiations may be conducted with all the bidders to clarify the deviations vis-à-vis tender specifications/requirements. After bringing the acceptable offers on a common platform, all the commercial terms/conditions and technical specifications should be frozen. In case some changes are made in terms/conditions or technical specifications, the bidders may be given a fair chance to revise their price bids accordingly. The distribution of work, if considered necessary should be done in a fair and transparent manner.
2 LIMITED TENDERS
13.2.1. Some organizations issue limited tenders to their approved contractors, almost for all the works. However, there are instances when either the response is very poor or the offers are not responsive, as per the bid documents.
(i) A PSU company issued limited tenders to their approved contractors but only one firm responded. Due to the inadequate response, the date of tender opening was extended but still only one offer was received and as a result the work was awarded on the single offer basis at very high rates viz-a-vis the estimated cost. On examination, it was revealed that the firms which were short-listed for limited tenders were empanelled long back. So they had either colluded to form a cartel or were no more interested to execute the tendered works. In yet another case, one Government consultant first short-listed 8 firms for purchase of UPS for the computer system of a bank and called for the technical and price bids from all the 8 firms. However, after opening of the bids, the work was awarded to an L-4 firm and lower offers were rejected on technical grounds, which otherwise were short-listed based on their past performance and technical competence.
· In cases where firms are short-listed for issuing of tenders on limited basis, the techno-commercial competence and other credentials are required to be scrutinized thoroughly. After the offers from such short-listed firms are received, there should normally be no occasion to reject them on technical grounds. Further, since limited tenders are issued to the empanelled firms dealing in a specific item/job on the basis of their capacity and performance it is imperative to up-date the panel periodically.
14. POST TENDER NEGOTIATIONS
14.1. As per Government guidelines post tender negotiations except in case of negotiations with L-1 are not authorised.
(i) The Government has a purchase preference policy so far as the public sector enterprises are concerned. The ban on the post tender negotiations does not mean that the policy of the Government for purchase preference for public sector should not be implemented.
(ii) Incidentally, some organizations have been using the public sector as a shield or as a conduit for getting costly inputs. This should also be avoided.
(iii) Another issue that has been raised is that many a time the volume of work to be executed is much more than L-1 alone can execute. In such cases the work may be distributed in such a way that the same is done in a fair, transparent and equitable manner.
15. REASONABLENESS OF PRICES/MARKET RATE JUSTIFICATION
15.1. It has been noticed that works are awarded to the firms by virtue of being lowest among all the bidders without analyzing and establishing the reasonableness of the quoted rates vis-à-vis the estimated rates and the prevailing market rates. In some cases even the Abnormally High Rated (AHR) and Abnormally Low Rated (ALR) items are not identified.
In one such case, regarding the supply and installation of air-conditioning plant, the work was awarded to L-1 firm at 20% higher than estimated rates. However, the officials of the department found these rates reasonable as compared with the prevailing market rates. It is interesting to note that the same officials had prepared the estimates based on the prevailing market rates approx. 3 months before award of work. Such manipulative practices have to be curbed.
· Before acceptance of the offer, it is very important to establish the reasonableness of rates on the basis of estimated rates and the prevailing market rates. The AHR and ALR items should be duly identified and the officials/agencies responsible for execution of work should be intimated to exercise appropriate control on such identified items.
16. AWARD OF WORK AND SIGNING OF CONTRACT AGREEMENT
16.1. In many cases, it is noticed that even if the offer of a particular firm is found acceptable, the work is not awarded within a reasonable time rather, it is prolonged intentionally. Since such delays are viewed as potential source of corruption, it is therefore, advisable that work should be awarded immediately and a formal letter of intent should be issued within a reasonable time. In some cases, even though the work order had been issued long back and even the work had started at site, the formal contract agreement between the contractee and the contractor had however not been signed for months together or even in some cases, years together despite payments being made. In such cases, the work is executed without any contractual obligations on either party.
· In order to avoid any potential source of corruption, it should invariably be ensured that once the offer is found techno-financially acceptable, the work is awarded without any loss of time. All the necessary documents should be kept ready beforehand. Further to give the contract legal sanctity, a formal contract agreement containing all the requisite documents forming part of the agreement should be signed within a reasonable time.
17. ADVANCE PAYMENT & BANK GUARANTEES
(iv) It is desirable that payment of mobilization advance should be made only in cases of select works and that the advance should be interest bearing so that the contractor does not draw undue benefit. However, it has been noticed that some of the organizations are quite liberal in allowing advance payments up to 20%, that too, totally interest-free. The payment of interest-free advance is against the interest of the Government.
(v) In some cases though the contract was bifurcated into supply and erection portions but while working out 20% advance payment, total amount of both the portions i.e. supply and erection was considered to the benefit of the contractor. It should be made clear that no advance payment is admissible for the erection portion of the contract.
· The advance payments need to be generally discouraged. Whenever the payment of advance is considered unavoidable, the same should be interest bearing and should be allowed after getting an acceptable Bank Guarantee for an equivalent amount with sufficient validity. Timely action for revalidation/encashment of the bank guarantees also need to be taken so as to protect the Government interest.
18. PERFORMANCE BANK GUARANTEE AND INSURANCE
18.1. In some works, either the Performance Bank Guarantee is not stipulated at all or even if it is stipulated the amount of Performance Bank Guarantee/Security Deposit is too low in comparison to the contract value. The validity of Bank Guarantees is also not being scrupulously monitored and extension in the BG commensurate with the time extensions being sought, is not asked for, which is detrimental to the Government interest in the event of non-performance of the contract. Some organizations stipulate initial Performance Bank Guarantee (PBG) be submitted at the time of the award of work and be kept valid throughout the duration of the contract period and the defect liability period. But after award of the contract neither does the organisation insist on such PBG nor does the contractor furnish the BG, and at time furnishes this late thus getting a financial benefit in the process.
· In order to safeguard the Government interest, it would be appropriate to take reasonable amount as Performance Bank Guarantee valid up to Defect Liability period for due performance of the contract. The validity of the BG needs to be properly monitored and whenever the time extension for contract is granted, the validity of BG should also be appropriately extended. The date of submission for the BG should be clearly spelt out and adhered to at the time of the execution of the contract.
18.2.1. The insurance clause in some cases is either found as not incorporated in the contract or the same is not complied with by the contractor and the department officials also do not insist on compliance. There are instances when the contract envisaged a comprehensive All Risk Insurance for the entire period of the contract but the contractor got the material insured only for transit purposes. In some cases, when the contract period is extended, the insurance cover is not simultaneously extended.
· Comprehensive insurance cover for men and materials apart from being a statutory obligation has to be provided in the contract to safeguard the interest of the organisation. Avoiding insurance cover may jeopardize the safety of men and materials and may result in serious legal complications in case of any mishap. Therefore, a comprehensive all risk insurance clause needs to be incorporated and implemented.
19. COMPLETION SCHEDULE OF CONTRACT
19.1. The completion period is the essence of any contract but the contract is rarely found to be completed as per the original completion schedule. It has been noticed that most of the organizations grant an extension of time in a liberal and routine manner. The LD clause is not invoked, in cases of delay. Even a proper delay analysis, to establish the cause of delay, is not made. Hindrance Registers, though are sometimes found as maintained at site but in most of the cases either entries are not made at all or bogus entries are made in collusion with the contractors. In quite a few cases rains during the monsoon were considered as hindrance and the benefit was given to the contractor.
19.2. In some cases, two different periods for completion of contract are stipulated; one for the supply portion and the other for erection portion. Keeping such stipulations is not in the interest of the contract as the contractor after making the supply may claim large portion of payments and then tend to respond sluggishly as the contractor’s stakes are minimal. Moreover, in the case of delay in erection portion, the contractor will plead for an imposition of penalty only for erection part of the contract even if the LD clause stipulates penalty on entire value of the contract. There are cases where the contractor got paid 90/95% payment for the supply of equipments, but shirked the erection and commissioning work on one pretext or the other.
· The specific schedule of completion of contract should be stipulated in the contract in an unambiguous manner. Completion of contract should imply overall completion of all the events of the contract, in case of big projects. If the work is broken into small contracts, each and every contract should have its specific schedule of completion which inter alia should be within the overall completion schedule of the main contract. The contractors should be asked to submit the completion schedule of various activities in advance and the progress should be monitored in accordance with such schedule. The LD clause in case of delay in completion of work, should be invoked as incorporated in the contract agreement.
20. DEFECT LIABILITY PERIOD CLAUSE
20.1. The defect liability period clause incorporated by some of the organizations is quite sketchy. The extent of the contractor’s liability is generally not spelt out clearly. The date from which the defect liability period starts is not clearly indicated resulting in ambiguity in case the defect is detected in the work. Sometimes the date is reckoned from the physical completion of works but before due commissioning of the same. In some contracts of supply and installation of plants and machinery, the standard guarantee/warrantee clause of 15 months from the date of shipment/dispatch and 12 months from the date of delivery, which ever is earlier is incorporated. In such cases, by the time the equipments are installed their guarantee/warrantee period is already over or some times a very short period of guarantee/warrantee is available.
(vi) In a case of providing DG sets in a Hospital, the DG sets were procured by the organisation and stored at site. A separate contract for installation, testing, commissioning was finalized at a much later stage resulting in lying of costly equipments unused for months together and jeopardizing the guarantee/warranty of the equipments as the same was reckoned from the date of dispatch. On further examination of the case, it was revealed that though the administrative approval had clearly envisaged supply, installation, testing, commissioning of the DG sets through one contract but the executing authorities broke-up the work into two contracts, apparently, to favour a particular firm which was not meeting the PQ criteria if the work was executed on SITC basis.
· Detailed Defect-Liability period clause embodying all the safeguards needs to be incorporated in the bid documents and in the resultant contract. In the contracts involving installation/commissioning of equipments, the defect-liability period should be reckoned only from the date of installation/commissioning. However, in case supply and installation have to be executed through separate contract due to some compelling reasons, both the contracts should be processed in such a manner that the time-gap between supply and commissioning is minimal.
21. PAYMENT TERMS AND APPLICABILITY OF TAXES AND DUTIES
21.1. In some organizations, the payment terms kept in the bid documents are found same irrespective of the nature of the contract. The payment terms are either not updated suitably or left open to change, after the award of the contract. In one case, in the execution of a Hydro-Electric power project, the first few payments were allowed periodically without linking the same with the progress of the work. In cases where a price break-up for payment purpose is required, the break-up is done in a manner that favours the contractor. Similarly, in the turnkey projects where supply and installation are involved, the Sales Tax on Works/Works Contract Tax (WCT) is applied only on the erection portion without making any reference to the same in the bid conditions. In some cases bigger firms sublet the manufacturing of major equipments to the firms located in priority areas and avail taxes and duties exemptions. Such exemptions are not extended to the end purchaser, i.e. the Government departments and in the process the main contractor draws financial mileage.
· The payment terms should be defined unequivocally and should not be changed after award of the contract. An appropriate control on the flow of funds should be exercised while making the payment. As far as possible, the payment terms should be so structured that the payments made to the contractors are linked and commensurate with the actual progress of work. In case of contracts where a price break-up is required for payment purposes, the break-up should be realistic and should be approved by the competent authority. The rates so approved should be deemed tendered rates as if the rates were called for item rate contracts. These rates should be considered for making any proportionate recoveries or withholding of payments or for working out any taxes duties etc. In the case of a composite contract for supply and erection, the applicability of various taxes/duties should be made clear at the outset in the ‘instructions to bidders’ part of the bid documents.
22. POST CONTRACT MANAGEMENT
1. MODIFICATIONS OF CONTRACT CONDITIONS/ SPECIFICATIONS
It has often been observed that after award of the contract, amendments/modifications that have financial implications are subsequently authorized in the contract conditions thus giving financial benefit to the contractors. Some of these are enumerated below :
22.1.1. The contract specifications are diluted to benefit the contractor. The makes and specifications as envisaged at the time of signing the contract are not insisted upon, the alternate makes/specifications are accepted at the time of execution of the contract, that too without any financial implication. In one case, in the execution of a hydroelectric project, the contract envisaged a 125T EOT crane but the contractor supplied and installed a 100 T crane. The organisation also accepted the same without making any cost adjustments while releasing the payment against this item.
22.1.2. The payment terms are amended in a manner favorable to the contractor e.g. advance payments are authorized even when no provision exists in the contract for making advance payments. At times, higher advance payments than stipulated in the contract are authorized.
22.1.3. The factory inspection of certain items though incorporated in the contracts was however subsequently waived without any reasons, thus jeopardizing the quality aspects as per contractual requirement and financially benefiting the contractor.
22.1.4. It has also been often observed that submission of the Performance Bank Guarantee was either waived or the same was not extended even when the contract period was extended.
22.1.5. Some bigger equipments are received in knocked down conditions and the payments are released against such items before getting them assembled, thus the labour and other input charges required for assembling the equipments are paid in an unauthorized way or pre-maturely, giving a financial advantage to the contractor.
· After conclusion of the contract, any relaxation in the contract terms/specifications should be severely discouraged. However, in exceptional cases where modifications/amendments are considered absolutely essential, the same should be allowed only after taking into account the financial implications. Further, a sufficient amount should be withheld against the items received in an unfinished/incomplete condition so as to ensure that no extra payments are made against such items / services.
2. POST-CONTRACT MONITORING
22.2.1. It is felt that the post contract monitoring is generally handled in a casual and lackadaisical manner. It has been observed that due to a lack of coordination and the diversified approach followed by various agencies in the implementation of the projects, there are time and cost overruns.
22.2.2. In some cases, even after expiry of completion schedule stipulated in the contract and without extension of time granted by the owner, the departments keep exchanging correspondence with the contractors and thereby keep the contract alive. This may result in serious legal complications if it is intended to cancel the contract.
22.2.3. Some organizations do not incorporate a liquidated damages/penalty clause for imposing a penalty in case of failure by the contractors to complete the contract within the stipulated schedule. The contractors quote short completion period and in the absence of deterrent conditions, in the contract, manage to obtain repeated extensions. Even in cases where the LD clause is stipulated; it is not invoked for delay in completion and no recoveries are made from the contractors, on some pretext or the other.
22.2.4. In a large number of cases, the contractors undertaking services contracts (viz. Electrical, Air-Conditioning, Lift, Fire-fighting etc.) try to blame the Civil Contractor for delays therefore absolving themselves of any responsibility and officials meekly accept this argument without verifying the details, thus giving undue benefit to the contractor.
22.2.5. It has also been noticed that even though the contract clearly stipulates deployment of site supervisory staff by the contractor, with minimum requisite qualification and experience, but in practice the supervisory staff is invariably found with inadequate qualifications and experience and is also not employed for the full duration of the contract. The departments are found ignoring this important aspect thus jeopardising the quality supervision of the contract.
· It is essential to accord priority to the post contract follow-up for execution of works. The time extension should be granted only on bonafide requests and not in a routine and casual manner. After expiry of the contract period, the contractee should refrain from exchanging correspondence with the contractor. For any delays on part of the contractor in completing the contract, the liquidated damages clause should be invoked. In case more than one contractor is engaged on a project and delay occurs, the case should be analysed in a total perspective and the agencies responsible for the delay, including the consultants should be appropriately penalized. There is a dire need to inculcate a transparent and professional contracting culture so that the non-performers are weeded out and only reliable contractors, who can prove their credentials by consistent performance in terms of quality and timely completion of contracts, are encouraged.
COMMON IRREGULARITIES / LAPSES OBSERVED WHILE AWARDING CONTRACTS AND EXECUTION OF CIVIL WORKS
Electrical and Mechanical Works. 94-112
This part of the report deals with common irregularities / lapses observed while awarding contracts and execution of Civil works by the various Engineering Departments (of the State Government). It has been found that Engineering Departments are compromising on vital issues such as accord of Administrative approval / Technical sanction, preparation of detailed estimates, engagement of consultants, tendering process, work agreements, maintenance of site records, quality in construction and payments to the contractors. An attempt has been made to identify the problem areas of corruption in the construction related Departments encountered during the investigation of vigilance cases by the State Vigilance Organisation in the recent past. These problem areas may not be exhaustive but are of tremendous importance in ensuring the fairness and transparency in execution of Govt. works besides preventing loss to the State exchequer.
1. Problem Areas
Quality in the construction was the area exploited initially for getting bribes from the contractors by allowing inferior quality of works. The payment to the contractors became the next area. Most of the activities in the construction had now become problem areas of corruption. The following areas are identified as the problem areas from the past experience.
(i) Administrative Approval
(ii) Detailed Estimate & Technical Sanction
(iv) Tender Process
(v) Invitation and Opening of Tenders
(vi) Tenders Scrutiny & Award of works
(vii) Works Agreement
(viii) Payment to Contractors
(ix) Site Records
(x) Quality in Construction.
2. Administrative Approval
For every work (excluding petty works and repairs), it is necessary to obtain the concurrence of the competent authority of the administrative department before commencement. The formal acceptance of the proposals by the competent authority is termed as “administrative approval”. The following are the main purpose of the above approval:
i) To check whether the work is really required.
ii) To see whether the estimate is not an inflated one.
iii) To see whether yardstick for various provisions are not exceeded.
2.1.1 No approval accorded.
According of A/A provides to the competent authority an opportunity to take decision regarding scope of work, specifications and cost involved. Otherwise there is likelihood of misuse of the powers by the subordinate authority. Instances are available to suggest that administrative approvals are at times not sought and at other times the competent authorities sit over the matter and delay according such approvals.
ILLN: A/A for a work costing Rs. 30 crores nearing completion was not obtained. On scrutiny it was learnt that funds meant for other works were diverted for this work which was to provide luxury for the staff and not within the yardsticks.
2.1.2 Inflated Provisions in the P.E.
At the conception stage itself, inflated provisions are incorporated in the preliminary estimate and the margin thus available in the sanctioned estimate is misused for non essential works and also for awarding the work at higher rates to the contractor.
2.1.3 Major changes made during execution
The scope and specifications of the work are drastically changed by the executing authorities. This exercise is mainly to give undue benefit to the contractor by allowing him to execute the items at higher rates. Apart from the high rates, the contractor gets additional work without competition.
IILN.-1: Number of spans in a bridge were increased during execution from 3 to 8 without the knowledge of competent authority in a bridge work awarded at high rates.
ILLN.-2: CC & Terrazzo flooring of an office building was substituted with the costly polished granite flooring etc. and thereby increasing the total cost of the project by 30% and by deciding high rates for the substituted item.
2.1.4 Funds allotted to one head incurred on another
There were instances of utilizing the funds on the works not approved by competent authority by diverting funds from approved works. There is no financial discipline in this case apart from utilizing the funds for the lavish expenditure.
ILLN: An office building was constructed almost at double the sanctioned cost by diverting the funds from other sanctioned projects for providing expensive finishing items and air-conditioning items.
2.1.5 Cost over run due to delay in award of work
In many instances it was noticed that there has been unreasonable delay in A/A after submission of the estimate, planning and design, inviting tenders, acceptance and award of work after receipt of administrative approval. This results in exorbitant cost overruns to the tune of crores of rupees.
ILLN: A/A was accorded for an amount of Rs. 370.00 crores for a Hydel scheme. But due to delay in taking up the work, the cost had increased to Rs. 1150.00 crores
2.1.6 No check on the preliminary estimate prepared by Consultants
The consultants engaged for planning, design and execution of work may furnish the preliminary estimates with ambiguous provision and inflated rates etc. The administrative departments simply sanction these estimates without scrutiny resulting in the approval of inflated cost estimates which can be a source of corruption.
ILLN: A consultant prepared an estimate to the tune of Rs. 2360 crores for a project. The estimate gives lumpsum amount for various components without giving any basis for the L.S amount. The administrative approval was accorded without checking the estimate. During the subsequent intensive examination it was found that the estimate is an inflated one.
2.1.7 Non observance of Yard stick
There must be some yard stick prescribed for various requirements such as floor area, finishing items, air-conditioning works etc., for various type of buildings for a particular use. The competent authority should see that these yard sticks are observed strictly while according administrative approval to safeguard the public money against its misuse for personal comfort and benefit.
ILLN: In a work of construction of an office building, the estimate prepared by the consultant provided for expensive finishing items, polished granite flooring, Italian marble flooring etc., and lavish facilities such as air-conditioning etc. for low paid staff etc.
2.1.8 Unit Cost not considered
The estimate prepared for obtaining administrative approval should have some basis, such as unit cost etc. Some organizations such as CPWD follow well established practice, such as “plinth area rates” for preparation of estimate for accord of A/A. If such practice is not adopted, it is difficult to exercise control over the cost, and there is every possibility of approving an inflated cost estimate by the administrative authority.
3. Detailed Estimate & Technical Sanction
The detailed estimate supported by complete details such as schedule of all items, quantities, rates, cost, drawings, specifications, rate analysis, measurement details needs to be prepared for each work and technical sanction of competent authority should be obtained. Technical sanction ensures that the proposal is structurally sound and estimate is an economical one. The nomenclature of various items of works should be without ambiguity. The rates should be adopted from standard schedule of rates and for non-schedule items, rates should be based on proper analysis of rates. If the estimate is prepared by the consultants, the estimate has to be checked and sanctioned by the competent engineers of the organization which appointed the consultant to ensure economy as well as structural soundness of the project.
3.1.1 Detailed Techno-Economic Surveys of Projects not conducted while preparing estimate at the initial stage
ILLN 1: During technical examination of a work executed by Rural Engineering wing of Rural Development Department, it was found that the work was executed with an estimate of Rs. 64.50 lacs in anticipation of administrative approval. Spot inspection revealed that the distance between dumping site and the working site was 300 mtrs. instead of 700 mtrs. shown on paper. This alone led to a reduction in the estimate by about Rs. 25.00 lacs.
ILLN 2: After spending about Rs. 98.546 lacs on a Rural Road in Kupwara District it was found that the gradient of the road was too steep to allow vehicular movement. The wastage of time and money could have been avoided if detailed Techno-Economic survey at the initial stage was conducted.
ILLN 3: Because a technical design was not prepared a water supply scheme in Bandipora continues to remain non-functional even after spending more than Rs. 274.91 crores though the original estimate was for about Rs. 62.80 crore.
3.1.2 Estimate not prepared
Instances have come to the notice of this organization, where the process of preparation of detailed estimate and call of tenders was dispensed with and contractors were asked to execute the work.
IILN –1: An additional work which cost Rs. 5.00 crores was straight away entrusted to the contractor who was executing the adjoining work. As such, undue favour was extended to the favourite contractor, who got the additional work without going through the competition.
3.1.3 No sanction accorded for the estimate to ensure economy and structural soundness.
Very often, the detailed estimates prepared by the consultants were not checked by the Department. Tenders were invited based on the cost estimated by the consultant. The estimates prepared by the consultants are usually inflated ones. Invitation of tenders based on such inflated estimates often lead to the possibility of acceptance of the same at higher rates extending undue financial benefit to the contractor.
ILLN: Item of brick drain casting Rs. 2.00 crores was incorporated arbitrarily in the estimate of highway project without doing proper design for the drain. The drain collapsed later on resulting in huge loss of the public money.
3.1.4 Nomenclature of items - ambiguous
Any ambiguity in the nomenclature of the items in the estimate, results in quoting of erratic rates by the contractor as well as in disputes, ultimately resulting in loss to the organization.
IILN: Items of aluminium works having high unit rates were taken on sq.mtr. basis without giving any reference to relevant drawing number etc. in the nomenclature of items. The contractor provided lightweight sections during execution resulting in undue benefit to him.
3.1.5 (i) No schedule of rates followed.
(ii) No analysis for non-schedule items
Detailed estimates prepared on the basis of standard schedule of rates is not followed. The rates need to be analysed based on NBO/CPWD guidelines etc. If the above procedure is not followed, it results in adoption of arbitrary rates for items in the Detailed Estimate. This ultimately will lead to inflated estimated cost, which could be a source of corruption.
ILLN: In a building work, arbitrary lump sum rates were adopted. Coefficients for various components of analysis of rates were taken arbitrarily such as contractor’s profit to the tune of 25-30% against the standard 10%. This formed the basis for awarding the work at much higher cost than the justified.
3.1.6 No details and reference to drawings for quantities adopted.
It was observed in many cases that the details of measurements and drawings are not made as a part of the detailed estimate resulting in arbitrary adoption of quantities in the estimate. This often led to abnormal and unreasonable deviation in the quantity of various items of work. The above again can be a source of corruption during execution to extend undue benefit to the contractor.
3.1.7 Same component repeated in more than one item.
Repetitive stipulation of the same component in more than one item in a detailed estimate, results in over payment to the contractor.
ILLN: Tack coat was included in the bituminous items such as bituminous macadam, asphaltic concrete etc. In addition to the above, separate item for track coat was also provided in the estimate of an airport work. During execution, duplicate payment was made to the contractor to the tune of Rs. 50 lakhs
3.1.8 (i) No check on the estimate prepared by the consultants.
(ii) No check on use of imported material.
It is the tendency of the consultants to use costly as well as imported items in the estimate to increase the cost of work as the fee payable to them is fixed as certain percentage of the cost of work. Due to the above, the works are awarded at high rates. Thus, the consultants and contractors were benefited during the above process, which becomes the source of corruption.
3.1.9 Technical sanction based on earlier accepted rates
Instances have come to the notice where technical sanction of detailed estimates was prepared based on the high rates quoted by the contractor and accepted in earlier tenders. This resulted in the high estimated cost, which was used for award of work to the contractor on higher rates extending undue benefit to contractor by corrupt officials.
A few Government departments and most of the Public Sector undertakings appoint Consultants. It was observed that the appointment of consultants was mostly made arbitrarily without transparent manner.
4.1.1 No publicity
Appointment of consultant is generally being done without publicity and without collecting adequate data about their performance, capabilities, experience etc. Most often, panel of known firms is made and the consultancy contract is given arbitrarily to one of the firms at higher fee without proper publicity and competition.
ILLN: Consultant was appointed by a PSU for a fee of Rs. 58 crores without inviting tender for a petroleum project.
4.1.2 Appointment From Old Panel
It has been observed that consultants are picked up from very old panels kept by the department and contracts were awarded to them arbitrarily. For big projects, the consultants have to be selected by inviting fresh tenders indicating the requirement to get competent consultants at competitive rates instead of selecting them from the old panel.
ILLN-1: One organization engaged Architects from a very old panel prepared 15 years back.
ILLN-2: One organization engaged a private firm as the institute’s architect for more than 20 years by paying a very high fee resulting in extending undue benefit to single firm.
4.1.3 Ad-hoc Rates
Award of consultancy contract at pre-determined/ad-hoc rates and not resorting to competitive price bids results in acceptance of exorbitant fees.
ILLN: Architect was appointed arbitrarily for planning and design at a fixed rate of 5% of the cost of construction for construction of a training institute building.
4.1.4 Consultant appointed when in-house facility is available
Appointment of consultants when in-house expertise is available, becomes the source of corruption in addition to non-utilisation of available resources.
ILLN: One of the Government departments, for a project costing Rs. 20.00 crores, incurred expenditure to the tune of Rs. 60.00 lakhs towards payment to the consultants though in-house expertise was available with them. This resulted in loss to the exchequer apart from corruption in the deal.
4.1.5 No action for Part Performance
Punitive action against the consultant is generally not taken even though they fail to perform the required services as per terms of the contract. This result in financial loss to the Government and also the project is delayed resulting in indirect loss in terms of payment of escalation to the contractor.
ILLN: In one of the works, the consultants were paid substantial amount at the early stage of the project though they had submitted only preliminary drawings. Subsequently, the consultants failed to complete the job and no action was taken against them by the Department.
4.1.6 No Maximum limit fixed for payment
The Consultants tend to increase the cost of work for more fees as generally the fees of the consultant is fixed at a certain percentage of the cost of the work. In case, the clause related to maximum ceiling of payment is incorporated in the agreement, then this can serve as a tool to check such tendency of consultants to increase the cost of the project.
ILLN: In a office building work, tender was accepted for Rs. 10.00 crores but during execution, specifications were changed and actual cost on completion was twice the tendered cost. Thus the consultant was benefited in the same proportion as there was no maximum limit fixed for the consultant’s fee.
4.1.7 Rates for repetitive works not fixed.
In the consultancy agreement, generally nature of repetitive type of work is not defined. Fee for such work should be less as no extra input other than issue of additional set of drawings is required.
ILLN: In one work, 4 similar blocks comprising of 100 hostel rooms each were constructed. The Consultants were paid same standard fees for each block. Due to the above the organisation suffered loss.
4.1.8 No approval accorded
In many instances, it was observed that payment was released to the consultants even though services required to be rendered were not complete in all respects, e.g. complete structural drawings were not submitted by the consultant but payment was released or supervision not done but payment released.
4.1.9 Consultants were allowed to receive sale proceeds of tenders
Some of the banks and public sector undertakings allowed consultants to invite tenders on behalf of the organisation. Consultants collected the sale proceeds of the tender documents sold and did not remit the amount to the concerned PSUs etc. This is highly irregular as it amounts to undue financial benefit to the consultant beyond the scope of contract.
ILLN: In case of a pipeline project, consultant was asked to invite tenders. The consultant, in turn, charged exorbitant cost for tender documents and kept the sale proceeds with him, resulting in undue benefit to him.
4.1.10 No control on the travel expenses of consultants for site visits
Many cases of excess payment to the consultants on travelling expenses have been observed. Payment made towards travelling expenses some times exceeds the fee payable to the consultants.
ILLN: For a work in Punjab, Mumbai based Architects were appointed. The fee payable to them was Rs. 6.00 lakhs. But the actual traveling expenses paid to them were Rs. 7.5 lakhs. This was mostly done to extend favour to the known firms.
4.1.11 No check on consultants’ planning, design and execution – Contractors benefited in the process
In many cases, it has been observed that the departments entrust the responsibilities relating to the preparation of estimate, structural design and execution of work to the consultant. The consultant tends to be over safe in the structural design because of the fact that the above adds to the fees payable to them on account of increase in cost. It has also been observed that the consultants generally do not take much pain while doing the structural design and essential criteria such as earthquake resistance design etc. is ignored. Hence checking of the structural design and drawings of the consultants by the departmental officers is a must to ensure that the design is an economical one apart from the structural soundness.
ILLN: Pile foundation for a workshop building was designed with the capacity of piles, capable of carrying twice the required load. In the same project, high capacity piles (450mm dia, 20m deep) were provided for a single storeyed ordinary office building which does not require pile foundation at all.
4.1.12 Consultants passing on their responsibility to contractor
ILLN: Consultant was supposed to give design and drawing as per the consultancy agreement. While preparing the tender document for construction work, the responsibility of the preparation of drawings and structural design was entrusted with the construction contractor by adding a condition to that effect. Finally, the contractors loaded the quoted rates for the above work and the consultant was benefited during the above process at the cost of the organisation.
5. Tender Process
Wide spread violation of Rule No. 9.2 read with 18 (i) of J&K Financial Code has been taking place on the part of Engineering Departments wherein the tendering process is being avoided or subverted on one pretext or the other. Competitive bidding is the only available mechanism to ensure efficiency and cost effectiveness besides being a check on the abuse of discretion available to the officials of Engineering Departments.
Tender documents (generally called NIT) comprising of notice inviting tender, standard tender form with conditions, schedule of quantities, set of drawings, specification of the work etc. should be prepared and approved by the competent authority. The NIT should be properly bound and sealed and it should be made available for inspection.
5.1.1 It has been found that the tendering process is being subverted by a nexus between corrupt officials and unscrupulous private contractors and persons. The known methods have been discussed as under:-
ILLN 1: Non-existent emergencies are cited to avoid tender process and work is undertaken either departmentally or on approval basis. Some works were allotted to favoured contractors without tendering for these works and without mentioning the emergencies. Even after 3 years the works have not been completed clearly establishing that it had not been undertaken on account of an emergency.
Even when work is executed departmentally the proper procedure as laid down in the Financial Code and PWD Accounts Code is not being followed. In most cases the work is actually sublet to a contractor more popularly known as mate (supplier of labour). Payments are released and advances made to the departmental officer who uses the mate as an intermediary to make payments to individual labourers and also material against hand receipts. The departmental officer is required to prepare muster-sheets and vouchers of each purchase before claiming any payment which he never does. Instead he delegates this work to the mate.
A totally new bad practice has been invented wherein works are being awarded arbitrarily to a person of one’s own choice, what is being called approval basis.
ILLN 2: The indenting Government Department used a Government Corporation as a shield and conduit to award contracts of execution and supply to favoured contractors and avoid competitive bidding. The execution contract of a project worth Rs. 5.00 crores was given to JKPCC without any competitive bidding. The JKPCC won the contract without competing with other private parties in the market. Thereafter the JKPCC further sublet the execution and supplies to subcontractors without adopting any competitive bidding. This is above and over availing the benefit of price preference and overheads allowed by Government policy. Recently the 77th meeting of Board of Directors of JKPCC authorized the procurement of material and execution of works without adopting of any tendering process.
ILLN 3: UEED Jammu cited the reason of being able to execute the work at a price lower than the lowest bidder and allowed itself to execute the work departmentally. During technical examination it was found that the same work with same specifications and quality has been executed at Rs. 1.76 lacs by the lowest bidder after competitive bidding as against Rs. 2.40 lacs by the Department without competitive bidding.
ILLN 4: An Engineering Department called off the tendering process citing the reason that the lowest bidder has quoted an abnormally low rate which is impractical. Enquiries revealed that the lowest bidder was planted by the nexus between officials and other unscrupulous bidders to subvert the tendering process and keep the honest bidders out of business. The tendering authority have not taken any action against the bidder quoting abnormally low rates and did not give any opportunity to other bidders to explain the practicality of the rate quoted.
ILLN 5: The bidders form a cartel and the lowest rate quoted is a pre-decided inflated rate under an extremely bad practice commonly known as pool system. The margin is then shared with other members of the cartel and corrupt officials. Another variant of the practice is to avail the contract in term so that all cartel members are equally benefited at the cost of exchequer.
ILLN 6: Some bidders build up a nexus with criminal elements and also collude with officials to subvert the process by using muscle power. Here the honest bidders are physically kept away from process of bidding at various stages such as sale of tenders, submission of tenders etc.
5.1.2 Registration and licencing of contractors. The licence conditions have not been updated since long. Technically and economically unsound persons have managed to obtain licences. Periodic review of licences are not being done by the licencing authorities. Defaulters and mischievous persons have not been black-listed. The honest and genuine contractors have been put to unfair disadvantage by not barring the dishonest and the unscrupulous contractors.
5.1.3 Tenders are being invited by officers not competent to do so. For example AEEs are inviting tenders above Rs. 5000/- against rules citing reasons such as emergencies.
5.1.4 Approval of competent authority not accorded
In many PSUs/Banks tender documents as prepared by the consultants are issued to the contractors without scrutiny and approval. Tender documents should be issued only after scrutiny and approval by the competent authority of the department to avoid irregularities.
5.1.5 Contain conflicting, vague and ambiguous provisions resulting in disputes, delays and financial losses
Conflicting provisions in the tender documents often lead to dispute, delay and financial loss to the Government.
ILLN: In one of the Road contracts, a condition was stipulated that entire quantity of bitumen to be used in the work shall be brought by the contractor before commencement of work. At the same time, under escalation clause, it was mentioned that the difference between the actual purchase rate and stipulated rate (for issue of Bitumen by the Department) as and when the Bitumen was brought by the contractor shall be paid to the contractor. The two stipulations were ambiguous. But the latter was operated to the benefit of contractor to the tune of Rs. 1.5 crores on account of escalation in the price of bitumen.
5.1.6 Pre-qualifying criteria ambiguous/stringent
It has been observed that either eligibility/pre-qualifying criteria is not specified clearly in the NIT or made very stringent thereby restricting the numbers of intending bidders
ILLN: The pre-qualification criteria in one of the works of a Port was kept so stringent which resulted in pre-qualification of only one firm. The above was only to favour the favourite firm and ultimately work was awarded to the single contractor without competition.
5.1.7 Rate only Item
“Rate only” items are seen provided in the bill of Quantities without giving quantity against the item. Such items do not alter the position of the tenderers irrespective of the rates quoted. For such items, generally abnormally high rates are quoted by the tenderers and such A.H.R. items are operated to the advantage of the contractor during execution. Therefore, the rate only items should not be provided in the tender documents.
5.1.8 Advance for old machinery already in possession of contractor
It has been observed that in some of the hydel projects, plant and equipment advance to the tune of crores of rupees were allowed to the contractor for the old machinery acquired by the contractor prior to award of work for which no additional expenditure was incurred by the contractor after award of the work.
5.1.9 Mobilisation advance without interest
It has also been seen that works Departments / organizations allow mobilization advance to contractors / firms without any interest which is not authorized under rules.
5.1.10 Unworkable period of construction
The stipulated period of completion of work should be realistic based on magnitude of work etc. Stipulation of unworkable period leads to frequent grant of extension of time, litigation and corrupt practices.
ILLN-1: In one hostel work of Rs. 6.00 crores, initial time stipulated of 21 months in the NIT was reduced to 8 months during negotiations after receipt of tenders. However, period of completion reduced was not practicable considering the magnitude of work. This resulted in frequent grant of EOT, huge escalation of payments and ultimately led to corrupt practices.
ILLN-2: The period of completion of a seven-storied building with basement was kept 12 months only. The work could ultimately be completed in three years, resulting into huge payments on account of escalation, irregularities in sanctioning E.O.T. etc.
5.1.11 Tender documents prepared by splitting bigger works deliberately to fall within the competency of subordinate officers
Subordinate officers deliberately split the bigger works into smaller works so that these small works fall within their jurisdiction in respect of technical sanction, award of work etc.
ILLN: A jetty work was split into two parts to bring the tender within the powers of the subordinate officer. This resulted into a loss of Rs. 1.5 crores (approx.) to the government by way of awarding the work at high rates.
5.1.12 Particular Brand of products stipulated
It is appropriate to stipulate the use of ISI marked products instead of stipulating a particular brand of product in the tender document, as it encourages restrictive trade practices. Use of a particular brand of product is done to favour the known manufacturer.
5.1.13 Improper type of contract followed
Works are generally awarded on item rates contracts. L.S (lumpsump). contracts are awarded when all design, drawings, specifications etc. are ready before inviting tenders.
ILLN: In a flyover construction case, the tender as per the Department is based on lump sum basis. The work is to be executed as per the design and drawing to be given by the Department. The complete drawings should have been finalized before call of tenders. However, only part drawings were available. The contractors were asked to quote their rates in 2 schedules. Schedule I contains quantity of various items to be executed for which lump sum price was to be quoted by the contractor. Schedule II pertains to rates to be quoted for individual items in case of deviation in quantities specified in schedule ‘I’. The tender is neither LS nor item-rate.
The above type of contract is not an appropriate one due to the following deficiencies:-
(i) The financial implication of the rates quoted in Schedule-II could not be worked out for deciding the “L1”.
(ii) Had the “L1” quoted very high rates in Schedule-II, it is a loss to the Govt. while executing additional quantities.
5.1.14 Voids to be deducted for earth filling (other than those below flooring) not specified
ILLN: In a reclamation work, voids were not deducted on the pretext of non-specifying percentage deduction in the contract resulting in huge financial benefit to the contractor.
6. Inviting And Opening Of Tenders
6.1.1 Adequate time for publicity not given
Adequate time is not given to restrict the competition in tendering so that the work can be awarded to a favoured contractor at exorbitant rates.
ILLN: The period between the date fixed for opening and the date of publication in newspaper was only 7 days instead of normal period of 21 days, resulting in restricted tendering and the work was awarded at rates higher than the rates of other accepted contracts of similar nature during the period.
6.1.2 Wide Publicity not given
It was observed in many cases that the tenders were published in newspapers having hardly any circulation. Publicity through websites are to be encouraged as far as possible. Also tender notices are not sent to the Building Association. It has come to notice that wide publicity is not given or restricted tenders are invited by some corrupt officials due to the following :
(i) To favour a few contractors who normally execute the works for such organizations.
(ii) To award works to the above contractors in turn by having understanding among the contractors and the corrupt officials.
(iii) “Bribe Money” for awarding the works is extracted by the corrupt officials well in advance at various stages. In certain cases, the bribe money is paid well before invitation of tenders for the works since the prospective contractors are decided much before the invitation of tenders. Hence wide publicity is a must.
6.1.3 Tenders issued to ineligible applicants
The pre-qualification criteria specified in tender notice is not being checked before issue of tenders resulting in award of works to ineligible contractors.
ILLN: In a Railway project, the tender documents were issued to all the applicants without checking the criteria of selection specified in tender notice. This resulted in opening of price bids of ineligible applicants also. Subsequently, the work was awarded to an ineligible contractor on the pretext of being the lowest. The same resulted in inordinate delay and rescission of the contract.
6.1.4 Tender sale and opening registers not maintained
6.1.5 Opening tenders in the absence of tenders
For fair and transparent system of tendering, the tenders should be opened at the prescribed time and place in the presence of bidders who choose to be present at that time. The rates quoted by various tenderers are read by the tender opening officer.
ILLN: Tenders were opened in the absence of the intending tenderers in one work. Finally the rates were tampered and, the work was awarded to the ‘L2’.
6 Corrections, omissions etc. in tender not numbered and attested by the tender opening officers. It is a must that all corrections, omissions and insertions etc. are properly numbered and attested by the tender opening officers to avoid possibility of tampering of documents.
ILLN: A work was awarded with the corrected rates. The corrections were not numbered and attested by the officer who opened the tenders. It was found that the rates of ‘L3’ were reduced to make him ‘L1’ and the work was awarded to ‘L3’.
6.1.7 Rate not quoted in figures by Tenderers
The rates for various items are to be quoted in words also. The tender document should have provision of quoting rates in figures and words by the tenderer. In case the tenderer fails, the rate in words must be written by the tender opening officer.
ILLN: In one of works executed by a PSU, the rate of an item was increased by L-1 after adding ‘O’, in connivance with the officials resulting in increase of rates by ten times, after ensuring that he remains L-1 even after this change. The above had happened because ‘L1’ had not quoted in words for the above item.
6.1.8 Tender invited without availability of site and approval of local body
Award of works without obtaining possession of site and approval of the scheme by local body is not proper as it results in non utilization of assets created and huge escalation payment to the contractor due to delay in commencement and completion of the works.
ILLN: In case of airport extension, part land between the existing runway and proposed extension of runway was not made available to the contractor. The extension of runway was done leaving a portion for which possession of land was not available. Thus, Rs. 8.00 crores spent for extension of runway could not yield any benefit and the assets created could not be utilized.
6.1.9 Limited tenders invited as emergency work but later either work delayed or not put to immediate use on completion
It was observed that limited tenders were invited on grounds of emergency but later either the completion was abnormally delayed or assets were not put to use on completion. The above is done to avoid competitive bidding and mainly to award the work to favourite contractors at higher rates.
ILLN-1: In one of the embankment work, the limited tenders were called on the pretext of emergency and work awarded at rates higher than justified rates. The work of four months could not be completed even after 2 years.
ILLN-2: Another work executed by a Petroleum PSU was awarded to a contractor on single tender basis without call of tenders at exorbitant/high rates showing urgency in construction. The above work took about 11/2 years for completing the same against the stipulated time of 4 months. The asset created was also not put to use for a long time after completion of the work.
6.1.10 Tenders received late considered for evaluation/award
Tenders received after due dates and time of receipt are not to be considered to maintain the sanctity of tender system and to avoid malpractices.
7. Tender Scrutiny And Award Of Works
7.1.1 Certificates for satisfactory completion of work executed for private organizations accepted without TDS certificate
The certificates produced by the contractors for having executed works for private organizations are accepted without ascertaining the TDS details as a proof for completion of work of required magnitude. The same is not proper and may result in award of work to the ineligible contractors. Therefore, TDS certificate in addition to the certificate issued by the Organisation shall form the basis for considering experience of work executed for private organisation.
ILLN: In many works awarded for Jetty construction, reclamation etc. by Port authorities, T.D.S certificate are not cross-checked before considering works of private Organisation for pre-qualification resulting in pre-qualification of ineligible contractors.
7.1.2 Non-evaluation of conditions quoted by the tenderers and accepting undue conditions during negotiations to give undue benefit to the contractor.
Financial implications of the conditions given at the time of submission of the tenders are generally not worked out to decide the relative position of the tenderers. Due to the above, the work is not awarded to the actual ‘L1’. During negotiations certain additional conditions are accepted regarding supply of non-specified material/machinery, interest-free mobilization/equipment advance and increase in rates of few items etc. The same is not proper and results in extending undue advantage to certain contractors.
ILLN: In a bridge work, contractor put forth the condition of reimbursement of difference in rates of cement, steel, liner etc. prevalent at time of procurement and at time of submitting tender. The financial implication of above condition was not evaluated at time of scrutiny of tender. This resulted in additional payments to the tune Rs. 1 crore to the contractor apart from changing the position of the lowest tenderer.
7.1.3 Non-finalisation of tenders within validity period
The acceptance of tenders is delayed without any justification. This results not only in time and cost over-run but also a major source of corruption.
ILLN: In a hydel project, the validity of period of a tender was six months. The validity period was got extended several times. Ultimately L-1 backed out to extend the validity due to increase in price of material and labour since the delay was two years. The tenders were re-invited and the work was awarded at exorbitantly higher rates.
7.1.4 L-1 ignored pointing out non-satisfactory performance or on other flimsy ground
L-1 contractor, though pre-qualified based on the criteria stipulated in tender documents, at times is ignored on flimsy grounds or on unsatisfactory performance. The same is done as the favoured contractor has quoted higher rates and the work cannot be awarded to him unless L-1 is ignored.
ILLN –1: In a hydel project, only three firms were qualified by the Department. The L-1 was rejected on the pretext of rates quoted as unworkable. The work was awarded during second call to another contractor at higher rates.
ILLN –2: In a highway project, tender for L-1 pre-qualified contractor was rejected on the plea that the firm has failed to complete an earlier awarded work. The work was subsequently awarded to L-2 at much higher rates.
7.1.5 Comparative statement not prepared and checked
It is observed that comparative statement of rates quoted by the tenderers was not prepared, checked and signed by the officials. The same can result in award of work to agency other than L-1.
7.1.6 Market rate justification not prepared to assess the reasonability of quoted rates before acceptance
The rates at which works are to be awarded, should be reasonable considering the prevailing market rates of material and labour and other factors pertaining to the work. At times, the quoted amount is compared with the inflated estimates of consultants, which were prepared without any basis, resulting in award of work at higher rates.
7.1.7 Justification statement prepared wrongly to justify higher rates
ILLN: As per a Departments’ Works Manual, the work, which is not of urgent nature, can be awarded to a contractor if quoted amount is within 5% of justified cost. In a work executed by the above department, to bring the percentage of market rate justification within 5%, contingencies were added to the estimated cost and work was awarded at an amount more than 5% of the justified cost.
7.1.8 Tenders accepted on higher rates during second call
The tenders during first call, at times, are not accepted on flimsy grounds if the favoured contractor is not the lowest. To award the work to predetermined/favoured contractor, the tenders are re-invited and works awarded at higher rates/amount than first call, either with the same or changed condition.
ILLN –1: In a road work, the tenders of part schedule were not accepted by the Department, on the plea that the same may result in sub-contracting the work to one contractor. The tenders were re-invited with changed conditions of issue of machinery. Earlier machinery was to be issued on hire charges, which was modified to free of hire charges during the second call. The tender during the 2nd call was accepted on rates higher than the earlier quoted rates, even though the condition for the hire charges was relaxed in favour of the contractor.
ILLN –2: In a tender of renovation of building, the rates quoted by L-1 in first call was Rs. 1.39 crores. The same was rejected and the work awarded during 2nd call for Rs. 1.82 crores. Thus, resulting in additional liability/favour to the tune of Rs. 0.43 crores.
7.1.9 Items deleted after opening price bid to make the favoured contractor as the lowest tenderer (L-1)
7.1.10 Work awarded without proper verification of papers furnished by the tenderer.
It is often observed that the works are awarded to the contractor without proper verification of documents furnished by the tenderers. Sometimes items, E.M.D is submitted in mode other than the prescribed one (or) false proof of completed work is considered (or) work awarded to the contractor not having valid income-tax clearance certificate or sales-tax registration.
ILLN: In a tender of residential building, incomplete works were considered for issue of tender document to a contractor, which eventually become L-1, resulting in award of work to ineligible contractor. This further resulted in delay in completion of work as the contractor was not technically capable of executing the work.
7.1.11 Similar/Identical contracts awarded at the same time with different rate for major items
The rates quoted by the tenderer are not being compared with the rates of similar/identical works and work is awarded at higher rates
ILLN: In one of the airport works, overall position of tender considering common civil items was compared with other similar work awarded at the same time. Difference in rates was found to the extent of 28% in two similar contracts, i.e., the contract was awarded at much higher rates.
7.1.12 Contract at risk and cost of contractor who has defaulted
Tender document for the left over work of a recinded contract is to be executed on the risk and cost of defaulting contractor. The specifications and condition of contract are also not to be altered.
7.1.13 Back to back contracts by PSUs.
Some PSUs undertaking construction works participate in the tender for works by having pre-tender tie-up with one contractor. In the above tie-up, the contractor agrees to execute the works at certain percentage less than the tender amount awarded to the PSU. This is irregular since the competition in awarding the work by the PSUs (undertaking construction works) is missing in addition to award of works to favourite contractors.
ILLN: One Government Department awarded the work to a PSU and the above PSU in turn awarded the work to a contractor (without inviting tender) at 5% lower than the tendered amount accepted by the Govt. Department. In the above illustration, following irregularities were observed – (i) The Govt. Department awarded the work at higher rates; (ii) Govt. Department allowed the PSU to sublet the contract against the provisions in the agreement; and (iii) The PSU awarded the work without call of tenders to a favourite contractor.
ILLN: The work of renovation of J&K House at 5-Prithvi Raj Road, New Delhi was allotted to JKPCC without inviting any tender. The funds were directly placed at the disposal of JKPCC without any supervisory control of the state PWD with the result the corporation who are supposed to act as contractors for the Government became the supervisors as well as the executors of the work.
8. Works Agreement
It has been seen especially in the PHE Department that contracts are being executed only for the labour component whereas the contractor is provided with material worth crores of rupees which is many times more than the amount of the contract on account of labour. Subsequently the contractors are turning defaulters in execution and are misappropriating the material such as cement, steel, pipes etc., issued to them by the Department. The temptation to default is very high because the value of the material component is much more than the value of the labour component and the former is not being made a part of the contract.
This problem should be addressed by including it in the terms and conditions while tendering and subsequently enforcing it strictly. In other words the tenders should be for full items and not for labour component only.
8.1.1 Unwanted papers in the agreement
Most often, it is observed that contract documents are not drawn in complete and detailed manner, i.e. either lot of unwanted papers are kept or vital papers e.g. original price bid, letters of negotiations etc. are kept in loose file. Therefore, the contract document should be precise, definite and complete.
ILLN: In one agreement of a Govt. Undertaking, the following irrelevant documents were made part of the agreement:-
b) Protocol between the Govt. of India and a foreign
c) Approval accorded by the Lt. Governor with respect to
d) Same proposal submitted by the organisation during
various stages etc.
On final scrutiny, it was difficult to work out the exact requirement/provision made in the agreement.
8.1.2 Important papers such as negotiation letters missing
Important papers such as negotiation letters, copies of amendments subsequent to issue of tender documents etc. shall be made part of contract agreement to avoid contractual complications.
ILLN: In one of the works executed by a Bank, negotiations were conducted twice with the contractor. Second negotiation letter was not found in the agreement and payments were made to the contractor based on first negotiation, resulting in overpayment to the contractor.
8.1.3 “Performance guarantee” obtained late
It has been observed that the performance guarantee is being obtained later than stipulated in the tender document. Late submission of performance guarantee amounts to giving undue advantage to the contractor by way of saving bank charges.
8.1.4 Insurance not taken as per conditions
Contract documents of most of PSUs stipulate, furnishing of insurance policies such as Contractor’s all risks policy, workmen compensation, third party policy and policy of machinery/T&P by the contractor. The contractors either do not submit these policies or submit policies for less period. The same can result in large commitments due to mishap during execution. The contractor also gets benefit by saving the insurance policy charges.
ILLN: In a hydel work, insurance for flood was not obtained by the contractor even though specific provision exists in the agreement resulting in large saving to the contractor. During execution, flood occurred resulting in huge loss to the department that could not be recovered from the contractor.
8.1.5 Bank Guarantee not verified through issuing bank
In many cases, it has been observed that the bank guarantees are not verified from the issuing banks. In one of the cases, on verification of BG, subsequent to intensive examination, the BG was found to be fake.
8.1.6 Labour Licence not obtained
As per the agreement and the relevant Act, labour licence from appropriate authority is to be obtained by the agency before commencement of work. But this aspect is not taken care of and work is allowed to proceed without labour licence.
8.1.7 Technical staff not employed by the contractor
It has been observed that the technical staff required as per the terms and conditions of contract are not employed by the contractor resulting in execution of bad quality work due to lack of supervision as well as undue financial benefit to the contractor.
8.1.8 Safety precautions not taken at site
A number of provisions regarding safety precautions to be taken at site during execution, such as providing barricading, red flags, night lamps, road diversion boards and double steel scaffolding etc. are made in the agreement. But it has been observed that no importance is given to such an important aspect, which can result in fatal accidents and also contractors are benefited by not complying with the contract provisions.
8.1.9 Issue of material/machinery not stipulated in the contract agreement
Material/machinery for which no provision is made in the agreement is being issued to the contractor on meager charges, resulting in financial benefit to the contractor.
ILLN: In one of the works being executed by a PSU, no provision was made for issue of machinery to the contractor. On contractor’s failure to deploy the required machinery, the machinery was issued by the Department and hire charges were fixed at a much lesser rate than the prevailing market rates resulting in undue advantage to the contractor.
8.1.10 Stipulations regarding approval of sample not adhered to/work not executed as per the approved sample
In most of the cases, it has been observed that the samples of material to be incorporated in works are not approved by the competent authority. In works where samples are approved, the work is not executed as per the approved samples and contractor is benefited by using substandard materials.
ILLN: In one hospital work, flooring and dado in the building was of marble stone. The quality of the marble used in the work was inferior to the quality of sample approved by the competent authority.
8.1.11 Price escalation paid though not stipulated
It has been observed in a few cases that price escalation was paid to the contractor though there was no provision for the same in the agreement resulting in undue benefit to the contractor.
ILLN: In one work executed by a Petroleum PSU, the quoted prices were fixed and no escalation was to be paid to the contractor. The completion of work was delayed and escalation to the contractor was paid by the Department.
8.1.12 Risk and cost action not taken and balance work awarded at high rates
On failure of the contractor to provide the desired services, the contract agreement is rescinded by the Department. The left over work is awarded at the risk and cost of the original contractor.
ILLN: In one work, the contract was rescinded due to delay on the part of the contractor in completion of building. The work was awarded to another contractor on single tender basis with additional liability of approx. Rs. 44.0 lakhs. No action was taken by the department to encash the various bank guarantees to recover the additional liability from the defaulting contractor resulting in undue favour to the contractor.
8.1.13 Guarantees on various accounts not obtained
Certain guarantees for water proofing treatment/anti-termite treatment etc. are to be obtained as per the provisions in the agreement. These guarantees are not often obtained and no action can be taken against the contractor for defects noticed in the guarantee period.
8.1.14 Non-execution of specialized work through specialized agencies
A provision for execution of specialized works like anti-termite treatment, water proofing treatment, aluminium work, fire check doors, flush doors etc. is often made in the agreement. These conditions are not implemented at site resulting in large savings to the contractor and execution of sub standard works.
8.1.15 Design of concrete mix not done by the approved lab and design not revised with change in source of ingredients
8.1.16 Recording fictitious date of completion though work not completed
The date of completion, at times, is recorded before actual date of completion of work to favour of the contractor by non-levy of liquidated damages due to delay and also to relieve him early of his responsibility of defect liability period.
9. Payments To Contractors
9.1.1 Excessive deviations allowed without approval of competent authority
The quantities of various agreement items advantageous to the contractor are indiscriminately deviated during execution of work. The deviation can also occur due to inaccurate detailed estimates and due to wrong/over measurements. Prior approval of the authority competent for deviation is not generally taken by the subordinate officers.
9.1.2 Less quantity of Abnormally Low Rated items executed and paid
Items for which contractor has quoted abnormally low rates are to be identified at the time of award of contract. Execution of less quantity or substitution of such items result in undue advantage to the contractor.
ILLN: In one work, terrazzo tiles flooring was to be carried out and the rates quoted by the contractor were abnormally low. During execution about 15% of quantity was executed and remaining quantity was substituted with marble flooring. Thus, undue advantage was extended to the contractor.
9.1.3 More quantity of AHR items executed and paid
Similarly, abnormally high rated items are to be identified at the time of award to avoid increase in quantity of these items during execution since it results in undue advantage to the contractor.
ILLN: Contractor’s accepted rate for item of M.S grill/railing in a work was abnormally high and 250 Kg was only stipulated in the agreement. To favour the contractor, the above quantity was increased from 250 Kg to 1190 Kg by allowing the contractor to use higher size square bars without any technical requirement which resulted in financial benefit to the contractor.
9.1.4 Items substituted to the advantage of contractor
It has been observed quite often that items not beneficial to the contractor are substituted for other items. The above practice is more prevalent in Orgnisations which engaged consultants for the purpose of estimation, supervision and preparation of bill etc.
ILLN: In one building work, RCC structure was substituted with structural steel and pre-cast slab and the requirement was justified by showing urgency in completion. The extra cost on account of substitution was Rs. 1.00 crore (approx.) but the work could not be completed in the revised period of completion. Thus, the substitution was aimed to favour the contractor.
ILLN: In another work, pile foundation was changed to well foundation without any technical necessity thereby increasing cost of the project by Rs. 2 crores which had gone to the benefit of the contractor.
9.1.5 Inadmissible extra items paid
At times, extra items which are not admissible, are paid to extend undue benefit to the contractor.
ILLN: In one building work, as per the conditions given in the agreement, nothing extra was admissible to be paid for extra height of centering and shuttering. Inspite of specific provision in the agreement, extra item was sanctioned, measured and paid to give undue benefit to the contractor.
9.1.6 Exorbitant rate fixed for extra/substituted items
It has been observed that the rates of extra/substituted items are not derived based on the conditions of contract. They are derived on abnormally high rated items, which results in undue benefit to the contractor.
ILLN: In one hydel project, extra items amounting to Rs. 100.00 crores were allowed and the same were sanctioned at high rates. The rates were analysed by adding 49% on account of contractor’s profit and overheads as against the normal 10%.
9.1.7 Measurements not recorded in MBs.
Measurements of the items are to be recorded and kept in a bound Book which should be kept ready for inspection. But in many cases, the same were found in loose sheets, which could be changed at any time.
9.1.8 Checking measurements
The measurements including hidden and high rated items are to be checked by senior officers to avoid overpayment. But it is not done in many cases.
9.1.9 Incomplete items paid on full rates or excessive part rates allowed
The payments to contractor for various items are being made as per contractors quoted rate even if the complete scope of the item is not executed by the contractor and this results in over-payment. In certain cases, it was observed that part rates allowed were more than the admissible.
9.1.10 Voids not deducted before allowing payment to contractor for work in filling
Deduction on account of voids in earth/stone filling work is to be done where compaction is not as per the desired density under OMC conditions. Non-deduction of voids results in huge overpayment to the contractor in connivance with the field staff.
ILLN: In a reclamation work casting Rs. 15 crores, deductions on account of voids was not made which resulted in overpayment to the tune of crores of rupees.
9.1.11 i) Measurements not restricted as per the drawing
ii) More working space measured than admissible in each work in excavation
iii) Excessive offset and side slope than admissible measured and paid in earth work in excavation
9.1.12 i)Secured advance paid for larger quantity than required for execution at site
ii) Secured advance paid for perishable materials without insurance cover
iii) Secured advance paid without adequate testing of materials
iv) Not effecting recoveries of secured advance in respect of material utilized in the items which were measured and paid.
9.1.13 Non-recovery of I.Tax and Service Tax
Statutory deductions are not made as per the requirement resulting in huge benefit to the contractor. In few cases, it was observed that Income Tax and Service Tax were not recovered from the contractor’s bills. At times recovery is made on net amount after deducting cost of stores/hire charges from contractor’s gross payment. The above practice is highly irregular. Recovery shall be made on gross amount of the bill.
9.1.14 Wrong payment of escalation
Escalation, at times is paid based on provisional indices. It has further been observed that the escalation is paid on gross amount of bill without deducting cost of materials issued by the Department. The above result in extending undue benefit to the contractor.
9.1.15 Escalation paid for period for which extension of time was not granted by the competent authority
9.1.16 Wrong mode of measurements/wrong coefficients adopted
It has been observed that the mode of measurement for brick work in most of the works is not as per the relevant IS Code and also wrong coefficients of reinforcement are adopted while working out quantity for payment to the contractor, resulting in overpayment to the contractor.
9.1.17 Recording measurement under wrong item of agreement
It has been observed that measurements of items are recorded under items other than the appropriate one to extend undue benefit to the contractor.
ILLN: In one land development work, the rate quoted by the contractor for excavation and filling for pipe lines was less than the rates quoted for excavation in foundation trenches and filling earth in plinth. The items of earth work in pipe line was measured under earth work in trenches to extend benefit to the contractor.
9.1.18 i) All the accepted rebates of the contractor were not availed by the department while releasing payment to the contractor
ii) Rebate not considered while finalizing the rate for extra/substituted items
9.1.19 Retention money released before due date
9.1.20 Payment made on full rates for sub-standard work
The work not executed as per the specification is not to be accepted and contractor is supposed to redo the work. If it is structurally impossible to rectify the defect, the payment shall be made at reduced rates, after approval of the competent authority. The payment at times for sub-standard work is made at full rates resulting in huge benefit to the contractor.
9.1.21 Correction in MBs not attested by concerned official.
9.1.22 Serviceable and unserviceable material retrieved after dismantling old structures is not being accounted for properly at the time of estimation and also payment. Instances are available wherein such material is being accounted for on percentage basis rather than actual measurements leading to undue favour to the contractors.
10. Site Records and Inspections
Proper documentation of test records, site instructions, issue of cement and steel etc. is essential to ensure execution of quality work. Recoveries, grant of EOT etc. are decided at a later date based on site records. Therefore, all the site records prescribed in the Works Manual are to be maintained at site and produced during vigilance inspection.
10.1.1 Registers with pages numbered serially not issued by the competent
10.1.2 Hindrance register not maintained
Hindrance Register is a very vital document. All the hindrances with date of occurrence and removal are to be noted in the hindrance register. Record of hindrances is not only required for grant of E.O.T (Extension of Time) but also required for early removal of hindrance by the site officials etc.
ILLN: It was observed in some cases that E.O.T. was granted to the contractor without levy of liquidated damages and payment for cost escalation were made without record of hindrances which resulted in undue benefit to the contractor.
10.1.3 i) Site order book not maintained
ii) Compliance in site order book is not recorded by Engineer-in Charge
10.1.4 MAS A/c Registers not maintained
In some of the cases, it was seen that MAS A/C registers of important materials viz. cement, steel, bitumen, etc. were not maintained. In the absence of such basic record, quality, quantity and day to day consumption of these materials cannot be checked. It is, therefore, essential to maintain MAS A/C registers for above mentioned materials.
10.1.5 Cement and steel/Engg. material not tested/Test Certificates not available
Cement and steel are the major materials used in the construction of any building. Hence, proper quality of these materials has to be ensured by the site officials. Lot wise manufacturer’s test certificates should be obtained and kept on record. Reference of these test certificates should be given in corresponding cement and steel Registers to facilitate checking by any independent authority. Independent testing of cement and steel should be also done at regular intervals to ensure proper quality. The above procedure is generally not done and the same results in showing undue benefit to the contractor by accepting inferior quality materials apart from the danger of structural failure.
10.1.6 Cuttings/over writings in the cement register. Test checks not done by senior officers.
Cuttings/over-writings are to be avoided in cement registers. Any cutting, overwriting etc. gives an indication of manipulation of cement records to cover up less/over issue of cement. Periodical test-checks of cement register as per required frequencies are to be done by senior officers to avoid any manipulation by junior officers.
10.1.7 Record for mandatory tests not maintained properly
Mandatory tests on various materials are to be conducted as per the prescribed frequency in the contract document/BIS codes to ensure the quality of materials used in the work. Test results obtained from outside labs are to be properly recorded in the test registers by giving the references to the test report. The test results should be compared with the acceptability criteria in the test registers to ensure that the results obtained passes the acceptability criteria. Records of quantity of material brought and tests conducted should also be maintained in the test registers to ensure that test have been conducted as per prescribed frequency.
ILLN: It has been noticed in the past that the test registers were not maintained and mandatory tests are not conducted as per prescribed frequency. During vigilance inspection, samples of materials were taken and tested independently. It was found from the test results that many materials failed to fulfill the quality parameters. Non-carrying out the mandatory tests results in extending undue benefit to the contractor by accepting sub-standard materials and by saving in testing charges.
10.1.8 Record of test of water not maintained.
Water is a very important ingredient which affects the quality of concrete. Use of proper quality water must be ensured by site officials to ensure quality of concrete work. Water must be tested regularly at the specified frequency to ensure proper quality of concrete work and to avoid benefit to the contractor for allowing bad quality water in case the contractor has to arrange water.
10.1.9 Record of check of surface undulations in case of cement concrete pavement/bitumen pavement not maintained.
The above will help the contractor in allowing bad quality work which goes to the benefit of the contractor.
10.1.10 Bituminous works
(i) Record of tests of DAC, SDAC, Bituminous Macadam for bitumen content, grading of aggregate and field density not maintained.
(ii) Record of level of bottom/top of DAC, SDAC and bituminous macadam not maintained.
(iii) Record of temperature of bitumen macadam, DAC, SDAC not maintained.
(iv) Record of core test or proctor density test of BM, SDAC and DAC not maintained.
During vigilance inspection, variations which were beneficial to the contractors were detected.
10.1.11 Record of testing of earth brought from outside for filling not maintained
10.1.12 Record of testing of earth disposed off declaring unserviceable not maintained
Testing of earth is to be carried out before declaring the earth unserviceable to avoid corrupt practices.
ILLN-1: Earth excavated in a building was disposed off on the pretext that the above was unsuitable for filling purpose and earth was brought from outside. When the disposed off soil was tested, the same was found suitable for filling. As such, action of the department resulted in avoidable expenditure of Rs. 12.00 lakhs
ILLN-2: In a work for extension of runway, the soil available from excavation was to be used for filling in embankment. The available soil was disposed off without ascertaining its suitability and a separate contract for embankment with soil to be brought from outside was accepted resulting in avoidable expenditure of Rs. 4.83 crores.
10.1.13 Record of disposal of rejected material by specifying Truck No. and date of disposal not maintained
10.1.14 Testing of piles not done
Initial and routine pile tests are mandatory as per IS codes to check the capacity of piles. Such tests were found not done in many cases. Records were not maintained in certain cases.
ILLN: In a work of construction of chemical storage terminal, no initial test was conducted to check the bearing capacity of pile considered in the design. Further, no routine pile load test was carried out during execution. Due to the above, public fund was wasted due to the execution of larger diameter piles, longer piles and excess number of piles than the design requirement. During the process, the contractor was also benefited by getting additional work and doing bad quality work since the contractor knew the larger safety margin.
10.1.15 Inspection notes not issued by senior officers
Inspection of site by senior officers improves the quality of work. However, it was noticed that senior officers are not issuing any inspection notes as a record of their inspection. This is mainly due to the fact that senior officers are not keen in taking any responsibility for quality of work. The inspection of senior officers are not to be confined only to issues concerning progress, coordination etc. Senior officers are required to inspect the site to check quality of work etc. Works Manual of the organisation should specify such matters. Inspection note is to be issued invariably for each inspection carried out by senior officers. An inspection register is to be maintained at site and inspection notes are to be entered in these registers. Senior officers must review the inspection notes on subsequent visit to ensure its compliance. In the absence of the above procedure, there is a tendency for the subordinate officials to allow bad quality work for giving undue benefit to the contractor.
11. Other Miscellaneous Problems
11.1.1 In case of contracts which includes rate for full items stores are being issued to contractors in bulk and in excess of their bonafide requirement. This has led to pilferage and misuse. Issuance of material should be strictly against payment and as per the sanctioned estimate.
Several instances are available wherein stores worth lacs of rupees are outstanding against contractors and departmental officers. The Departmental superiors are guilty of not recovering the same in time leading to substantial loss to the exchequer. No follow up action such as deduction from the bill and pay of the concerned is being taken. Black listing of the defaulting contractors and departmental action against defaulting officers is not being done by the departmental superiors.
11.1.2 A few influential suppliers of construction and allied material have manipulated the system and are working as civil contractors. These suppliers are very often unit holders registered with Government bodies like SICOP, SIDCO. In collusion with officials of such Government Corporations, these suppliers have created a cartel to limit genuine competition. Government instructions regarding preferential treatment is being mischievously interpreted or totally non-existent directions are being invented by unscrupulous public officials in favour of the cartel to award execution of contracts. Besides, these suppliers unlike regular contractors are not paying service charges (4%) and Income Tax (2%).
11.1.3 In the absence of preparation and periodic up-dation of Schedule of Rates backed by Analysis of Rates different Engineering Departments and individual officers within each department are arbitrarily following their own rates and on the basis of wrong precedents of each other are awarding contracts at inflated rates. The office of the Chief Engineer Quality Control apparently is responsible for preparation of above mentioned rates and rate analysis but the same is not being done.
11.1.4 Unwarranted carriage charges are being added on to the cost even when the material is available near the site of execution.
12. Quality In Construction
It is noticed in a number of inspections that site officials incharge of the work do not pay much attention to the workmanship and quality of materials used in the work. Sub-standard works are allowed. When deficiencies are pointed out by inspecting officials of the SVO, the departments resort to effecting recovery for sub-standard works. Recovery is not a substitute for acceptance of bad work. Officials responsible for execution of sub-standard work are liable to disciplinary action apart from the recovery.
12.1.1 Earth work
(i) Surplus excavated earth not levelled and neatly dressed at the disposal place.
(ii) Less sand filling done under floors.
(iii) Proper compaction of earth under floors not done.
(iv) Compaction of earth work in filling not done as stipulated in the contract.
(v) Lead chart for disposal of surplus earth not maintained.
(vi) Excavation of foundation less than specified in drawing.
12.1.2 Concrete work
(i) Oversize/disintegrated/soft aggregate used.
(ii) Sand with more silt content used.
(iii) Honey combed concrete.
(iv) Concrete found bulged and not in plumb.
(v) Less thickness of PCC under floors.
(vi) Proper overlaps in reinforcement not provided.
(vii) Reinforcement found exposed.
(viii) Lesser diameter binding wire used.
(ix) Expansion joint not properly located/provided.
(x) Timber from work used though contract provides for steel form work.
(xi) Clear cover to reinforcement not as per drawing.
12.1.3 Brick work
(i) Hollow vertical and stretcher course joints.
(ii) Joints in brickwork thicker than specified.
(iii) Raking of joints not done properly.
(iv) Poor quality of mortar and inadequate curing.
(v) Sub-standard quality bricks used.
(vi) Bricks on edge not provided at desired locations.
(vii) Cross walls not properly bonded with long walls.
(viii) Brick layers not laid in proper level.
(ix) Less thick brick tiles provided on terrace.
(x) Expansion joints filled up.
12.1.4 Stone work
(i) Bond stones in required numbers not provided.
(ii) Levelling course of C.C. in case of R.R. masonry not provided at required places.
(iii) Bushing/dressing of stones was not proper.
(iv) Joints thicker than specified.
(v) Joints not filled with cement mortar.
(vi) Poor quality cement mortar.
(vii) Cramps, pins and dowels not provided for stone veneering/lining work.
(viii) Thickness of stone less than specified.
12.1.5 Wood work/Aluminium work
(i) Species of wood other than specified provided.
(ii) Cracked wood/Wood with knots used.
(iii) Kiln seasoning not done where specified.
(iv) Less size of styles and rails.
(v) Coal tar/wood preservative not used for timber in contact with masonry.
(vi) Hold fast size found less.
(vii) Glass panes of less thickness provided.
(viii) Non ISI fittings provided.
(ix) Glue not used in joints of wood work.
(x) Non ISI flush doors provided at site.
(xi) Less size and number of hinges provided.
(xii) Doors/windows not fabricated in approved factory.
(xiii) Lighter weight Aluminium sections provided.
(xiv) Proper sealing between frame and opening not done.
(xv) PVC strip/EDPM lining not provided in Aluminium doors/windows.
(xvi) Less thickness of anodizing/powder coating.
(xvii) Wire gauge not turned at right angle in rebate.
(xviii) Interior grade ply/particle board used instead of specified exterior grade.
12.1.6 Steel work
(i) Non-standard steel sections used.
(ii) Priming coat either not done or poor quality priming coat done on steel works.
(iii) Tack welding done instead of continuous welding.
(iv) Extra slag of welding not removed.
(v) Thickness of sheets in rolling shutters found less.
(vi) Metal beading and glazing clips not provided in windows though specified.
(vii) Inferior quality hinges and fittings provided.
(viii) Steel hinges in M.S. frames not fixed by cutting slots.
(ix) M.S. striking plates fixed in steel windows instead of brass/aluminium.
(x) Flash butt welding not done in steel windows.
(xi) Top and bottom fixing of windows not carried out.
(xii) Non ISI steel windows provided.
(xiii) Crate mesh and chain link fencing material is being procured by measurements. It should be procured by weight and not by gauge thickness.
(i) Lesser width and lesser thick glass strips used in flooring.
(ii) Smaller size chips used in terrazzo flooring.
(iii) Thickness of flooring found less.
(iv) Second quality marble stone provided against specified first quality white marble.
(v) Floors sounding hollow.
(vi) Stones of smaller than specified size provided.
(vii) Large panel size of CC/Terrazo flooring than specified.
(viii) Joints of tile/stone flooring found thick and crude.
(ix) Grinding stone marks visible on final polished flooring.
(i) Non ISI and lesser thickness of CGI/AC sheets provided.
(ii) Side and end laps of sheets found less.
(iii) Rusted G.I. hook of lesser diameter used.
(iv) Brick coba treatment found with cracks, local undulations, sounding hollow with inadequate slope and less thickness.
(v) Thickness of mud phuska found less.
(vi) Joints of brick tiles laid over roofs not grouted.
(vii) Gola not provided by cutting chase in parapet wall.
(viii) Non-ISI marked rain water pipes provided.
(ix) Limpet washers needed for fixing / tying of CGI sheet are not being used and yet is being reflected in the bill.
(i) Ceiling plaster found 10 to 20 mm thick against the requirement of 6 mm thick.
(ii) Finished surface of plaster found not smooth and uniform and not true to lines/levels.
(iii) Poor quality mortar used in plastering.
(iv) Smaller size grit used in external grit plaster.
(v) Poor quality primer, distemper, paint etc. used.
(vi) Surface not prepared before painting/distempering.
(vii) Distemper/white wash/snowcem etc. coming to hands on rubbing.
(viii) Brush marks visible on pointed/distempered surface.
12.1.10 Water supply, sanitary installations and drainage
(i) Non ISI marked SCI/GI pipes provided.
(ii) Less weight SCI/GI pipes used.
(iii) Clamping of GI pipes either not done or done at inadequate spacing.
(iv) Less size of MS flat used in MS holder bat clamps and MS flat was not galvanized.
(v) MS holder bat clamps not fixed in CC blocks.
(vi) No lead used in SCI/CI pipes joints.
(vii) Traps with insufficient seal used.
(viii) Commercial quality sanitary wares.
(ix) Lesser weight bib taps/pillar taps/stop cocks etc provided.
(x) Under weight PVC storage tanks provided.
(xi) Less size and weight of gully gratings and manhole covers.
(xii) Inferior quality SW/RCC pipes.
(xiii) Earth not properly compacted during refilling of trenches.
(xiv) Leaking P traps used which result into the damage of whole building.
(xv) Septic tank not designed properly, resulting in overflow in shortest period.
12.1.11 Horticulture works
(i) Estimate not prepared as per landscape plan.
(ii) Landscape plans do not indicate the location of plant and species.
(iii) Species not selected as per environmental conditions.
(iv) Details of plants e.g. species, heights etc. not mentioned in the nomenclature of items.
(v) Mode of measurement of earth/manure supply is not indicated. Deduction of voids not done.
(vi) Excavation/trenching not done up to required depth at the time of development of new garden or regressing of lawn etc.
(vii) Fresh/semi decayed cowdung manure/farm yard manure accepted in place of well decayed cowdung manure/farmyard manure.
(viii) Grass not dibbled at specified distance during development/regressing of lawn.
(ix) Pit size for different types of plant not mentioned in nomenclature of items.
(x) Composition of refill mixture of earth and manure etc. not mentioned as per the requirement of particular species.
(xi) Ph value of earth not checked before taking its supply to suit the type of plantation.
(xii) Manure mixed with earth, stone and other extraneous matters used.
(xiii) Good earth mixed with building rubbish.
(xiv) Unhealthy/diseased plants.
13. Special Projects
Following special projects are discussed in this chapter:
vii) Sewage treatment plants
viii) Development of site
These special projects require proper supervision by site officials to ensure execution of quality works. It has been observed that inexperienced engineers are deputed for supervision of these works by the contractors resulting in undue benefit to the contractor and execution of bad quality work. Hence, special attention is required for supervision of these works by qualified and experienced engineers.
13.1.1 Highway Projects
(i) Consultants are appointed arbitrarily without competitive biddings in spite of the fact that the fee payable is in crores of rupees.
(ii) Private consultants are appointed for almost all the activities of the Projects without proper competitive bidding ;
· General Consultants
· Planning and Design consultants
· Construction management consultants etc.
The works done by the consultants are not checked by the departmental Engineers, whose job is mainly to issue cheques to the consultants/contractors.
(iii) Payment for the works to the tune of several crores of rupees is made by the departmental officers based on the recommendations of the private consultants and that too without conducting any check by the departmental officers. The structural design provided by consultant are mostly over safe & unecomical resulting in excess payment.
(iv) Deviation orders for payment of several crores of rupees are made on lump sum contracts as recommended by the private consultants. The recommendations for such payments are generally not checked by the departmental engineers.
(v) Quality of the works executed by the private contractors are checked by another private consultant. As such no responsibility lies with the Department.
(vi) Structural Design and estimate are generally not checked by the departmental engineers. CBR values for the base course are not conducted & hence pavement thickness not arrived at economically.
(vii) Inflated estimates and recommendations are made by the consultants by adopting many lump sum provisions etc.
(viii) Compaction of embankment/sub-grade not carried out upto the desired levels.
(ix) Embankment/sub-grade material not spread in uniform thick layers as specified in specifications.
(x) Grading of materials used for granular sub-base, water bound macadam, wet mix macadam, bituminous macadam and dense bituminous macadam not as per the requirements.
(xi) Granular sub-base, wet mix macadam, bituminous macadam, dense bituminous macadam etc. not compacted to the desired density.
(xii) Thickness of granular sub-base, WBM, WMM, BM and DBM found less than that specified.
(xiii) Alignment, levels and surface regularity of pavements not executed as per the specifications.
(xiv) Proportions of various ingredients to be mixed for bituminous concrete not as per design mix.
(xv) Bituminous macadam and bituminous penetration macadam not covered with seal coat before allowing traffic over it.
(xvi) Flexural strength of CC pavement not as per specified requirement.
(xvii) Use of sub-standard quality reinforcing element used for reinforced earth work.
(xviii) Variation in dimensions of kerbstone more than the permissible limits.
(i) Design and drawings of form work including supports not approved by the Department before execution.
(ii) Form work used at site not leak proof.
(iii) No pre-camber provided to the soffit of form work.
(iv) Mechanical coupling of bars at additional/extra rate paid though provision for some included in the lump sum price.
(v) Concrete mixed in batch type mix though provision for fully automatic batching and mixing plant made in the agreement.
(vi) Surface cracks observed on deck slabs.
(vii) Complete record of pre-stressing along with elongators, jack pressure etc. not maintained though provision exists in contract agreement.
(viii) Safety precautions to avoid accidents during construction not taken as per the requirement specified in the agreement.
(ix) Diversion roads not constructed and maintained as per the contract provisions.
(x) Construction done based on RCC solid slab instead of pre-stressed/voided slab construction accepted at the time of selecting consultant.
(xi) Uneconomical type of retaining works used for approach roads.
(xii) Lumpsum provision for various item costing approx Rs. 20.00 crores was kept in estimate.
(xiii) Estimates were prepared based on inflated rates.
(xiv) Basic data/Traffic data required for design of flyover was not provided by the deptt.
(xv) Consultancy work awarded to firm not having any experience of planning of flyover.
(xvi) Cost of flyover increased by more than four times the cost estimates furnished by the consultants in spite of the fact that the selection of the consultants was based on economical design etc.
(xvii) Private proof consultants were appointed to check the design of another private consultant arbitrarily without any basis.
(xviii) Quality check not based on manual finalized by the department/consultant.
(xix) Provision of independent quality check from outside agency not complied.
(i) Interior decoration with very costly and imported materials allowed even though existing specifications were adequate.
(ii) Nomenclature of items of interior work not framed properly resulting in litigation and payment of huge amount in the form of extra items.
(iii) Rates of interior items not derived on the basis of detailed drawings and after working out the quantum of material and labour for each item.
(iv) Materials used in interior works e.g., fabric, wood, board, carpet, tiles, marble etc. not found as per approved list specified in the contract document.
(v) Consultants tend to experiment with new materials and design in the name of interiors at the cost of department for their commercial benefits/gains.
(vi) Minimum price range specified for materials of items not adhered to. Purchase vouchers when verified indicated lesser price than specified but cost adjustment not done.
(vii) Fire resistant paint/primer on the unexposed surfaces of paneling ceiling etc. though specified in the contract agreement found not done.
(viii) Sizes of furniture items and other inbuilt components e.g. drawers, partitions, shelves etc. found less than that specified in the drawing.
(ix) Concealed frame sections used in false ceiling found of lesser size and of inferior quality. Hangers fixed at more spacing than specified. Adjustable nuts and bolts not fixed to hangers.
(x) Anti-static PVC flooring not provided inspite of clear stipulation of same in contract agreement.
(xi) Glasses used in cabins not given adequate treatment to get permanent stain free surface.
(xii) False ceiling of different system of cheaper quality used than that specified in the contract agreement.
(xiii) Interior grade (urea bonded) board and plywood used instead of exterior grade (phenol formaldehyde bonded) plywood.
(xiv) Melamine polish found of inferior quality.
(xv) Plaster of paris lining of 20mm thickness done over already plastered and smooth surface resulting in in-fructuous expenditure.
(xvi) Sub-standard quality venetian blinds, sun control films, floor springs, marble files etc. provided.
(xvii) Simple teak wood moulding provided against specified ornamental mouldings.
(xviii) Anodizing/power coating thickness found less than specified.
(xix) Gauge of sheet thickness of steel almirah found less.
13.1.4 Sewage Treatment Plants
(i) Capacity of proposed treatment plant was decided arbitrarily i.e., in view of the discharge to be treated.
(ii) The performance of the tenderer/firm with respect to technology followed in similar plants installed earlier was not ascertained/checked independently. The proposed technology was earlier used in small plants and the performance of plants also was not found satisfactory.
(iii) The technology proposed was supposed to be cost effective as compared to conventional plants. However, the technology was not cost effective and investment of double the cost was required.
(iv) Design and drawings submitted by the contractor were not checked by the department for hydraulic design/structural design and economy.
(v) No guarantee of plant available to the department due to delay in completion of work.
(vi) Clearance from Chief Electrical Inspector, Explosives Department and Pollution Control Board not obtained.
(vii) Design of channels, appurtenances and conduits designed for average flow though the same are required to be designed for maximum flow.
(viii) OPC cement used in sludge digestion tank as against blast furnace slag cement.
(ix) Size of gravel in sludge drying bed was 25mm as against 3 to 6 mm recommended by manual issued by Central Public Health and Environment Engg. Orgnaisation.
(x) Plant initially recommended to be constructed up to primary stage of treatment by the consultant. The secondary stage recommendation to be added at a later date depending on reuse of treated effluent. However, plant being constructed with secondary treatment.
(xi) Alternative scheme proposed though cost effective and acceptable to consultant not agreed. Plant being constructed at higher cost.
(xii) No provision exists in agreement for payment of extra item since tender was on lumpsum basis on contractors specification/design. Extra item paid to the contractor, resulting in undue benefit.
(xiii) Spares of various plants/equipments not supplied.
(xiv) Water retaining structures were not tested as per provision made in IS 3370.
(xv) Welded joints were not tested by non-destructive testing.
(xvi) Water used in concreting not tested before use in the concrete work.
(xvii) Thickness of filter used in sludge drying beds and filter was less than the specified.
(xviii) Clearance of elevated MS/RCC structures from ground was less than the specified.
(xix) Various pipe lines laid not tested before covering the lines with earth/concrete etc.
(xx) Exposed surface of concrete not treated though provision for treatment exists in agreement.
13.1.5 Development of site
(i) RCC pipes covered with CC 1:2:4 alround even though the pipes were not in close proximity to trees/tracks etc.
(ii) Performance test of water supply and sewerage system not carried out.
(iii) Design of road, sewage, water supply and storm water drainage systems not carried out.
(iv) Slopes of pipes not provided properly.
(v) Height and slope of concrete channel in man hole not as per specifications.
(vi) Less weight manhole frame and cover provided.
(vii) RCC/SW/GI pipes not tested before use.
(viii) Less quantity lead provided in CI pipes.
Thus it can be seen that almost all the activities of construction has become problem areas. Unless preventive vigilance measures are under taken in advance, occurrence of calamity cannot be avoided. Prevention is better than cure, hence it becomes the duty of the Departmental Vigilance Officer (DVO) of every organisation to locate the vulnerable to corruption well in advance so that the problems can be avoided before their occurrence.
COMMON IRREGULARITIES / LAPSES OBSERVED IN EXECUTION OF ELECTRICAL MECHANICAL WORKS
COMMON IRREGULARITIES / LAPSES OBSERVED IN EXECUTION OF ELECTRICAL MECHANICAL WORKS
1. Electrification Works (External & Internal)
1. HT Panels
3. LT Pannels & Cables
4. Internal Electrification
2. Air-Conditioning Works
5. Heat Load Calculations
9. Condensers and Chilled Water Motor Pumps
10. Air Handling Units
11. Ducts, Grills and Diffusers
12. Cooling Towers
13. Pipes and Fittings
14. General Workmanship
15. Machine Room
16. Lift Car
18. Testing of the Lifts
4. Fire Detection and Fire Fighting System
19. Control Panel, Control Cables, Detectors & Hooters
20. Main & Jockey Pumps
21. Pipes and Fittings
1. ELECTRIFICATION WORKS (EXTERNAL & INTERNAL)
1. HT PANELS
Common deficiencies observed in HT Panels are enumerated below :
(i) The size of bus bars in some of the cases is found less than the rated current carrying capacity.
(ii) In some cases, tripping current of switchgear was found to be higher than the current carrying capacity of bus bars.
(iii) The clearances in all directions of panels and gap between bus-bars were found to be less than the IS stipulations.
(iv) The construction material of the panel body is often sub-standard either due to poor quality of the sheet or due to lesser thickness of the sheet.
(v) In some cases, the highest operating points in the panels are positioned higher than the standard stipulations. As per practice, the highest operating switch in panels should not be above 1900 mm from the ground level.
(vi) The CTs are sub-standard in make and the burden of CTs does not match with the requirement.
(vii) The make of the components/accessories is not mentioned clearly, thus leaving everything to the choice of manufacturer of the panels.
(viii) The control wiring inside the panels is found multi-stranded and sometimes even less than 2.5 sq. mm.
(ix) The selection of capacity of capacitor banks is done in a random manner and is not based on the actual inductive load in the circuit.
(x) The stacking of batteries is not done on corrosion resistant platforms and often even the acid is found spilt over the floor. Adequate ventilation for acid fumes is also not provided.
· Any tripping/ faults in the HT part of the switchgear affects a wider area of supply. Therefore while designing the HT panels, an adequate factor of safety should be considered. The size of bus bars, side clearances of the panels, construction of materials, selection of components of HT panels should be strictly as per the relevant IS and the tender specifications and should conform to the IE rules.
Common deficiencies observed in transformer installation are as under :
(i) The types of transformers are selected in an adhoc manner. There are cases when outdoor type transformers are found placed inside the closed rooms without proper ventilation.
(ii) In one of the cases, though the cooling system specified for the transformers was air natural, but on site it was found that one more exhaust fan was installed at the top of the transformer to supplement the cooling system which made it a forced natural cooling system.
(iii) The type of winding material of transformer coils is not clearly specified which may be a potential cause of controversy at the time of execution.
(iv) The gap between the phases of end terminations of cables is found less than specified.
(v) The transformers are found with one body earthing and one neutral earthing instead of double body earthing and one neutral earthing.
(vi) The minimum clear distance as required between the earthing and the equipment is not maintained and all the earth pits are sometimes found clustered in a small area.
(vii) In some of the cases, the clearance in all directions of the transformer is not found adequate as per the relevant IS specifications.
(viii) The arrangement for prevention of fire due to leakage or spillage of the transformer oil is not found adequate.
The transformer is the heart of electrical
installation/switchgear. The type and capacity of the transformer should be
chosen with utmost care. All the relevant IS specifications should be strictly
adhered to. There are certain restrictions in the installation of oil
transformers in basements and in public intensive areas. Another key
consideration for installing transformers is that the place should not be low
lying as water collecting near such installations may prove costly.
3. LT PANELS AND CABLES
Common irregularities observed in LT panels and cable works are enumerated below :
(i) In a majority of these cases, LT panels are manufactured by subletting to small firms that are not even CPRI approved. Often their products are not type tested.
(ii) The sheet thickness used for the panel body is found to be lesser than the specified dimension in some of the cases.
(iii) In one case, the original specifications envisaged two MCC (Motor Control Centre) panels but on actual site, one panel with both side openable and installing switches was accepted without any financial adjustment.
(iv) Sometimes, the specifications envisage provisions of MCCB while in actual fact SFUs (Switch Fuse Units) were provided at the time of execution.
(v) There have been instances when incoming main was required with an ACB but instead MCCB was provided which gave financial advantage to the contractor.
(vi) At times, the panels are not found to be of cubicle type as envisaged in the specifications.
(vii) Sizes of bus-bars are found on lower side or sometimes the material of the bus-bar is changed from copper to aluminium giving a financial advantage to the contractor.
(viii) Many a time, the thimbles used for termination of cables are found of unspecified makes. Even the thimbles are not properly crimped thus leaving air gaps, etc.
(ix) In some cases the types of cables and the optimal size of cables are not properly mentioned thus leaving everything to the discretion of the contractor.
(x) The XLPE cable in one case was originally envisaged but at the time of execution, the contractor supplied PILC cable which is an obsolete alternative.
(xi) Mostly the laying of cables is not done as per relevant IS specifications. Either the depth of trench is found less or brick and sand cushioning is found inadequate. The cables are abruptly bent near the panel for termination.
(xii) In one instance, the cable was to be held in a new trench, as per contract, but the contractor laid the cable in an existing trench, which was made to lay other cables, and claimed payment at the rates of laying a cable in the new trench.
(xiii) There have been instances when laying and terminating the cables was one item of BOQ and termination of cables was another item which amounted to duplicity of work. But due to misinterpretation, the contractor claimed payments against both the items separately.
(xiv) In the construction of the Head Office building of a bank, the LT switchgear was installed in a basement which was potentially hazardous due to chances of collection of water in the basement.
· LT panels are generally manufactured by small firms, therefore, in order to ensure the requisite quality and safety, CPRI approval should invariably be asked for the type of switchgear they are authorized to manufacture. Types of switches ACB, MCCB, SFU, etc. should be explicitly defined in the contract specifications. Similarly, the type and size of cables required for the work should also be categorically mentioned beforehand. Items of BOQ should be chosen with due care so as to avoid any duplicity of works which may result in overpayment to the contractor.
4. INTERNAL ELECTRIFICATION
Common deficiencies observed in internal electrification work are enumerated as under :
(i) The conduit size with its class are not clearly specified resulting in the supply of sub-standard material of contractor’s choice.
(ii) The maximum number of wires in each conduit pipe is not found strictly as per the relevant IS.
(iii) In some cases, the wire sizes and the thickness of conduit pipes are found to be less than specified.
(iv) In some cases, a single switch box was found with two incoming phases. This is a safety hazard and violation of ISS.
(v) Switch-boards are not properly flushed and bakelite sheets are found in bent position.
(vi) Metal boxes are found without proper provisions of earth termination arrangements.
(vii) In many cases, terminations of conduits are not provided with check nets to ensure continuity. Also, rubber bushes are not provided in the conduit in the MS boxes so as to draw the wire safely and without causing any injury.
(viii) The gap between clamps is found more than the specified in relevant IS specifications.
(ix) Fish-wire is found of lesser size and is generally not found inserted during the laying of conduits.
(x) The sheet thickness and depth of MS-box is found less than specified.
(xi) In some cases, joints are provided at the point wiring even without proper insulation/connectors.
(xii) In some cases, the junction boxes were found used for the fan connections. Also ceiling roses for fans/exhaust fan point are not provided.
(xiii) In quite a few cases, it is found that the height of switchboard for light points and light/power sockets is not 1.2 meter and 23 cms. respectively, from finished floor level as stipulated in relevant IS specification.
(xiv) Mostly the earth-pit dimensions are found less than as stipulated in the contract. As per relevant IS norm the cover-thickness of earth pit should not be less than 10 mm and the dia of the MS rod should not be less than 6 mm.
(xv) In a majority of the contracts, the polarity test of all switch/sockets is not conducted and certified by competent authority.
· For any internal clarification work, the size and quality of conduit pipes, cross section and thickness of insulation for wires and quality of circuit breakers should be given due attention as these items form the most critical part of the installation. All relevant IS specifications should be strictly adhered to at the time of execution of IE work.
1. AIR-CONDITIONING WORKS
The common irregularities noticed in the air-conditioning works are as under:
1. HEAT LOAD CALCULATIONS
In most of the cases, the designing of plants is found to be done on higher side. The ambient peak temperatures for short times are considered for heat load calculations. Also the heat generation load of various equipments and human occupancy is kept on an unrealistically higher side. All these factors result in over-designing and thus perpetual under utilization of the plant.
· Heat load calculations should be based on the ambient conditions prevailing over a considerably large period so that the design parameters are realistically selected and the system is utilized optimally. Also the other inputs for heat load calculations, like occupancy rates, equipment load, etc. should be taken on a realistic basis only.
The selection of type of cooling is found to be done in an adhoc manner. There have been instances when air cooled chillers were used while the highest temperature touched 45 C or above and there was no scarcity of water in the area. On the other hand, the water cooled chillers were used in some areas with an acute shortage of water where probably air cooled chillers would have been a better choice. In one more instance of irrational choice of type of cooling, one organizations went for a mix type of chillers, i.e. 50% air cooled and 50% water cooled, which has not only resulted in a mismatch but also resulted in maintaining two types of spares which is a costly affair.
· Since the type of chillers affect the overall performance of the air conditioning plant, the selection of cooling should be done with due care. Generally, the type of chillers are based on climatic conditions, the size of the plant and availability of water, etc.
(i) There are instances when two compressors of half the capacity are accepted in place of one unit of double the capacity as envisaged in the contract.
(ii) Sometimes, even the type of compressors envisaged is left open till execution of the item and thus a free hand is given to the contractor to supply the compressor of his choice, i.e. open type, thermetically sealed or semi-thermetically sealed.
(iii) In some cases, though reciprocating type of compressors are envisaged in the tender specifications, the contractor supplied screw chillers of lesser capacity on the plea that screw chillers are more efficient against contractual obligations.
(iv) In most of the Government Works the specifications of compressors and other accessories are generally based on a particular model of a particular manufacturer in a vague manner. When it comes to supply of items, the model numbers envisaged in the tendered specifications are not found matching with the model actually supplied.
(v) In one case, the model number envisaged in the tender specifications was changed during some technical negotiation with the successful bidder. But at the time of actual execution, even the model supplied was not found matching with the agreed model.
(vi) In some cases, the motor rating of the compressor motor is envisaged as being 10% higher than the full load requirement of the compressor. But since most of the manufacturers supply a factory built motor compressor unit, which normally does not have motors with a 10% higher capacity, consequently 100% conformance is not ensured.
· The model number, capacity of compressor and motor should be explicitly indicated in the tender specifications so as to avoid any controversy at the time of execution. Also the type of compressors should be decided before hand to avoid any subsequent interpretations.
(i) Though in the contract the make of condensers are normally the same as the compressors, at times it is found that condensers are of some local and less reputed make.
(ii) In one case the overall length and dia of condensers were found lesser than the stipulated dimensions.
(iii) The dia and thickness of copper tubes used in the condenser were found less than specification in some cases.
(iv) The linear density of fins was also found lesser than the specifications.
(v) The inlet and outlet temperatures of water and refrigerant are either not specified in the tender or not adhered to by the contractors.
· The overall length and dia of the condenser the dia and thickness of copper tubes and the linear density of fins decide the performance of a condenser and are very important parameters. Therefore, these parameters should invariably be checked and it should be ensured that these are of tendered specifications before installations.
5. CONDENSER AND CHILLED WATER MOTOR-PUMP SETS.
(i) The type of coupling of motor-pump set is either not mentioned in the contract specifications or not adhered to at the time of execution of work.
(ii) In some cases, the impeller of pump was found to be of cast iron as against brass as envisaged in tender specifications.
(iii) Invariably the type of protection of motors and class of insulation is found to be at variance with the specifications.
(iv) Even the motor rating and rpm was found lesser than the specifications.
(v) There have been instances when horizontal split casing pumps were envisaged in the tender specifications but actually monoblock pumps were provided at site.
· The type of casing of pump sets rating and Rpm of motors should be clearly mentioned in the tender specifications. Besides, the material of construction of impellers and type of protection and class of insulation of motors are also critical items, which need special attention.
6. IAR HANDLING UNITS
(i) In some cases, double skin AHUs were envisaged in the tender specifications but at actual site, single skin AHUs were supplied by the contractor.
(ii) There was a case when the provision of double blower AHU was agreed upon as a substitute item though there was no change in the CFM of AHU vis-à-vis single blower AHU. There was however, a significant change in the price of the substituted item.
(iii) The face area of cooling coils was found lesser than the specified and/or drawing dimensions.
(iv) The detailed tender specifications were not found matching with the actually installed AHUs. The plea given for such deviations are that AHUs are standard items and are supplied as factory built items from the manufacturers of AHUs.
(v) The rating of motors used in AHU was found less than the actual requirement resulting in over heating of the motors. Also, the single phase preventors were not provided in these motors.
(vi) Almost in all the cases, the specifications envisage provision of AVMs (Anti-Vibration Mountings) for installation of AHUs but there was hardly any instance where AVMs of reputed make were provided. Most of the places, rubber pads are used instead of AVMs.
(vii) Similarly, the AHUs are envisaged with noiseless operation but in a few cases the noise level was measured after installation of AHUs.
(viii) Even the sheet thickness of enclosure of AHUs was found inadequate when compared to the specifications.
(ix) In most of the cases, the AHUs are located in cramped spaces with the result that maintenance and upkeep of AHUs become very difficult. In one case, the AHUs were installed in a loft inside a big auditorium which would create unpleasant noise inside the auditorium.
(x) In one case, a large number of small AHUs were installed in a scattered manner to cater to the library of the training institute. Such large areas are generally provided with a big AHU of suitable size in order to save space as well as cost.
· The cooling impact of any AHU is mainly judged by the CFM and cross section area of the cooling coils. Therefore, it should be ensured that these two parameters strictly conform to the specifications. Besides, since these units normally run in unmanned areas, the fault detection and prevention action thereon should be given due priority.
7. DUCTS, GRILLS AND DIFFUSERS
(i) The degree of galvanization of GI sheets was found inferior to the specified grade in some of the cases.
(ii) Even the thickness of sheet was found less than specified in quite some cases.
(iii) In some cases, either the insulation of GI sheets was not properly specified in the tender documents or the same was not found conforming to the specifications.
(iv) Sometimes the thickness of sheet was not matching the cross-section of duct and thus violated the stipulations of relevant ISS.
(v) Invariably the supports used for hanging the ducts are found at distances more than specified.
(vi) Even the dia of hanging rods was found less than minimum requirements.
(vii) In some cases the dimensions of grills were found less than specified.
· The ducts are important link between AHUs i.e. source of generation of conditioned air and the area to be air-conditioned. The heat gain or heat loss in ducts or any leakage in the ducts may have adverse effect on the overall performance of the AC plant. Therefore jointing of ducts and insulation of ducts besides quality of sheets should be given due attention.
8. COOLING TOWERS
(i) The makes of cooling towers are restricted to one or two only while there are quite a number of firms manufacturing the cooling towers.
(ii) Thickness of FRP sheets used for manufacturing the cooling towers are not mentioned in specifications in most of the cases thus giving free hand to the suppliers.
(iii) In quite a few instances, though the material of fan blades was envisaged as cast aluminium, actually the contractor supplied fans made of FRP on the plea that cooling towers are factory built items and bought out from trade.
(iv) In some cases the cooling towers with same model number were found used. For example, for a range of tonnage of the CT from 75 ton to 90 ton, same model was found to be used.
(v) In most of the cases particularly with cross flow cooling towers, ladders are not provided even if specifications envisage provision of ladders.
(vi) In some cases the cooling towers were to be installed on RCC foundations which was included in the BOQ but at actual site, the cooling towers were installed on the RCC beams of the civil work of the building thus giving financial benefit to the contractor.
(vii) The colour and thickness of PVC fills used in the cooling towers are either not specified in the tender or are not adhered to as per specifications.
· An efficient cooling tower can, to a great extent lessen the burden on other equipments of the AC plants. Even one degree fall in temperature of outlet water of cooling tower can improve functioning of plant significantly. Therefore the capacity of fan, colour and density of PVC fills, sprinklers and nozzles, etc. should be carefully chosen and strictly adhered to at the time of execution.
9. PIPES AND FITTINGS
(i) The grade and sizes of pipes in some of the cases was found to be used in an adhoc manner and the makes were not from the approved list.
(ii) The valves and fittings are also found supplied from less reputed firms and not as per specifications.
(iii) The thickness of insulation and cement plastering is invariably less as compared to specifications.
(iv) The item of pipes and fittings in most of the cases is kept as lot instead of making it linear measurable item so as to ensure market rate justification of these items.
(v) In some of the cases the proper colour coding of the pipes and direction of flow marks were not made on the pipes.
· The selection of pipes of different size should be done on a realistic basis. Also only reputed and standard makes of pipes and fittings be envisaged in the tender specifications and adhered to at the time of execution.
10. GENERAL WORKMANSHIP
(i) Jointing of G.I. ducts is not found as envisaged in the specifications. In one case, the tender specifications envisaged slip joints but the ducts were jointed with riveted joints.
(ii) The insulation inside ducts and pipes etc. was done in an unskilled manner as the same was found peeling off at a number of places.
(iii) The acoustic insulation applied in a plant room was found to be done in a shabby manner. The glass wool used was not uniformly spread on the wall and lump formations were seen at many places.
(iv) The aluminium foil used for wrapping (cladding) the duct insulation is not given proper finish.
(v) The canvass used at the joint of AHUs and ducts are found either torn or extricating from the joints thus resulting in leakage of air.
· Besides sound material, skilful workmanship can add to the sheen of any project. Therefore, in order to ensure efficient and flawless running of AC plants, the installation of different parts of AC plants should be got done by skilled workmen only.
2. LIFTS/ ELEVATORS
1. MACHINE ROOM
Common irregularities observed in the design of machine rooms for equipments of lifts are as under :
(i) The access to machine rooms was allowed even to unauthorized persons, thus jeopardizing the safety in the use of lifts.
(ii) In some cases, the dimensions of machine rooms were found less than the tender specifications.
(iii) The laying of equipments inside the machine room was not done in a planned manner which gave a shabby and clustered look.
(iv) In some cases, the dynamic and static colour coding was not applied as per relevant standards.
(v) There have been instances when the ventilation in the machine room was found inadequate and the electronics components were found getting heated up abnormally.
(vi) In certain cases even the instructions pertaining to rescue operations by the operating staff were not found displayed inside the machine room.
(vii) In one case the type of drive envisaged was variable voltage control DC drive instead of thyristor controlled AC drive. Since the variable voltage DC drives are phased out, the machines with these control shall have maintenance problems. Therefore, the latest technology viz. thyristor control as drive should be adopted for the lifts.
(viii) In yet another case of replacement of old existing lifts in a reputed hospital in Chandigarh, the machine room equipments, particularly the motors and control panels provided, were of some foreign make despite the fact that there are quite a large number of indigenous manufacturers for motors and other accessories for the lifts. The imported equipment shall not only be difficult to procure in case of replacement but maintenance of spares shall be a costly affair.
(ix) In the above cited case, the batteries used for control purpose were found placed in ARD (Automatic Rescue Device) unit thus making the entire unit very congested. The batteries were required to be placed in the battery stack to be provided separately.
· Generally, the machine rooms of lifts are unmanned and therefore proper lock and key arrangement is essential so as to ensure the entry of only authorized persons, thereby avoiding any intentional or accidental mishandling of lift equipments. Further, since the critical equipments for lifts are placed inside the machine room and these equipments generate heat when in use, proper ventilation should also be ensured to dissipate the heat. Lastly, all the safety instructions for operators and rescue personnel should be displayed inside the machine room in a conspicuous manner.
2. LIFT CARS
The illustrative list of deficiencies observed in the lift cars is as under :
(i) In one case, the guide shoe rollers in the lift car were not envisaged at the initial stage, but at the time of execution guide shoe rollers were provided at a high cost without any financial justification for these items.
(ii) The factor of safety of lift rope is not tested and established in most of the cases.
(iii) In a majority of the cases, the emergency alarms/telephones are found either bypassed or rendered out of use over period of times.
(iv) In most cases, abnormal misalignment is found between the car floor and the sil. The reason for the abnormal misalignment is generally attributable to the maladjustment of limit switches.
(v) In some cases, adequate ventilation is not provided inside the lift car. There are instances when even the stipulations of IS 4666 (clause 8.2.) are not complied with properly in terms of adequacy of ventilation in the lift car.
(vi) There are certain cases, when the thickness of brass sheet used inside the lift car is found less than the tender specifications.
(vii) Although the IS specifications stipulate conspicuous display of Dos and Don’ts for safety in use of the lifts. In a majority of cases, either the instructions are not displayed at all or the same are displayed in a very inconspicuous manner.
(viii) In some cases, the ceiling height of the lift cars was found much less and even the illumination level inside the car was inadequate.
· The size of the lift cars should be commensurate with the carrying capacity of the lift. The interiors and type of shoe, etc. of cars should be decided before-hand in the tender specification. All the safety instructions should also be displayed preferably bilingually in a conspicuous manner inside the lift cars. Besides, provision of recorded sound with alternative audio clippings in local language and in English/Hindi should also be made announcing the instructions to be followed in case of accidental stopping of the lift. In order to improve safety in the lifts, the length of the toe guard should be increased appropriately in order to reduce the gap between the landing sil and the lower edge of the toe guard so as to prevent any accidental fall through the gap. Further, in case the car stops away from floor level due to power failure, the trapped passengers, in panic, may fiddle with the electro-mechanical latch in the landing door which may be accessible from the car. Therefore, in order to avoid such situation, the electromechanical latch should be so designed that it is inaccessible or invisible to the passengers in the car.
The common irregularities noticed in the shafts of lift works are enumerated as under :
(i) In most cases, the illumination level in the lift shaft is found inadequate either due to non-provision in the tender specifications or due to non-conformance to the specifications.
(ii) In majority of the cases, the buffer springs are not checked to test their compression which should be minimum 250 mm as per IS specifications.
(iii) In some cases even the lengths of buffer spring and counter weight spring were found less than the stipulated values.
(iv) In quite a few cases, the earthing strips provided in the lifts are either not clamped properly or the distance between clamps is found more than specified.
(v) In some cases, the depth of the car pit was found to be less than specified.
· In order to have hassle-free maintenance and operation of the lift the shaft of the lift should be adequately illuminated. Further the earth strips should be properly clamped in conformance to the specifications.
4. TESTING OF THE LIFTS
Before putting any lift to use, there has to be a statutory test and certification from the lift inspector. But the following deficiencies are noticed in respect of various tests conducted or required to be conducted on the lifts.
(i) In most cases, the lift doors are neither tested for a fire withstand rating nor is any certificate obtained from the manufacturer.
(ii) Free fall test is not conducted in most of the works of installation of lifts, neither is the same certified by the lift inspectors.
(iii) Often the lift trailing cables are not tested for fire retardance and moisture resistance.
· Safety in use of lifts has to be given top priority. Therefore all the tests stipulated by IS specifications should be done in a stringent manner. However, in case the conducting of test is not feasible, a certificate to that effect should be obtained from manufacturer or from the Lift Inspector.
3. FIRE DETECTION & FIRE FIGHTING SYSTEM
1. CONTROL PANELS, CONTROL CABLES, DETECTORS, HOOTERS
These items from part of the integrated control and detection system for fire-fighting arrangement. Common irregularities observed in these items are enumerated below :
(i) In the case of a reputed Bank, the provision for a microprocessor based control panel was envisaged in the tender specification but at actual site, a conventional panel with some solid state switching arrangement was supplied without any techno-commercial considerations.
(ii) In some cases the number of detectors in each zone of main control panel are found at variance with the standard stipulations.
(iii) In most cases, the distribution of smoke and heat detectors is not found in a reasonable and justified manner. At some places, the number of detectors is found unreasonably high despite the fact that the area may not be a fire prone one. On the other hand, a lesser number of detectors are installed in fire hazardous places.
(iv) At times it is found that the fire fighting system installed is not of the appropriate type required for the particular fire hazard. For example, the electrical installation should be provided with sand buckets and carbon foam fire extinguishers but at many places, these provisions are not strictly adhered to.
(v) In some cases, the main control panel, sector panel and zone panels supplied are not even TAC (Technical Advisory Committee) approved.
(vi) In some of the cases, the main control panel and sector panel are found to be of patch cord or normal/conventional wiring type instead of adaptor cord system.
(vii) In some cases, the base of the detector does not conform to the specifications and at times even the makes are not approved ones. The base of detector is an item which is rarely checked properly and in most of the cases, it is found to be of spurious make instead of standard make.
(viii) There were instances when the smoke detectors and heat detectors were not matching the ambient conditions of the places of installations. The detectors were designed to work at a particular temperature. On further examination, it was revealed that the ambient temperature was higher than the detection level of these detectors and hence the chance of false alarms were high. Due to these false alarms, these detectors are generally by-passed.
(ix) Almost in all the cases, the signal cables, which are used in bulk in fire-fighting detection, are not tested from a reputed laboratory even on a sample basis.
(x) In most cases, the tender specifications envisage branded and reputed makes of hooters but at actual site, locally made hooters are found installed.
· Timely detection of fire can avert a catastrophe. Therefore, it is needless to emphasise that the main control, zonal control, detectors, cables, etc. should be selected with utmost care conforming to latest technology, high quality standards and suiting the particular place of installation. Further, though there is statutory obligation for seeking clearance and approval for using the fire fighting installations, yet it is found advisable to seek pre-installation or stage inspection of such works so as to avoid any major alterations/modifications at the final stage of installation.
2. MAIN AND JOCKEY PUMPS
The common irregularities observed in these items are enumerated below :
(i) In some cases the capacity of motor was found less than the rated capacity of prime mover of the pump.
(ii) In yet another case of fire fighting work in a training institute of a bank, the capacity and head of the main pump was found less than the tender specification.
(iii) There was an instance when the jockey pump did not start automatically even while the standing pressure of hydrant line fell below the threshold value.
(iv) In one of the cases of Diesel-Engine-Pump Set, the exhaust pipes were not wound with asbestos rope as stipulated in the specifications thus leaving chances of accidental human contact to the heated part of the engine.
· The capacity of engines and the rating of prime movers should be chosen with due care. Also all the interlinking controls should be tested periodically to ensure operation of equipments. In order to avoid transmission of vibrations of Engine, Pumps etc. to the main hydrant lines, a flexible coupling between the pump and hydrant line should be provided.
3. PIPES AND FITTINGS
The common deficiencies observed in the pipes and fitting of fire fighting works are enumerated as under :
(i) In some cases the grade(class) of pipes was found Class ‘A’ which is inferior to the minimum specified grade, i.e. ‘Medium’ (Class ‘B’).
(ii) Inmost cases, GI pipes were found jointed with threaded coupling as against specified flange welded joints.
(iii) In some cases, the non-return valves and the sluice valve above 65 mm dia were provided without wheel arrangement and even the direction of rotation was not indicated.
(iv) There have been instances when a single outlet was provided in place of gun metal double outlet as envisaged in the tender documents.
(v) In quite a few cases, the dia of primary hose nozzle was found less than 20 mm i.e. the minimum stipulated size as per relevant IS standards.
(vi) In some of the buildings, the location of hose reels and hydrant out lets are found completely covered by wooden panelling.
(vii) In some cases even the inscription “Fire Hydrant” and other indications with red paint on doors, etc. were not displayed.
(viii) There were instances when the water sprinklers provided with quartz bulbs were found obstructed/hidden inside the false ceiling/plastering.
(ix) In some cases, the hose reel cabinets were found insufficient for the movement of the reel to a minimum of 120 from its original position.
· Since the Hydrant Lines are required to maintain constant pressure, the grade and quality of pipes should not be compromised under any circumstances. All the fire fighting equipments should be given proper colour coding and indications, etc. wherever required. The location of hose reels should be in a conspicuous position and with free access. The sprinklers and nozzles should be installed without any obstruction.
A/A Administrative Approval
AC Asbestos Cement
AHR Abnormally high rated
BIS Bureau of Indian Standards
BM Bituminous macadam
CC Cement concrete
CPWD Central Public Works Department
DAC Dense Asphaltic Concrete
DBM Dense Bituminous Macadam
D.E. Detailed Estimate
EMD Earnest Money Deposit
EOT Extension Of Time
E/S Expenditure Sanction
GI Galvanised Iron
I.T Income Tax
L-1 First Lowest
L-2 Second Lowest
MAS Material At Site
MB Measurement Book
NBO National Building Organisation
NIT Notice Inviting Tender
PCC Plain Cement Concrete
P.E Preliminary Estimate
PSU Public Sector Undertaking
RCC Reinforced Cement Concrete
RR Random Rubble
SDAC Semi Dense Asphaltic concrete
SW Stone Ware
TDS Tax Deducted at Source
T&P Tools and Plants
WBM Water Bound Macadam
WMM Wet Mix Macadam