Undue favor to the Contractor. The Uttar Pradesh Jal Nigam extended undue favor to the Contractor by allowing inadmissible escalation resulting in a loss to the GoUP of Rs. 4.09 crore.
The Department of Technical Education, Government of Uttar Pradesh (GoUP), awarded (March 2009) the work of construction of Dr. Bhim Rao Ambedkar Engineering College of Information and Technology (College) at Banda to the Construction and Design Wing (C&DS) of the Uttar Pradesh Jal Nigam (UPJN) as a deposit work at an estimated cost of Rs. 126.05 crores as approved (February 2009) by the Expenditure Finance Committee (EFC). However, due to standardization of the design of the work, the GoUP revised (January 2010) the cost of the work downwards to Rs. 62.13 crore which was also approved (December 2009) by the EFC.
The C&DS, after inviting (March 2010) the tenders, awarded (July 2010) the above work to M/s Ultra Homes Construction Private Limited (Contractor) at a cost of Rs. 54.76 crores (5.8 percent below the schedule of rates). The scheduled dates of the start and completion of the work were fixed as 14 July 2010 and 13 July 2012 respectively. The work was completed in June 2014.
The C&DS prepared the detailed estimates on the basis of the Bill of Quantity of the work and accorded the Technical Sanction in June 2010. The detailed estimates inter-alia included the work of 300 mm dia Pile work at the analyzed rate of 5,569 per pile.
Audit noticed (February 2016) that the C&DS had paid an amount of Rs. 1.89 crores for the item “300 mm dia Pile work” to the contractor for 3,595 pile works at the rate of 5,569 per pile less 5.8 percent through the first and the second running bills (October 2010 and January 2011).
Due to revision of the rates and inclusion of some extra items, the C&DS subsequently submitted (October 2012) a revised estimate of the work to the GoUP totaling Rs. 81.49 crore which was approved (January 2013) by the GoUP for Rs. 80.08 crores as also approved by the EFC (October 2012). As required by the GoUP, the C&DS also submitted detailed estimates along with the revised estimates. The detailed estimates were prepared on the basis of ‘Work Done’ and Work to be done. The audit further noticed that although the works of ‘300 mm dia Pile work’ were already executed and paid for at the rate of 5,569 per pile, however, the C&DS had depicted the above works as executed at the rates of 17,650 per pile (an increase of 217 percent) in the detailed estimates submitted to the EFC. The discrepancy was not noticed by either the EFC or by the Department.
After approval by the GoUP, the C&DS paid (March 2013) the Contractor the difference between the rates already paid and the new rates. This resulted in an inadmissible payment of Rs. 4.09 crore to the Contractor. Therefore, by submitting highly inflated rates for a work that had been already executed and paid for, the C&DS not only submitted incorrect information to the GoUP, it also paid the difference between the rates paid and the rates subsequently approved to the Contractor, thereby allowing him an undue advantage of Rs. 4.09 crore.
The Management stated (July 2019) that the value of the contract ( Rs. 54.76 crores) made with the Contractor was Adhoc as C&DS could not get sufficient time to estimate the value of the contract in view of GoUP Order dated 27 January 2010. The contractor was paid on a tentative basis. The revised rates for the above works were recommended by Project Formulation and Appraisal Division (PFAD) and approved by the EFC and no incorrect information was given to Government.
The reply is not acceptable as there is no condition in the contract showing its value as adhoc. The pile works were already executed and paid for at the agreed rate (5,569 per pile). The C&DS, however, had depicted the works as executed at the rate 17,650 per pile in the detailed revised estimates submitted to the EFC which clearly shows that the subsequent EFC’s approval was based on the incorrect information submitted to them by the C&DS. Moreover, as per the agreement, no price escalation was admissible to the contractor. The matter was reported to the Government (March 2019). The reply is still awaited (September 2019).