₹500-cr road contracts: CAG pulls up BMC over clearing bills sans 3rd-party audit

The comptroller and auditor general of India (CAG) has questioned the Brihanmumbai Municipal Corporation (BMC) over clearing bills of contracts worth nearly ₹500

The comptroller and auditor general of India (CAG) has questioned the Brihanmumbai Municipal Corporation (BMC) over clearing bills of contracts worth nearly ₹500 crore for road projects, without carrying out third-party audits. These works were awarded to contractors who have since been either blacklisted by BMC or have show-cause notices against them.

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CAG carried out test checks on the records of BMC’s road and traffic department for a period of one month, between July and August 2019. It inspected transactions carried out between April 2015 and March 2019.

The test-check report was submitted by CAG to municipal commissioner Praveen Pardeshi in October.

In the report, CAG questioned how BMC had cleared bills for blacklisted contractors without conducting third-party audits of the completed works, which is mandatory according to tender conditions.

Although these contracts were awarded before blacklisting or issuance of show-cause notices, the works were completed in the last one year or, in a few cases, are still ongoing.

BMC had served show-cause notices and blacklisted several road contractors and auditors in 2016 and 2017. The blacklisted period was reduced from seven years to three years following an appeal filed by two contractors.

The report found “third-party audit was not conducted before payment of bills, though the contractors were blacklisted/ registration cancelled”. It went on to say, “Thus, without ensuring the quality of work done by the contractors, the department paid the bills to the contractors who have been blacklisted for poor quality of work.” Pardeshi told HT, “Let me assure you that we will take strong action on this.”

CAG found no third-party audit was conducted before clearing bills for a ₹165-crore project, awarded in 2015 to a joint venture (JV) by two contractors, to improve side strips and footpaths along Linking Road in Bandra, Khar, Santacruz, Vile Parle and Andheri in 2015. Both contractors were blacklisted in March 2017. A third-party audit was a condition of the tender document.

BMC’s response in the report says, “Third-party quality auditors were appointed for the works prior to September 2015. However, services were suspended owing to lack of supervision. The works were supervised by deploying additional staff.” CAG said the quality certificate issued by the department staff was not furnished as well.

CAG also pointed out that a third-party audit was not carried out, despite being a tender condition, in the ₹191-crore project to improve 36 city roads. The contract was awarded to a JV which has one blacklisted contractor. The work was to be completed by May 2018, but as of May 2019, only eight works had been completed. CAG also pointed two works were deleted from the scope of the project, and sought the reason and necessary approvals for the same. BMC has said the matter will be scrutinised and detailed compliance will be submitted.

An official from the CAG’s office said, “We have now sought a detailed reply from BMC to further carry out a proper audit.”