Domestic Airports Scam- Part 2: Ineligible contractors give shoddy work and get illegal overpayments in Younphula airport

The draft RAA report on the construction of Domestic Airports has pointed out several irregularities in the construction of the Nu 81.2 mn Younphula Domestic Airport. These include an irregular bidding process causing additional costs, selection of technically non eligible bidders, overpayments to contractors for works not done, poor quality of work done and etc.

As per the report around Nu 11 mn was paid in illegal overpayments for works not done but paid for by the Ministry of Information and Communication. The report also mentions how Nu 10 mn of additional costs was incurred due to irregular bidding process.

Of the Nu 81.2 mn sanctioned for the airport the Draft RAA report covers Nu 76.04 mn of the works between January 2010 and June 2012.

The draft  report has unearthed Nu 152.876 in illegal overpayments and more than Nu 83 mn in avoidable costs out of the total Nu 427 mn spent on the three domestic airports.

 

Nu 11 mn in overpayments

The Nu 11 mn in overpayments to contractors are for various works but the two main areas are for incomplete earth moving works and fictitious use of an excavator.

As part of the construction the contractor was paid Nu 28.94 mn for removing 382,490 m3 of soil but a joint survey by a RAA and Department of Civil Aviation team found that in reality only 220,443 m3 of soil had been removed.

As a result Nu 8.14 mn had been overpaid to the contractor.

The report says, “It is imperative for the Ministry and the DCA to thoroughly investigate the estimation process which had impeded economy, efficiency and effectiveness in the execution of infrastructure works.”

It also says the Ministry should fix responsibility on the officials responsible for the preparation of estimates besides recovering the extra payment of Nu. 8.14 mn

In another case the contractor Sonam Ugyen and hiring unit had claimed and was paid Nu 2.24 mn as hiring charges for a fictitious excavator that never existed.

The RAA on enquiring about the registration with the Road Safety and Transport Authority found that the registration number was of a tripper truck which had been off road since 2010 and sold for scrap at Nu 20,000.

Other overpayments were for CGI roofs, timber flooring, taxiway, compressor works, and shoulder works and fencing works.

 

Ineligible contractors chosen

Three firms which are Sonam Ugyen and Hiring Unit, CDCL and Peldang Hiring Unit had bid for earthmoving works for the Younphula domestic airport.

Of the three CDCL was disqualified for giving and alternate bid and Peldang was disqualified after the MoIC tender committee said the company failed to qualify for almost all criteria.

As a result Sonam Ugyen and Hiring Unit was selected as the lowest evaluated bid at Nu 18.78 mn which was 36.54% higher than the estimated cost of Nu 13.76 mn.

However, the RAA on the review of the Tender evaluation report fund that Sonam Ugyen and Hiring Unit has failed to fulfill several minimum qualifications which should have rendered the company ineligible.

The company failed to fulfill experience in works of similar nature, lacked availability of critical equipment, project manager and site supervisor, did not have adequate credit facilities and lacked bid capacity.

In fact RAA found that the company that was disqualified Peldang Hiring Unit had actually fulfilled many of the criteria which the tender committee had claimed it had not fulfilled. It had experience as a prime contractor of  similar nature, had critical equipment and also had a project manager.

The report says, “It is apparent from the above facts, that there existed flaws and ambiguity in the tender evaluation process which resulted in award of contract to a non-responsive bidder.  The Ministry and the Department may comment on the circumstances leading to incorrect evaluation of bids and award of contract to a technically non-responsive bidder posing the risk of quality and progress of work.”

In another case the RAA found that a lone bidder Kuenleg Construction who was selected for Nu 13.49 mn to carry out site development works was actually not eligible as the bidder had failed to fulfill several requirements.

The report says, “The decisions and action on the part of the Evaluation Committee and Tender Committee were not in line with the provisions of the PRR 2009, Standard Bidding Documents on Procurement of Works and tender terms and conditions.”

The report also says that it not only violated the tender terms and conditions but also posed risk of possibility of technically compromising the quality of such vital infrastructure.

 

Substandard and poor quality works

A joint physical inspection of the runway on 13 September 2012 revealed several defects with the airport. The runway was found to have multiple cracks.

The report said that the occurrence of such defects indicates either poor workmanship due to technical incompetence of the contractor or the materials used were not in conformity with technical specifications.

It also said that the runway not only had cracks, seepage of water and growth of vegetation but also necessitated urgent resurfacing of the pavement to reinstate the operation of the air services.

The RAA report said that rather than spending Nu 8.77 mn in redoing the runway in patches it would have been better to redo the entire runway in a uniform manner to ensure quality works.

The report asks for defects in the runway to be rectified at the cost of the contractor or official responsible for such lapses.

The report also said that the pavement thickness did not meet the designed thickness. The RAA also criticized the fact that the Younphula was the only airport where the CBR test had not been done without which the density of the runway cannot be known.

The RAA also criticized the DCA for accepting a thickness 4.04 mm for the MS angle in the perimeter fencing as opposed to the technical specification of 5 mm.

The RAA also pointed out poor quality cement concrete flooring around the terminal building with undulations, major portions worn out, full of cracks and casting not done as per specifications.

 

Nu 10 mn in additional costs due to irregular bidding process

The MoIC had called for tenders in 2009 for construction of the Domestic Airport and received six bids but had cancelled the tenders on grounds of budgetary constraints and called for a retender later.

The RAA says that this irregular bidding process resulted in additional cost to government of Nu 10 mn. This is because the lowest bidder in the first tender was 10 mn lower than the accepted bid of Kuenleg construction at Nu 34 mn.

The report also says that Nu 4 mn worth of additional works were awarded to Kuenleg construction without proper tendering process.

The report also says that the cancellation of the initial tender was not justifiable particularly when the financial bids of the six bids were lower than the prepared estimates.

It also says the delay of the construction of the airport by nearly one year failed to achieve the objective of reducing the scope of work and ensuring timely completion.

 

Doubtful BOQs and deployment of different equipment than specified

The RAA has also pointed out the use of unauthenticated Bill of Quantities or BOQ (list of construction items and their costs) by the MoIC tender committee for tendering and awarding contract for infrastructure works and demolition of three hills.

The report said that there were many estimates for the same work, none of which were found authenticated and considered final. It says, “RAA could not confirm the authenticity of such vital documents giving scope for possible manipulation and abuses during process of contract implementation.”

RAA said that the estimates for the machine hours for demolition of two hills were in fact provided by the contractor without proper basis, legality and authenticity. “There was thus ad-hoc and lack of transparency thereby impeding decision making and effective implementation of the project,” says the report.

The RAA found that the type or specifications of vehicles like excavators and trippers used at the site were entirely different from those committed in the tender documents. This according to the report should have been treated as a fundamental breach of contract but no action was taken.