The final RAA report on the construction of Domestic Airports issued on December 2012 has confirmed most of the findings of the earlier draft reports of the RAA with some minor changes.
Though the MoIC gave some explanations the audit has not accepted them and has upheld a majority of its original findings in the final report issued to various senior government officials.
The MoIC has been given till March 31st 2013 to come out with an action taken report to list out the action they have taken on the RAA report or provide further justifications and explanations.
The RAA meanwhile has forwarded a copy of the Report to the Anti Corruption Commission to investigate possible corrupt practices in the project (see story on pg 1).
The airports were constructed using nu 435 mn of scarce RGoB funds excluding the resurfacing works.
The report confirms Nu 121.61 mn in overpayments and Nu 114.88 mn in wasteful expenditures.
The report also covers findings on the Younphula and Bathpalathang airports (see story on pg 1).
A peculiar aspect of the report is that the MoIC minister is involved in several violations that would normally be committed by tender committee members. This is especially because ministerial tender committees do not include ministers.
The report says that the Gelephu and Bathpalathang airports did not meet the required pavement thickness compromising the safety of aircraft and passengers.
The Auditor General in the covering letter of the report says, “The auditors review revealed lapses of serious nature involving improper planning and preparation of estimates, inappropriate evaluation of tenders, inflated claims, acceptance of substandard works, excess payments to contractors etc.”
The report says that many procedures were violated on the pretext of completing the airports on time.
However, it says the neither the objective of rendering the domestic air services operational within the stipulated timeframe was achieved nor was the value for money in the implementation of the project ensured.
The information on the final RAA report was shared with this paper by whistleblowers who want this information to come out in the interest of transparency and accountability.
In the draft RAA report the bulk of the illegal overpayments and wasteful expenditure occurred in the Gelephu Airport. This has been reconfirmed in the final audit report.
Overpayments and unjustified payments
The final RAA report confirmed four instances of overpayments and unjustified payments made to the contractor Tashi Kunzom Construction.
The RAA report confirmed Nu 78.27 mn was overpaid in double payments due to inflation of the quantities of the work done. The work was for providing and laying out ‘Dense Bituminous Macadam’ (DBM) and ‘Asphalt Concrete’ (AC) on the airport surface.
The report also confirmed excess payment of Nu 24.94 mn for earthwork excavation and transportation of soil and rocks in the construction of the airport.
The report also confirmed Nu 23.67 mn in unjustified payment on transportation of spoil material.
The RAA has found Nu 6.96 mn in excess payment for blacktopping of the runway pavement using DBM and AC.
In all the above cases the RAA has asked the MoIC to recover the money within the three month period till March 31st 2013 beyond which a penalty of 24 percent per annum would be levied. The RAA has also asked for the Ministry to investigate possible collusion in all the above cases.
For the above cases, the direct accountability is on deputy executive engineer Gyem Dorji and supervisory accountability on Phala Dorji.
The report says that it may be advisable to not to ply any flights until the runway is brought to acceptable practices.
A financial impact of Nu 64.54 mn
The RAA report points out that failure of the Ministerial Level Tender Committee and in particular the Evaluation Committee which failed to evaluate the tenders with due diligence resulted in a loss of Nu 64.54 mn.
This was after the RAA found that the BOQ rate of the contractor Tashi Kunzom Construction was much higher than the BSR 2009 rates of the government.
The report says considering the huge adverse financial impact on the cost of the project, it is imperative for the ministry to go thoroughly review the circumstances leading to inappropriate stipulation of technical specifications in the BoQs.
The report has laid the direct and supervisory accountability on the Ministerial level tender committee.
Conflict of Interest
The RAA report has held the MoIC Minister directly accountable for possible existence of conflict of interest in the contract. The minister was held accountable for insisting on going ahead with the construction process in the absence of surveyors with the result that the contractor did the Topographical survey.
The RAA has said that conflict of interest cannot be ruled out when the contractor was asked to do the Topographical survey which should have done by the Department and later execute works based on it.
The topographical survey is a fundamental exercise for not only facilitating preparation of designs, drawings, estimates, BOQs but also forecasting realistic amount of earthwork excavation.
“There was no monitoring and overseeing mechanism put in place to validate the correctness of the topographic survey report,” says the Report.
“Further, non quantification of earthworks even after the conduct of topographic survey has lead to a huge deviation in the quantity of earthwork excavation between the estimated quantity of 28,635.00 m3 and actual executed and paid quantity of 581,885.040m3 representing +1932% deviations from the estimates,” says the Report.
Relocation of original site and flood prone airport
RAA in its survey found that ignoring the consultant’s information around 500 meters of the original site of the airport had been excavated before it was relocated. This has resulted in wasteful expenditure of Nu 4.21 mn in earthworks. The RAA has asked for more details on the work done on the first site to gauge the actual wasteful expenditures.
The RAA also pointed out that not following the consultants advice that had been paid Nu 5.6 made the expenditure worthless.
The relocation of the airport had also increased the distance between the building runway and the airport terminal from 246 meters to 374 meters.
The consultants, following a thorough study on flooding risks of the airports recommended that the runway elevation should be at least 322 meters at its lowest point. However, the lowest centerline was only 266.524 meters above sea level. The RAA report says that this could be one of the plausible reasons as why the Gelephu airport was threatened with flooding during the construction phase in last monsoon.
Here too the MoIC Minister was held directly accountable as the above had happened under his instructions.
Ambiguity in planning, estimations and implementation
The RAA noted that the estimates for the contract package especially for the earthwork excavation and construction of runway were not prepared as per the required construction norms. The DCA had not conducted any preliminary studies such as hydrological, geotechnical and geodetic data as these are the basic and critical information for execution of such vital construction work.
As a result the RAA found huge deviations in earthworks going up to 1,932 percent which it said was due to flaws and ambiguities in earthwork quantification but also unrealistic preparation on BOQs. The RAA says this all adversely impacted the project cost.
The MoIC in its reply said, “the honorable minister although appreciated the concern brought out, the need for conducting such studies was not felt as an urgent issue since flooding at Gelephu was not seen in the past years and to mitigate vulnerability against flooding river channelizing was agreed upon”
The RAA says the non-conducting of such surveys impeded the economy, efficiency and effectiveness in the project implementation and impeded value for money.
The RAA placed direct and supervisory accountability on the MoIC Minister.
Intransparency in the tendering process.
The DCA despite repeated requests failed to provide bid evaluation results to the RAA. The information provided by DCA could not be verified as the re-tendered documents of the three contractors were not made available on record except the Standard Bidding Document (SBD) of M/s Tashi Kunzom Construction.
The RAA has, however said, awarding the contract to Tashi Kunzom Construction whose bid was higher compared to Bhutan Engineering Company lacked transparency and fairness. It said existence of possible conflict of interest and corrupt practices could not be ruled out.
The direct accountability was placed on Gyem Dorji
Nu 34.27 mn defective fence
The RAA found that despite a Nu 34.27 mn fencing the Gelephu Airport still remains unsafe as the fencing has been damaged and washed away in parts the river and season stream. The fencing was also not constructed along the national highway at all due to insufficient budget.
The DCA has agreed to repair the fencing works and also deduct excess payments of Nu 49,858.
RAA’s final report confirms
Nu 121.61 mn in illegal overpayments
Nu 114.88 mn in wasteful expenditure
Compromised safety of airports
Acceptance of substandard works
Ineligible bidders chosen and eligible one disqualified
Possible collusion and corrupt practices
Conflict of Interest
Nu 435 mn for construction of three airports
Intransparency and adhoc decisions
Tender rules violated