8 depts ignored bidding to favour IT firm: CAG

Eight state departments awarded contracts worth Rs18.47 crore to a private firm without inviting tenders, in contravention of rules pertaining to competitive bidding, apparently after the erstwhile Congress-NCP ruling dispensation made them believe that it was government entity. This glaring anomaly was revealed by the Comptroller and Auditor General (CAG) in its latest report, which was placed in the assembly last week.

The government auditor, which scrutinised the workings of these departments and autonomous bodies associated with them between 2009 and 2014, found that the divisions roped in Pune-based Maharashtra Knowledge Corporation Limited (MKCL) even after it ceased to exist as a state-empanelled service provider in 2006.

The government bodies at fault are the Public Works Department, Directorate of Technical Education, Collector Solapur, Directorate of Medical Education and Research, Deputy Director of School Education (Mumbai region), Maharashtra Labour Welfare Board, Council of Agriculture Education and Research and Pune University.

“Three out of eight government organisations mentioned above were under the impression that MKCL was a government entity," states the CAG report, pointing to lack of transparency in the expenditure of public funds.

The Higher and Technical Education Department had in June 2001 decided to establish and operate MKCL with the objective of promoting IT-enabled education programmes in Maharashtra. However, MKCL was registered – in August 2001 – as a public limited company under the Companies Act, 1956. As of August 2014, the state had a stake of 37.13 in MKCL, states CAG.

As per Companies Act, a company can be termed a state-owned if the government’s holding is 51% or above – the other condition is that its control and management must lie with the government.

In April 2003, the General Administration Department (GAD) included MKCL in its list of government-empanelled service providers, which were eligible for participating in the tendering process for various government contracts till June 2006.

While the GAD didn’t empanel any firm, including MKCL, after June 2006, these eight departments treated it as a state-owned company and kept awarding contracts to it, bypassing the competitive bidding process. CAG found that the departments collectively signed 16 MoUs with MKCL.

MKCL committed big blunders

The audit found that there was gross irregularity in the recruitment process of PWD due to a ‘mistake’ committed by the firm. “Selection of 27 candidates for the post of Engineering Assistant in PWD, Nashik, was to be done on the basis of written and practical examinations followed by interviews, as per GR of October 2007 issued by GAD. However, while publishing the list of eligible candidates for interview, MKCL also declared their marks in written examination, which was otherwise to be kept confidential,” says CAG. Subsequently, PWD recruited the candidates on the basis of written examination, without conducting interviews.

As far as the MoUs are concerned, about 15 didn’t have provision for transfer of software codes and intellectual property rights to the government, contrary to the norms set by the state, observed CAG.

dna had earlier reported about the previous CAG report which had exposed MKCL's under performance at Mumbai University and latter's kindness of full payment.