dna exclusive: Defence ministry exposes Rs25K crore army housing scam

The defence ministry has cancelled 14 contracts awarded to private builders after smelling a scam in the Indian Army’s ambitious Rs25,000 crore housing project for married officers and other ranks. The ministry cited “delay” and “non-performance” as reasons for the cancellation of contracts, and accused the project directorate of “abdicating” its responsibilities and “allowing private players to benefit”.  

In a stinging internal communication to defence secretary RK Mathur recently, minister of state for defence Jitender Singh said: “It is unfortunate that non-performance of private parties is being tolerated and they are being allowed to benefit while armed forces personnel are suffering due to lack of accommodation.”

Responding to DG Married Accommodation Project’s explanation, Singh said: “The reasons cited for delay in cancellation of contracts of defaulting companies are neither convincing nor acceptable.” Singh noted that he found the criterion cited for handling delayed projects as “very lax and unacceptable”.

The project has been in the pipeline for over 11 years now. After the Kargil war, then prime minister Atal Bihari Vajpayee had in his Independence Day speech in 2001 announced “100 per cent housing” for armed forces personnel. A joint study was subsequently carried out by the three services and the project kick-started in May 2002 with the establishment of the Directorate of Married Accommodation Project (MAP). However, to date, MAP has managed to complete only 63 per cent of work despite missing extended deadlines repeatedly.

According to estimates, armed forces have shortage of accommodation for 40-45 per cent of officers and more than 55 per cent in case of non-commissioned officers and those with other ranks, including jawans.

The target was to provide two lakh dwelling units for armed forces officers and lower ranks in a phased manner on a PPP basis through 62 defined projects across the country. A budget of Rs25,000 cr was allocated by the Vajpayee government for the purpose.

While indicting the MAP directorate, Singh’s internal note says the DG MAP “abdicated” its primary responsibility of “proper monitoring and effective handling of the important project”.

The ministry has now suggested that in cases where the date of completion has been missed, 50 per cent physical progress should be a bare minimum requirement limit. Cases which fall short of this yardstick should be considered for cancellation if the contractor does not speed up work. In cases where work is less than 25 per cent complete, the project should be cancelled and the performance guarantee  encashed. At present, there are at least 20 contracts that have not been able to meet this benchmark. “Yes, cancellation of contracts would further delay the project. But a strong message has to be sent out to these private builders, who are making huge profits from the government exchequer,” said an official.