Annual audit : Irregularities found in CAA procurements

Rules flouted in award of licences: auditor-general’s report.

ISLAMABAD:

The country’s civil aviation regulator is in a deep administrative and financial mess, as revealed in the audit report for 2010-11 by the Auditor General of Pakistan (AGP), available with The Express Tribune.

The AGP conducted a random audit of 10 per cent of Civil Aviation Authority’s accounts and unearthed irregularities worth billions of rupees under different heads.

The annual audit report, which is to be presented before parliament in next few weeks, revealed that CAA awarded Cargo Throughput Charges (CTC) licences worth Rs2.18 billion in Karachi, Islamabad, Multan and Lahore without calling any tenders, in violation of government rules.

The public procurement rules that govern all government purchases and procurements state that “all procurement opportunities over two million rupees should be advertised on the website of the organisation as well as in other print media or newspapers having wide circulation.”

CCA’s own rules add that all “concession except office accommodation is to be given to the highest bidder through open advertisement for a period not more than three years.”

The CAA awarded a licence to M/s Air Gate International in Karachi for a period of three years from 2004 to 2007 at a rate of Rs18.15 million per month, with a 10 per cent cumulative increase for the 2nd and third year, instead of a 12.5 and 15 per cent increase, as per the standard practice in the aviation industry.

After the expiry of the original contract in 2007, an extension was granted till July 2009, followed by another four-year long extension till July 2013, at a rate of Rs25.9 million per month, with a 15 per cent cumulative increase for the subsequent years.

Extensions granted without open competition after the initial three years were in direct contradiction of CAA’s rules.

According to the estimates of the AGP, this licence agreement as a whole was an irregularity worth Rs2.18 billion and caused CAA direct losses worth Rs671.38 million.

The AGP office pointed out the irregularity to the CAA high-ups in July, September, October and November 2010 repeatedly and was told that “CAA headquarters would clarify the matter.”

On further pressing, the Departmental Account Committee (DAC) of the CAA took up the matter and decided to refer the issue to public accounts committee of parliament.

Another irregularity revealed in the report included awarding of a contract for procurement of 24 Airport Rescue Fire Fighting (ARFF) vehicles to M/s Oshkosh Corporation valuing Rs1.367 billion in September 2009 in contravention of procurement rules.

Repeat order for another 19 ARFF vehicles at a cost of Rs1.24 billion to the same supplier was placed without following tendering rules. When contacted by the AGP, the CAA replied that the “second contract  was awarded to the same company without tendering to ensure similarity of equipment to save costs.”

The DAC of the CAA also concluded that the repeat order was against the procurement rules.

Published in The Express Tribune, May 23^rd, 2011.