The government awarded a contract of over Rs20 billion to a blacklisted firm for a project at a new airport in Islamabad, according to an audit report (2011-12), which also found irregularities worth billions of rupees in Civil Aviation Authority accounts.
The CAA pre-qualified and awarded the contract for the construction of a passenger terminal building superstructure at the Benazir Bhutto International Airport (BBIA) to a joint-venture (JV) contractor on April 20, 2011 at a cost of Rs20,286 million.
The audit report, available with The Express Tribune, revealed that the multi-billion-rupee project awarded to JV, including all associated utilities and E/M works (Package-Hi), falls within the scope of “mis-procurement” as the CAA failed to observe rules and regulations. Therefore, the related multi-billion-rupee expenditures are unauthorised and irregular.
One of the constituting firms of the JV was blacklisted by the World Bank on charges of fraud and corruption, the auditors revealed, adding that, therefore, the company was disqualified to work all over the world on World Bank-funded projects. Consequently the award of the work at the BBIA was against the mandatory criteria as spelled out by the Public Procurement Regulatory Authority (PPRA), the auditors observed.
According to the PPRA standard bidding documents, the supplier should not be convicted of any criminal offence related to professional conduct, corruption or the making of false statements or mis-representation as to its qualification to enter into a procurement contract within a period of three years preceding the commencement of the procurement proceedings.
The auditors had communicated the observation to the CAA in November, 2011, to which the authority replied that the work was awarded to a joint venture and not to a blacklisted firm. However, the auditors rejected the reply since the blacklisting of a firm by World Bank renders the entire JV an ineligible entity. The mandatory eligibility criteria also apply to the supplier, any joint venture partners and any sub-contractors, they argued.
The auditors also noted that the issue was discussed in the Departmental Account Committee (DAC) of the CAA meeting on January 2-3, 2011. The committee upheld the audit observations and stated that the case may be presented before CAA Board for a decision and to furnish a revised reply.
The DAC had also directed the CAA to approach the Pakistan Engineering Council to determine an operational status of a company blacklisted by World Bank on fraud and corruption charges in Pakistan.
However, compliance to the DAC’s directives was not conveyed to the auditors till the finalisation of the audit report. Therefore, in its report, the Auditor General of Pakistan recommended implementation of the directives of the DAC.
Published in The Express Tribune, July 20th, 2012.