Construction contract: Rs55m irregularities unearthed at Air University

Published: October 8, 2015


The Air University awarded construction contract to a private firm in violation of rules, says audit report.

The Auditor General of Pakistan (AGP) has found that Air University awarded a construction contract worth Rs55 million to a private company without following tendering rules.

The report for 2014-15 observed that additional work on the avionics and aeronautical engineering department worth Rs59.94 million was awarded by the varsity’s planning and development director to a company called Airrs.

It states that the project was initiated without floating fresh tenders as the work was 108 per cent above the original estimate, while the limit for an acceptable price increase was 15 per cent on a repeat order. It was observed that this resulted in irregular enhancement of the scope of work, which should have otherwise been awarded through open competition. Public Procurement Rules state that all procurement worth over Rs2 million be advertised on the authority’s website as well as print media outlets.

After auditors pointed out the irregularity in August 2014, the varsity replied that the project was split into two phases and awarded to the same company. Hence, the execution of both phases was awarded to the same contractor after a lapse of a year and eight months, and on rates beneficial to the university, the varsity argued.

Auditors termed reply “tenable”, but noted that additional work was awarded without open competition in violation of procurement rules.

“The irregularity occurred due to weak internal controls and inadequate oversight mechanism for enforcing relevant rules and regulations,” the audit report maintained.

The university replied that entries and calculations of work done at the site were made in the interim payment certificates by the consultants with the necessary information. “Measurement Book (MB) in the case was not required as all prescribed requirements of the MB and procurement record are already met,” the university replied.

Auditors have termed this reply unsatisfactory. “As it was a mandatory requirement that detailed measurements are recorded in the MB. Measurement sheets generated through computer cannot be termed MBs,” it maintained.

Similarly, the issue was also discussed in the AGPR Departmental Accounts Committee (DAC) at a meeting on January 5, 2015, wherein the management shared work data and certificates of interim payments to consultants.

The committee was not convinced with the contention and directed that the detailed measurement must be recorded in MBs as a permanent record and should be verified from auditors. The compliance of the committee’s directive was not made till the finalisation of this report with the auditor general.

When contacted, the university replied that construction of the seven-storey university building was planned in 2005 and work was executed in two phases for which two separate funding allocations were made.

The university explained that introducing another contractor during the second phase of work at that stage was neither feasible nor in conformity with engineering practices. “Consequently, the work was awarded to the same contractor at the rates of phase-I (with a 3.74 per cent discount),” they added.

They also replied that after bidding, the contract of phase-II was awarded on the same rates in September 2007 but said nothing about whether the matter was published in newspapers.

“The last reply in this regard was furnished to the auditor in July 2015, which is under consideration at their end,” the university shared.

Published in The Express Tribune, October 8th, 2015.

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