Goa PWD Controversial Circular: For Better Quality or For Better Gains?

Public Works Department Minister Churchill Alemao had reinstated a circular which was recommended by the Vigilance Department, Finance Department and Chief Minister to be withdrawn citing the reason ‘better quality in execution of the works’. GoaChronicle.com questions was this circular reinstated in the interest of the people or the interest of the PWD Department and some contractors…

In a letter dated 02/03/2001whenVigilance Department first brought to the notice of the government the apprehension it had of the Circular:

“That the financial propriety demands that the Government’s money should be spent carefully as if a prudent man would spend his own money, and that it was highly illogical to put a floor limit, below which the tender cannot be allowed to go. That is in the interest of the Government to allow open competition among contractors and the cost is brought down to a level as low as possible in the open market situation. That the purported justification given in Circular dated 02/03/2001 that it would help maintain the quality of the work is an assumption too simplistic because the quality maybe compromised even due to negligence or collusion of supervising engineers even when the tenders are quoted much above the estimated cost.”

Then in 2005, Additional Director Vigilance Department Goa vide his letter dated 18/04/2005 informed that the Government of Goa has examined the consequences about this circular and has come to this conclusion that said Circular is illegal and of distortionist nature, inclined towards protecting the interest of Contractors rather than that of the Government, and therefore Government decided to amend (withdraw) the said Circular. Accordingly, this Circular was withdrawn by a Circular dated 07/06/2005

In a letter of the Chief Engineer, AM Wachasundar of the Public Works Department dated 10th August 2007, it states, “Based on a directive of the Government, Circular dated August 12, 2005 was issued directing the rejection of all tenders pertaining to roads, buildings, water supply & sewerage works quoted more than the 20 per cent below the estimated cost put to tender. This is with the intention to achieve proper quality in execution of works.”

The letter further states, during the meeting with the Chief Minister Digambar Kamat, this issue was discussed and it was decided to withdraw this Circular in order to achieve open competition and to avoid probable mal-practice in tendering process. Accordingly, it is proposed to withdraw the Circular.

Goa Finance Department View

It is important to note the Finance Department’s view on the circular. In a letter from the Office of the Joint Secretary (Budget) dated 14/08/2007, the Joint Secretary (Budget), S Shanbhogue was on the following view;

1.Logically the argument of Vigilance appears in order.
2.However, there must be some reasoning behind for not accepting tenders below certain percentage. As per telephonic discussion held with PCE (PWD), it was 25 per cent earlier which was brought down to 20 per cent. However, there is no rational reasoning or any Central Public Works Department (CPWD) manual provision quoted in the Order for the purpose.
3.It is not clear whether the CPWD Manual has any provision for the purpose. If not 20 per cent can it be 25 per cent or 30 per cent? Or is it appropriate to keep it open ended.

When file reached the Finance Minister office, Dayanand Narvekar, he mentions in his note on the file saying, “I leave it to the PWD Minister”

Chief Secretary’s Note on File

“In view of the views of the Finance Department and the Vigilance Department, it is clear that the circular dated 12/08/2005 issued by PCE is not in public interest and in fact may be violative of CVC guidelines. CM has already approved its withdrawal. Please issue order accordingly.

PWD Ministers’ reasons for Reinstating Circular

Churchill Alemao reinstated the controversial circular a few days after he became the State Minister of the Public Works Department, even though Vigilance Department, Finance Department, Chief Secretary and Chief Minister had already issued a withdrawal order 10/08/2007.

Here is are extracts of the NOTE written and signed by the PWD Minister, Churchill Alemao on 24/09/2007, “Vide Circular No. 1-8-05/SSW-PWD/Vol 1/07-08/371 dated 16/08/2007, the earlier Circular dated 12/08/2005 of PCE, PWD prohibiting the acceptance of tenders quoted more than 20 per cent below has been withdrawn. It may be noted that the earlier standing instructions rejecting tenders quoted more than 20 per cent below the amount put to tender were arrived at so as to prevent substandard works in the department on account of works quoted at abysmally below the estimated cost.”

Alemao further states, “It could be argued that restricting the absolutely unworkable tenders could not enforce quality since this aspect has to enforce by the Engineers in charge. However considering the large number of works tendered enforcement of quality becomes that much difficult particularly when on one hand tenders are accepted at rates based on GSR. It could also be argued that having tenders at undefined limits below the estimated cost only with the control of the Engineers would not automatically ensure quality control since contractors are in the business of profit and not loss. Further corrective measures and until they are carried out, would entail costs due to inconvenience and cost of damages to vehicles, etc.

All things considered, it would be prudent to take pre-emptive measures towards quality control by ensuring that the works are taken at workable rates. Therefore, as per the past prudence, tender pertaining to roads, buildings, water supply and sewerage quoted more than 20 per cent below the estimated cost put to tender should be rejected.”

On 12/11/2007 PWD Minister Churchill Alemao makes on note on the file saying, “Since the Finance Minister has left the matter to be decided by the Public Works Department’s Minister, the PCE is instructed to bring into force earlier circular.” Through which the controversial Circular was reinstated to reject competitive bidding and favour contractors.

Questions unanswered

1.Why would the PWD Minister Churchill Alemao reinstate the controversial circular, even though a month before the Government of Goa under the advice of the Vigilance Department had withdrawing the circular as it was not in Public Interest and not in compliance to CPWD guidelines?
2.Under what Rules of Business of the Government of Goa did the PWD Minister bring into force this circular without the consent of the Finance Minister (who states I leave it up to PWD Minister) when the Finance Minister has no delegation powers in this case because as per the Rules of Business delegation of power can only be done by the Chief Minister, so even if the Finance Minister leaves the decision to the PWD Minister, it does not give the PWD Minister the administration or financial authority to enforce the circular?
3.Why did the PWD Minister take upon himself the administration and financial powers which are not bestowed upon him under the Rules of Business?
4.Why have the Finance Department, Chief Secretary and Chief Minister not intervene when the PWD Minister enforced this withdrawn circular once again?
5.How has the PWD Department and PWD Minister ensured better quality of work by restricting competitive bidding; when the wear and tear of PWD works is a open assessment of their failure to ensure quality work?

In a nutshell, best put in an example, if an estimated cost for a PWD work is Rs 1000. Bids in between 800 to 1000 will be accepted according to this circular. If a contractor bid 790 for the work order it is rejected. This done to ensure better quality as per the reasoning of the PWD Minister; Vigilance Department was of the opinion that government and PWD Department can create other quality control mechanisms while keeping the playing field competitive so as to benefit the government, as in this case they felt it benefitted the contractors and it was found that contractors were bidding for tenders at 800 so as to get the contract.

The working of the PWD Department has always been in question. Is this controversial Circular which benefits the contractor the root from which the alleged corruption in the PWD Department and in question the PWD minister stems, only a CBI investigation in the matter will indicate?


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