CAG's CWG Audit Report - Chapter - 27 (2011)

8/6/2019 CAG's CWG Audit Report - Chapter - 27 (2011)

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c : : :wl-e..::I:uOrganisation of CommonwealthYouth Games - 2008, Pune

The Commonwealth Youth Games 200B (CYG-200B)1a sub-event of CWG-20101 was heldin Pune between 12and lB October 200B. Events were conducted in 9sporting disciplines,and 1673 athletes and officials attended. CYG-200B was held at the existing ShivChhatrapati Sports Complex Balewadi- Mhalungel Pune. which was refurbished andupgraded for the event. Two new hostels and a three-star hotel were constructed toaccommodate the participants.We found serious deficiencies with regard to the construction of the 3-star hotel on PPPbasis. The plot for the hotel was located in a public-semi-public land use zone, andcommercial use was not permitted. The proposal for change of land use to commercial,along with permission for higher building height than permitted, was moved to theGovernment of Maharashtra (GoM) on the grounds of urgency/ late staqe, work alreadyhaving commenced on the qround, and lack of other alternatives. This was approved bythe then Chief Minister in October 2007. The Review Committee, headed by the ChiefSecretary I abdicated its responsibility in this regard.Further; the tendering process for the hotel was severely flawed: The proposed PPP model was not submitted for examination by the existing

Infrastructure Committee and Finance Department and was introduced withoutappropriate vetting.

Tender conditions were relaxed substantially in various staqes, purportedly ongrounds of lack of response. In our opinion, such ambiguities in the bidding processwould have acted as a deterrent for bidders, which is confirmed by the dwindlinginterest of potential bidders from the first pre-bid meeting to the second pre-bidmeeting.

The issue of change of land use was not raised at all. It is possible that only bidderswho were confident of getting post facto clearance from the GoM would have goneahead with the bidding process.

The contract was finally awarded on a single financial bid to Unity Infra Projects withan NPVfar below that recommended by the Finance Department.

Further; the developer paid only the first instalment of annual premium (due in November200B) infulll and no penal action has been taken against it.CYG-200BIPune was expected to be a learning experience for the staging of CWG- 2010 atDelhi. The deficiencies noticed at Pune, and the resulting recommendations were

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Chapter 27 - Organisation of Commonwealth Youth Games - 2008, Pune

intended to ensure that these were not repeated in CWG-2010. WeI however; noticed thatDC lost this opportunity to learn and test its preparedness for Delhi 20101 andconsequently repeated its mistakes in key functional areas during CWG20101 notablytechnoloqy, ticketinq, sponsorship and merchandisinq, press operations, catering andaccommodation.We also found several deficiencies in the procurement of electronic, sports and otherequipment for CYG-200BI in particular single tendering and other tenderingirregularities. Most of the security equipment indented for CYG-200BI Pune was eitherordered after the Games, or received after the Games. Further; most of the cityinfrastructure projects (taken up largely under JNNURM) could not be completed in timefor the Games.

Shiv Chhatrapati Sports Complex, Balewadi - Mhalunge, Pune

27.1 IntroductionThe 3rd Commonwealth Youth Games 2008(CYG-2008), a sub-event of CWG-2010, washeld in Pune between 12 and 18 October2008. Events were conducted in 9 sportingdisciplines, and 1673 athletes and officialsattended. CYG-2008 was held at the existingShiv Chhatrapati Sports Complex Balewadi-Mhalunge, Pune which was refurbished andupgraded for the event. Two new hostels

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and a three-star hotel were constructed,and the existing three hostels renovatedand refurbished to accommodate theparticipants. Construction and upgradationof new and existing city - infrastructure inPune and adjoining areas was undertakento provide connectivity with the sportscomplex and also for better trafficmanagement. Security arrangements forCYG-2008 were made by the Commissionerof Police (CP), Pune.

27.2 Governance and OversightStructureThe governance and oversight structure forCYG-2008, Pune are summarised below:

Table27.1 - Governance and Oversight Structure jar eYG-200BArrangement Brief Details

ExecutiveCommittee {EC}

The ECwas constituted by the Government of Maharashtra (GoM) in May2006. It was headed by the Divisional Commissioner, Pune. Itsresponsibilities included: Planning and development of infrastructure at the Shiv Chhatrapati

Sports Complex, Pune; Administrative and technical planning of CYG-2008; Tendering and award of all projects; and Day-to-day decisions relating to the above activities

Review Committee This committee, which was constituted in June 2006 and was headed by theChief Secretary, was to oversee the status of works at the Government level.

Apex Committee This committee was chaired by the Chief Minister (CM) and included theDeputy CM, Ministers of School Education and Sports and Water Resources,Guardian Minister, Pune, Finance and Planning Deputy Commissioner and allMLAs/MPs of Pune and Pune-Chinchwada cities.

Department ofSports and YouthServices, Pune(DSYS)

This was the nodal agency for organising CYG-2008, Pune

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27.3 Budget and FundingPattern

The funding for staging of CYG-2008 camefrom the Gol, GoM, and the municipal

bodies of Pune - Pune MunicipalCorporation (PMC) and Pimpri ChinchwadMunicipal Corporation (PCMC), assummarised below:

Table 27.2 - Budget and funding for eYG-200B (In Rs. Crare)Particulars Budget Implementedmount of Expenditureallocation by whom funds incurred asofreleased December 2010Venue and 425.50 DSYS Gal 210.00 424.77equipment GaM 215.50

City 434.22 Commissioner, Gal 162.83 162.83Infrastructure PMC GaM 64.73 64.73

PMC 97.70 *112.25312.14 Commissioner, Gal 156.07 156.07

17.64 PCMC GaM 62.43 62.43PCMC 93.64 *178.38

Security Aspects 1189.50 CP,Pune GaM 17.64 9.40

Total 1080.54 1170.86* Also includes expenditure incurred by PMC & PCMCfrom own funds.

27.4 Venue Development27.4.1 Overview of venue up-gradation

Renovated Athletic Stadium

For CYG-2008, existing facilities at ShivChhatrapati Sports Complex, Pune were up-graded/ refurbished at a cost of Rs. 106.58crare; this included re-furbishing/ relayingof athletics stadium, centre tennis court,table tennis hall, swimming pool, and hostelbuildings and conversion of the oldwrestling hall into a boxing hall. Further,new facilities for shooting and badminton,and a weapons store, sports science centreand fitness centre were created at a totalcost of Rs. 102.06 crare.

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Chapter 27 - Organisation of Commonwealth Youth Games- 2008, Pune

Refurbished boxing hall

27.4.2 Hiring of ConsultantShashi Prabhu and Associates, Mumbai(SPA)was engaged as the ProjectManagement Consultant (PMC) in August2006 at a consultancy cost of 3.5 per cent ofthe estimated cost of works (pegged at Rs.192.50 crore), excluding payments madetowards price escalation, mobilisationadvance and machinery advance. We foundthat SPAwas irregularly paid total fees ofRs. 11.28 crore (upto October 2009), againstthe entitled amount of Rs.6.74 crore. Theexcess consultancy payment of Rs.4.54crore was on account of consultancy fees onprice escalation, equipment procured, andworks executed beyond the contract value,which were not provided for in theconsultancy contract.27.4.3 Main work - renovation and

construction of sports facilities27.4.3.1 Award of workBGShirke Construction Technologies PrivateLtd, Pune, was the L-1 bidderfor the mainwork at a quoted price of Rs. 263.44 crore.

Since this amount was 50.49 per cent overthe estimated price, the evaluationcommittee recommended exclusion of ninespecialized items for Rs. 83.21 crore fromthe scope of work of the main contractorand executing them through specialisedagencies. After negotiations, a work orderwas issued in February 2007 to BG ShirkeConstruction Technology Pvt. Ltd forRs.191.74 crore for a revised scope of work,after adding back five specialised items at23 percent discount for three items forcompletion by May 2008. In addition, workscosting Rs.31.15 crore were awarded bythe ECdirectly in December 2007 to BGShirke at the original tendered BOQ rateswithout bidding.

In our opinion, the changes in scope ofwork during post bid and award ofadditional work without bidding wasirregular. DSYS'contention of urgencyand availability of resources with themain contractor is not tenable, as BGShirke stated award of the additionalwork as one of the reasons for seekingextension of time.

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27.4.3.2 Payments to the main contractorWe found the following deficiencies inpayments to the main contractor TDSof Rs6.36 crore for VATand Rs.0.13

crore for Income Tax was not deducted/short deducted

Payment of Rs.20.59 crore for pricevariation in cement and steel fordifference between the approvedpurchase rates and basic rates (i.e ratesprevailing 28 days before the last datefor tender receipt) was made byadopting basic rates of Rs.4200/ MT(cement), Rs. 30,OOO/MT (tor steel) andRs. 31,OOO/MT (structural steel).However, these payments were withoutverifying the basic rates; justification forthese basic rates rates was not providedto us by DSYS.

27.4.4 Quality of ConstructionWe found the quality of works executed inthe sports complex to be prima faciesatisfactory, except in the case ofbadminton hall and tennis halls. Problemslike cracks, damages, false ceiling joints andleakages were identified in the badmintonhall and reported in January 2009 as havingbeen corrected. During our joint inspectionwith DSYSin December 2010, we found thatthe cracks were prepared over by chemicalsolution.During heavy rains in July/August 2010,there was water leakage in the badmintonand table tennis halls flooding the woodenflooring. DSYSstated that these were minorleakages, which were rectified by theroofing contractor, and did not damage theflooring. It further claimed that thecontractor had replaced a portion of thetable tennis hall flooring, but the quality ofthe work was not satisfactory.

Bandminton hall with cracks on the wall



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27.4.5 LandscapingLandscaping work was partly awarded tothe main contractor for Rs0.85 crore andthe major portion of the landscaping workwas awarded in March 2008 at a cost of Rs7.50 crore to Indage DevelopmentConstruction Pvt. Ltd. Murnbai'. We foundirregularities and deficiencies in award andexecution of the contract: The tender notice was issued only in

Sakal, a local Pune newspaper, giving anotice of only a little over two weeks;

The contract was tendered twice. ECirregularly clubbed bids received at bothstages. The contract was finally awardedto indage Development Consultant Pvt.Ltd., a bidder for the first tender,although it had not submitted a bid inthe second round.

There was no clear demarcation oflandscaping work/area between themain contractor and the landscapingcontractor;

A detailed completion certificate fromthe landscaping consultant could not beproduced to us;

The stipulated defect liability period(DLP) of five years was irregularlyreduced to one year. At the time ofhanding over of the project, DSYSobserved that the grass had dried andplants withered away at many sites.

We found the landscape in a state ofneglect and the benefits of the effortlargely lost (just two years after CYG-2008), as no agency had been engaged tomaintain the landscaped site.

Position of landscaped areas in front of the Swimming Pool Complex in December 2010

Who was also awarded additional landscaping and other miscellaneous works of Rs. 0.61 crare on nomination basis.



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27.4.6 Ancillary worksWe found that two ancillary works forconstructing a smoke and gunshot arrestorin the trap and skeet stadium, and designingand provision of signages and waste bins forRs. 1.09 crore were irregularly awarded toWhite Crow, Pune (who was in the businessof catering, event management, andhospitality services). Both works wereawarded on the basis of tender noticespublished only in Sakal with short noticeperiods of 10 days.

27.5 Construction of a threestar hotel on BOT basis foraccommodating CYGparticipants

27.5.1 OverviewAs per GC's requirement, accommodationwas to be arranged for 1700athletes/officials for 15 days in a GamesVillage' for CYG-2008. Since the existingthree hostels in the sports complex couldaccommodate only 500 participants, ECdecided, in July 2006, to build a 600 roomhostel (1200 beds), later to be convertedinto a three star hotel for commercial use,on BOT basis. Eventually, a three star hotelwith 400 rooms was built by Unity Infraproject Ltd. Mumbai. The chronology ofevents is given below:

Table27.3 - Chronology oj Eventsjar award oj hotel contract on BOTbasisDate Event

17 July 2006 ECdecided to go in for the construction of hostel to be converted into athree star hotel after CYG-2008on BOTbasis.

14 October 2006 NIT issuedinviting bids for a three star hotel on BOTbasis;tenderdocuments to be sold from 26October 2006; Lastdate of submission of bid28 November 2006.

November-December 2006

2 pre-bid meetings held on 1 November", 11 November 20064;Conditions in tender documents relaxed progressively by ECbasedondiscussionsin pre-bid meetings and ECdiscussions;andLastdate of submission of bid documents extended repeatedly due to non-receipt of bids. Lastextension given till 22 December 2006.

22 December 2006 Four bids received; technical bids opened.

In the international parlance, it implies that all athletes should stay at the same complex. It also facilitates securityarrangements.Participants at 1st pre-bid meeting: B.G. Shirke & Associates, S .D.Dabade , DLF ltd. Pune, Ashok Murkute, Ganpat MhatuBalwadkar, Ranee Group of Hotels, Pune, White Crow facilities, Hari Om Estates Pvt. L id. , Panchsheel Hotel Pune,Hiranandani Group, Mahindra Holidays, Nilesh Kakade Group, Pride Group Pune, Nilesh Group Pune and Hotel SawanGarden Lodging and Boarding.Participants at 2nd pre-bid meeting: B.G. Shirke & Associates, S .D. Dabade, Ranee Group of Hotels, Hiranandani Group,Nilesh Group



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Date

Matter was referred to GOM.

Event26 December2006

On the recommendation of the technical bid evaluation committee; only onefinancial bid opened; the other three bidders found "non-responsive" andfinancial bids were not opened.

8 February 2007 Contract awarded; and work commenced.12 April 2007 City Engineer, PMC refused permission for project.7 May 200715 October 2007/ Change of land use allowed by GoM under clause 58 of Maharashtra1 November 2007 Regional Town Planning Act, 1966 (MRTP Act).29 September 2008 Part completion certificate given by PMC.

27.5.2 Change of Land Use andrelaxation of building norm

The land on which the 3 star Hotel wasproposed to be built was located in public-semi public (PSP)zone, as per the publisheddraft extended plan of PMC limits. On suchland, apart from sporting facilities, onlyschools, colleges and universities and otherpublic purposes like markets, social welfare/cultural organisations, cinema halls, andpublic entertainment buildings could bebuilt. The land could not be used toconstruct a commercial hotel.EC,in total disregard of the usagelimitations attached to the plot, decided topermit construction of a 3 star hotel on afive acre plot" with FSI(Floor Space Index)of 2, along with permission to constructshopping malls, IT tower, office space etc onthe built up area left after building 300rooms. The issue of change of land use andviolation of the applicable building lawscame up only in April 2007 (after the

Increased to six acres post-bid, on the plea that thenumber of rooms had been increased to 400.

contract had been awarded and workcommenced on the site) when theMunicipal Engineer, PMC rejected theproposed building plan, since a hotel couldnot be constructed in a public-semi publiczone and also because the height of theproposed structure (shown as 39.5 metresin the proposed building plan) was morethan the 30 metres allowed under the PMCDevelopment Control Rules", Moreover, theproposed/advertised FSIof 2 also exceededthe permissible FSIof 1. Thereafter, theissue was referred to the Department ofUrban Development, GoM (May 2007), bythe DSYSand despite acknowledging thatcommercial exploitation on the plot was notpermissible under the existing zonalrestrictions, a case for change was made onthe grounds that work had already commenced on the

ground; lack of any alternative; and

Published draft development control rules of extendedplan of PMC limits



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as per the original GovernmentResolution, one third of the entire plotof 152 acres allotted for developing thesports complex could be used forcommercial purposes.

The change in land use for 6.1 acres wasapproved by the then Chief Minister,Maharashtra in October 2007 under clause58 of the Maharashtra Regional and TownPlanning Act, 1966We noted that there was negligence andoversight at all stages and levels, whichpermitted a prime piece of Governmentland designated for public purposes to behanded over to private agencies forcommercial exploitation of 60 years andthat too without commensuratecompensation accruing to the publicexchequer. This is evidenced by thefollowing series of events:

The Review Committee (headed by theCSand with Additional CSHome andFinance, Principal Secretaries Planning,Revenue and Urban Development, andPublic Health and Chief Architect,Mumbai as members and SecretarySchool Education and Sports as MemberSecretary), were apprised of theintended BOT project (a PPPmodel) inSeptember 2006, but chose not toquestion the attendant land use issues.They also did not suggest referring thematter to the existing InfrastructureCommittee (to which all Maharashtra

PWD proposals to build infrastructurewere to be mandatorily referred) or theFinance Department, but left it to the ECand the DC, Pune to pursue the project,subject to the condition that theownership of the land remains with theGoM. Hence, the proposed PPPmodelremained unexamined, and wasintroduced without appropriate vetting.

Clearly, the Review Committee chose toabdicate its responsibility with regard tothis project.

The Commissioner, PMC, a member ofthe EC,which frequently discussed theproposal in his presence, failed to bringto the notice of the members therestrictions on the land use of theidentified plot and the limitations on FSIand height of construction as per theapplicable building laws.

The Department of Urban Development,despite acknowledging that therejection was valid as per the PMC rulesand permission for exploiting one-thirdof the total area of the sports complexfor commercial purpose could beallowed only if the Development ControlRules permitted (which, in the instantcase, did not) recommended change ofland use on the grounds of noalternative, late stage, urgency andcommitments to 10AjCGF.

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Figure 27.1 - Map oj Shiv Chhatrapati Sports Complex showingthe location oj the proposed BOThotel

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It is pertinent to mention here that the ShivChatrapati Sports Complex falls largelyunder Mhalunge village, with a portionwithin PMC limits (refer map). The plotproposed for the hotel was a prime piece ofland (corner plot), located on the Mumbai -Pune - Bangalore Highway falling withinPMC limits. Permitting its commercialexploitation by a private agency, withoutadequate compensation to publicexchequer begs explanations at all levels.27.5.3 Choice of constructing a 3 star

hotel over residentialaccommodation to be disposedoff later

For the Asian Games 1982 and also CWG-2010, Gol had opted for constructingresidential units (either directly- AsianGames 1982 or through PPPmodel- CWG-

2010) to accommodate participants for theduration of the event and to besubsequently sold to recover costs.Contrarily, ECchose to construct a 3 starhotel on BOT basis, without the matterbeing referred to the PPPcell for its opinionor input on the suitability of the model, thealternatives, and structuring of thearrangement to safeguard public interest.

In our opinion, construction of dwellingunits and their subsequent sale in adeveloping city like Pune, with CYG-2008 linked infrastructure improvementin the vicinity, on 9.6 acres of publicland (6.1 acres for hotel plus 3.5 acresfor parking), would have been for thelarger public good.



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27.5.4 Gradual relaxation of tenderconditions

The NIT was advertised on 14 October 2006,with the tender document to be madeavailable from 26 October 2006. At thisstage, the tender conditions had not beenfrozen, and the exact location of the plot onwhich the hotel was planned was notdecided. The tender conditions wereprogressively relaxed at various stages, assummarised below:

EC based its proposal on a Feasibility Reportprepared by the consultant (Shashi Prabhuand Associates). The proposal and thetender documents were not vetted byFinance Department of GoM or thespecialised Infrastructure Committee of theGoM. The EC followed a very ad hocapproach in tendering and award of thiscontract.

Table27.4 - Summary oj progressive relaxation oj tender conditionsIdentification The proposed site for hotel was not indicated in the NIT published on 14of plot October 2006. The process of plot identification and measurement of land

area started on 1 November 2006.Area Increased from the initial 5 Acres to 6 Acres in EC'smeeting dated 4

December 2006; however, in the additional common set of deviations dated11 December 2006, it was retained at 5 acres.); Finally, 6.1 acres wereallocated.

Parking 2 acres - introduced in ECmeeting of 4 December 2006. Finally, 3.5 acreswas allotted for parking and gardening at a nominal rent of Rs 1/- per squaremetre per year.

Three Star norm for Reduced to one star norm in the ECmeeting of 4 December 2006rooms changed toone star normUpfront fee to NIT of 14 October 2006 indicated annual payments; Upfront fee introducedannual lease in 6 November 2006 ECmeeting; but only retained as annual payment in the

set of deviations to tender documents issued after the two pre-bid meetings.600 rooms to The requirement of 600 rooms was reduced to 300 rooms (600 beds) in the300 rooms ECmeeting held on 4 December 2006.Period as per Initially, the period of concession was to be the bidding criterion with fixedthe bid criteria to annual payments; It was subsequently changed to a fixed concession perioda 60 years of 30 years, finally increased to 60 years in the ECmeeting of 4 Decemberconcession 2006 from 30 years mentioned in the initial tender document. The annual

premium for leasing became the biddable criterion.PQ experience of This PQ criterion was removed, based on the pre-bid meeting of 11construction of a November 2006.three star hotel

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Such frequent and significant variations inthe tender conditions, though justified bythe ECon grounds of lack of response to theNIT, are indicative of ambiguity that markedthe bidding process, and would naturally actas deterrent to bidders. The dwindlinginterest of the bidders is evident from thefact that in the first pre-bid meeting, 15 agencies

(including several prominent players inthe construction/hospitality industry)participated; and

in the second pre-bid meeting, only 5 ofthe original 15 were present.

It is interesting to note that of the four thatfinally bid, only DLF Ltd had attended thepre-bid meetings, and the remaining three(including Unity Infra Projects Pvt. ttd.},whose financial bid was the only bid to beopened and contract awarded, neverparticipated in any of the pre-bid meeting.Further, it is strange that such experiencedagencies in the construction sector neverraised the critical issue of change of landuse', since it would be a critical parameterto decide whether to bid or not. It ispossible that lack of clarity on thisimportant issue deterred potential bidders,and only bidders who were confident ofgetting post facto clearance from the GoM,would have gone ahead with the biddingprocess.27.5.5 Post bid negotiations and award

of contractAfter numerous extensions, finally fourresponses" were received to the NIT on 22

or so it would appear from documents pertaining to ECmeetingsApproach Land Developers-BVG Joint venture, DLF Ltd,Pranav Infra Private Ltd and Unity Infra Projects Ltd

December 2006. The technical evaluationcommittee (comprising of six members ofwhom only two signed the report)disqualified three" bids on 26 December2006 citing that these were non-responsive.The financial bid of the only qualifiedbidder, Unity Infra Projects Pvt. Ltd, wasopened on 26 December 2006.The bidder quoted a fixed annual premiumof Rs. 2.16 crore per annum for 60 yearsfrom 2008-09. Negotiations were held on 30December 2006, which resulted inallotment of 6.1 acres of land against theoriginally envisaged 5 acres (toaccommodate the increased demand for400 rooms to accommodate three beds i.e.1200 beds at one location) and the annualconcession fee revised to Rs. 1.57 crore perannum with a 5 per cent increase every 3years.

In our opinion, opening of a singlefinancial bid essentially means that theprinciple of competitive pricing iscompromised. This is confirmed by thefact that the Finance Department, GoM(to which the case was referred by theeM's office, after the contract had beenconcluded) also noted that while theNPV of the original offer was Rs. 21.56crore, the NPV of the revised offer wasonly Rs. 14.97 crore. It assessed thevalue of 6 acres of land with 2 FSIat Rs.48 crore (considering the conservativeresidential rate of Rs. 10,000 per m')and the value of 8,000 rn' of land forparking at Rs. 3 crore. It recommendedthat a fair NPV for the said piece of land

Approach Land Developers-BVG Joint venture, DLF Ltdand Pranav Infra Private Ltd;



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would be Rs. 40 crore. Subsequently, ECrenegotiated with the concessionaireand secured an enhanced fixedpremium of Rs2.60 crore per annum for60 years in August 2007 (NPV Rs. 25.87crore) and reported to the GoM that itwas notpossible to go any further. There was nofurther communication from GoM inthis regard. This delayed intervention ofFinance Department, only confirms ouropinion that at the initial stage itself,when it was brought to notice of theReview Committee, the matter shouldhave been looked into by the concerneddepartment of the GoM. No penal action was, however, taken byDSYSin this regard.

27.5.6 Defaults in payment of premiumWe also noted defaults and delays inpayment of annual premium by theconcessionaire, right from the first premiumdue on 1 November 2008, as given below

Table27.5 - Position ojpremum payment

Due date Actual1 November 2008 25 May 2009

(delay of 205 days)1 November 2009 Only Rs. 50 lakh paid on

19 January 20111 November 2010 Not paid

Pictures of Vits hotel constructed on BOT at the Sports Complex Balewadi, Pune

Photographs of the hotel indicate that thefacility constructed is primarily oriented as asuperior class hotel, rather than merely afunctional hostel of international standardfor accommodating athletes. While it is wellappreciated that suitable accommodationhad to be provided to the participants ofCYG2008, evidently, under the guise ofhosting the athletes and officials of CYG

2008, a hotel was allowed to be constructedthrough change of land use with a minimalpremium accruing to Government. If indeedthe intent was to convert public/ semi-public land for commercial use, GoM choseto ignore an opportunity for unlocking thefull market value of such land in a primelocation.



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27.6 Lessonsfrom CYG-200S,Pune for CWG-2010

deficiencies and gave severalrecommendations so that these were notrepeated in CWG-2010. We, however,noticed that OC lost this opportunity tolearn and test its preparedness for Delhi2010, and consequently repeated itsmistakes in key functional areas duringCWG2010, as summarised below:

CYG-2008, Pune was expected to be alearning experience for staging of Gamesfor the conduct of CWG 2010. OC'sconsultant, EKS-E&Y, in their Post GamesReport for CYG Pune noted several

Table27.6 - Experience of different functional areas at CY-2008JPune and CWG-2010Area offunctioning/activity

Technology

Experience inCYGPune 2008

Experience inCWG Delhi 2010

The Post Games Report of CYGPunenoted that the technology underdelivered in many areas as therequired infrastructure andequipment were not operational intime and were not reliable.Communications were poor, andthere was lack of integration betweenvarious aspects of Timing, Scoringand Results systems.Internet availability in the GamesOperation Centre was poor initially.Internet around the centre wasregularly unavailable.

During CWG-201O, we found delaysand lack of planning for technologysolutions.The planning for acquiring TSRinfrastructure was delayed resultingin lower competition, additional costsand integration issues. Just 10 daysbefore the start of the games, thegraphics were not published by theTSRvendor.The Commentary Information Systemand Games Information systemmalfunctioned during CWG. (ReferChapter 12)

Ticketing There was lack of visibility of ticketing The recommendation for CWG-201O,strategy in terms of objectives,process, distribution and pricing.There was lack of availability ofinformation for confirmed venuecapacities to be used for ticketing.The process for sale and distributionof tickets was confusing, as the ticketoffice at Balewadi was notoperational and active till thebeginning of the games.Consequently, there were very fewspectators on the first few days.During CYG-2008, OC received

based on the performance duringCYG-2008, Pune, was to determinethe ticketing strategy to ensuremaximum sales and capacity crowdsand to provide easy systems forpurchase and collection of tickets.During CWG Delhi OC again failed toachieve the objectives of ticketingdue to delay in preparing ticketingstrategy, appointment of ticketingagency and finalization of actual seatinventory (Refer Para 8.9).



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Area of Experience in Experience infunctioning/activity CYGPune 2008 CWG Delhi 2010

Rs. 97.40 lakh through sale of tickets,although it had printed tickets of salevalue Rs. 3.10 crore.

Catering There was lack of clarity on levels of During CWG-2010 also, there wasservice for various constituent groups again lack of clarity on the level ofand this affected the quality of food. service for various constituent groups.This was alleviated by providing OC revised the RFPand wasted onepacked meals, which was found to be whole year, before once again optinga good option for providing food for packed food for the workforce,service to workforce and volunteers. volunteers etc. (Refer Para 11.5.3)

Sponsorship OC had signed an agreement with SMAM was also the sponsorshipSMAM for CYG-2008, Pune. In this consultant for CWG-2010. However,contract, the targeted sponsorship despite the poor performance ofwas not defined. Finally OC collected SMAM at Pune, OCfailed toabout Rs. 20 crore only, most of acknowledge this danger signal.which came from PSUsand OC made Once again, very meager sponsorshipcommission payments of Rs. 3.37 was generated, two-thirds of whichcrore to SMAM (Refer Para 8.4.3.1) was from Government/ PSUs.

(Refer para 8.4)

Merchandising There was no strategy to generate In CWG 2010, the target for revenuerevenue from merchandizing for CYG- generation through licensing and2008, Pune. OC had not fixed any merchandising was Rs 50 crore.revenue target from merchandising However, no revenue has beenfor CWYG, Pune. OC incurred received. (Refer Para 8.2.2 & 8.5)expenditure of Rs. 2.29 crore forexpenses on merchandizing activities,against which it could generaterevenue of just Rs. 2.03 crore fromsale of merchandizing items.

Press During CYG-2008, Pune, the facilities During CWG-201O, international andOperations provided to the media persons such national media people were not able

as media tribunes were not found to access the Games News Content forproper. EKS-E&Yrecommended the initial few days. Finally, agreater interaction between PIB and makeshift arrangement was made toOC to ensure smooth press give electronic access to Games newsoperations during games. to the media. The press operations

remained an area of firefighting inCWG2010 as much as it was in CYG-2008, Pune. (Refer Para 14.2)



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Area offunctioning/activityExperience inCYGPune 2008

Accommodation Contracts with various categories ofhotels stipulated that OC would payretention charges for unused hotelaccommodation. As there was nomechanism to track the arrivals,departures and other guestmovements, release of unutilizedhotel accommodation could not takeplace and OC incurred expenditure ofRs. 0.62 crore towards retentioncharges for unused hotelaccommodation.

27.7 Purchase of Electronic,Sports and otherEquipment

27.7.1 GeneralWe examined 63 major contracts for Rs.81.55 crore for procurement of electronicand other requirement and observed thefollowing general deficiencies in thetendering and award procedures Orders were placed directly in 16 cases

on a single source without tendering; inviolation of the codal provisions;

In 12 cases, less than the prescribedtime was given for submitting tendersand advertisements were placed only inlocal Marathi newspapers;

In 3 cases, contracts for equipment wereconcluded with firms with no priorexperience in the field;

Other instances of lack of transparencyin the tendering process were noticed in5cases;

Experience inCWG Delhi 2010

The same shortcoming was repeatedduring CWG 2010. On any given day,OC had more than 150 rooms vacantin its flagship hotels, and yet OC hadbooked rooms in other hotelsresulting in excess expenditure of atleast Rs 1.15 crore. (Refer Para 15.2.3)

Additional items were ordered from thesame contractor without tendering in 4cases;

Hire charges for facilities were paid forperiods for which the facilities were notavailable in three cases;

Penalty for delayed supply of equipmentwas not deducted in three cases;

Arrangements for technical inspection ofequipment by third parties were notmade or items were found defective onreceipt in 6 cases; and

Requirements of equipment were notassessed realistically and the quantityprocured was in excess of therequirement in 8 cases.



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After placing five supply orders aggregatingRs30.88 crore on nomination basis as perOCs direction, the matter was referred tothe MSYA, Gol through the stategovernment in June 2008 for guidance. InAugust 2008, Gol clarified that theprocurement was to be made as per GFRsand the concerned manufacturers (on theapproved list of official suppliers of theconcerned international federations forspecified equipment) should be invited tobid. However, even after receiving the Golclarifications, ECplaced another order forelectronic score boards etc for Rs.0.65crore in 2008 on Gem International,Faridabad.We also observed other deficiencies inprocurement of equipment: Athletics Starting Blocks (portable): 30

Starting Blocks were procured fromSwiss Timings Ltd. against therequirement of 17, resulting inavoidable expenditure of Rs.0.20 crore.

Rotatory electronic-scoreboard: Fourscoreboards (portable) were actuallyprocured for the main stadium basicallyfor display purpose. A maximum of twofield events were possible at a time inthe main stadium owing to its size. Theexpenditure of Rs0.38 crore onprocurement of two additionalscoreboards was avoidable.

Swimming Pool Starting Platforms:Sixteen starting platforms procured forRs0.13 crore for the warm-up pool werelying idle due to leakages in the warmup pool.

Shooting target system in 50 M mainrange: Six scoreboards (costing Rs0.43crore), which were an integral part of

the shooting target system, were notworking.

Boxing Scoring system: In March 2008,DC demanded one scoring system, butDSYShired two systems, involvingadditional expenditure of Rs0.12 crore

Electronic score boards supplied byShiv-Naresh, Delhi: The DC reported on24 September 2008 that the ElectronicScore boards supplied by Mis Shiv-Naresh Delhi (for Rs4.97 crore) werevery rudimentary screens, similar to anelectronic counter, without the inbuiltOlympic Result Information System(ORIS)compliant timing and scoringsystem and the cost of providing andhandling such system should be borneby the supplier. However, DSYSdid noteffect any deduction from the supplier'sbills for non-supply of the ORISsoftware.

Delay in supply and installation ofequipments by Gem International,Faridabad and Shiv-naresh, Delhi:Despite a provision of penalty of one percent per week of delay, DSYSallowedextension of time to these supplierswithout levy of penalty of Rs23.26 lakh

Rentals paid for electronic scoreboardhired from Mis Gem International,Faridabad for period it was notavailable: The agency claimed hire from01 September to 15 November 2008 forequipment that were dispatched fromFaridabad only on 04 October 2008.DSYSpaid the full hire charges claimedby the firm, without making deductionof Rs.0.38 crore for the period that theequipment was not available.



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Cost escalation due to currencyfluctuation: DSYSbore cost escalation ofRs.0.32 crore due to foreign exchangevariation during the period of delay ofsupplies by foreign suppliers, whichshould have contractually been borne bythe suppliers. In addition there was nocontractual penalty leviable for the delayin supplies.

Table below gives the list of otherdeficiencies noticed in procurement andexecution of works:

27.7.3 Other deficiencies noticed inprocurements

Table 27.8 - List of other deficiencies in procurement and execution of works(In Rs. Crare)

Equipment Contract Value Audit ObservationAir cooling system 0.81 The air cooling system initially installed at a cost ofreplaced by Air Rs.0.81 crore was removed and air conditioningconditioning system system purchased at an additional cost of Rs.0.67at the direction of OC crore and installed at a cost of Rs0.17 crore.Supply, installation 0.64 Work was awarded to a company engaged ordinarilyand testing of in the business of pharmaceuticals and medicalWeapons storage products, which could not complete it in time forcabinet and RFID CYG-2008.based locker accesscontrol systemCCTV 1.63 Of the 4 moving cameras, 37 Speed dome cameras,

55 fixed cameras, 34 indoor dome cameras and 4 LCDTV; equipment worth Rs.0.34 crore were lyinguninstalled in store rooms;

Idle equipment at 4.09 Spiro meter worth Rs.0.55 lakh not utilised asSports Science Centre long distance running events not held; Portable va Max for Rs.0.22 crore becameuseless after CYG-2008 since required oxygensensors were provided only during CYG-2008. Altitude Simulation Training equipment of Rs.0.91 crore remains untilised as the staff trained

to use it is no longer associated with the centre.Permanent Furniture 1.10 No documentary proof that these were receivedat the venue before CYG-2008

490 I Performance Audit Report on XIX Commonwealth Games (CWG-2010)


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Table 27.9 - L ist of infrastructure projects not com pleted in tim e for eYG-200BNature of work .II-~

Work for BRT systems

4Terminal works 12

Work on BRTScomponent of Rs32.67 crore was still at tendering stage5 1

Pedestrian subways113

11 1 2

Area traffic control system No work started so far

WBM treatment

1

1 1 1Widening and improvement 1

2rade separator 2Vehicular Underpass

While we accept the need for, and legacyvalue of such city infrastructure post CYG-2008, such delays in completion violate thepremise under which these projects weresanctioned. Since many of these projectsare still incomplete, it indicates lack ofresponsibility and accountability.

27.9 Purchase of SecurityEquipment and Vehicles

While DSYSforwarded a proposal for Rs67.70 crore to Gol for securityarrangements for CYG-2008, Pune, the CPsubmitted indents for equipment, vehiclesetc for only Rs23.59 crore to the DirectorGeneral of Police, Mumbai on 01 October2007, specifying the items were requiredbefore June 2008. In response, GoMaccorded approval for Rs 17.64 crore inpiecemeal during May - September 2008and released funds during August-September 2008 only.

121

1

1

We found that: Out of Rs17.64 crore sanctioned,

equipment for only Rs9.40 crore wasprocured, and Rs3.18 crore weresurrendered.

Out of the procurement of Rs. 9.40 croreof equipment, supply orders for Rs 1.33crore were placed after the CYGeventswere over, while equipment worth Rs3.23 crore were received only after theCYGevents were over.

Items which were not received in timeincluded night vision goggles withbinoculars, portable X-rays, operational andtraffic propaganda vehicles, ambulances,hearse vans, dog squad tempos, minibuses,working trucks, personnel carriers, lightvans, mobile repair vans, and cranes.

CAG's CWG Audit Report - Chapter - 27 (2011)

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