CAG's CWG Audit Report - Chapter - 31 (2011)

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c : : :wl-e ..::I:uIntegrated Security System (ISS)for CWG-2010

Electronics Corporation of India Ltd. (ECIL)Ia PSUI was appointed by the Gol in May 2009on "nomination basis" to provide an Integrated Security System (ISS)for CWG-2010. Wefound that ECILprepared a highly inflated cost estimate (approved at Rs.346 crore) whichallowed it to make an exorbitant profit of Rs. 126crore on just the procured items. Detailsof the savings on items manufactured in-house were not made available to us. Suchexorbitant profits by a PSU appointed on nomination basis by the Gol amounts to abreach of trust.Considering the unreliability of the estimates and variation between the estimated andactual costs, we recommend that final payments may be released to ECILonly afterdetailed examination of actual costs and an appropriate certification by ECIL'sstatutoryauditors after allowing aprofit margin of upto 20per cent.Wefound that 176Portable Explosive Detectors (PEDs) worth Rs.39 crore were wronglyprocured by ECILIand remained unutilised; similarly I 151090 out of 181700 RFID tags foraccredited vehicles also remained unutilised.MHA did not have an approved legacy plan for the utilisation/redeployment of thesecurity equipment, without an "a priori" identification of items as legacYI non-legacyand consumables. Subsequent to CWG-20101 ECIL identified legacy and non-legacyequipment worth Rs.272.65 crore, which had still not been redeployed or utilised.

31.1 IntroductionAn Integrated Security System (ISS)wasrequired to ensure effective surveillance forCWG-2010 to cover events, open areas,lanes/important traffic junctions, and highlysensitive and crowded areas in Delhi. Themajor components of the ISSwere: perimeter security; vehicle access control; pedestrian access control for accredited

card holders and spectators; and

venue security command centre.The security arrangements for CWG-2010were coordinated by the Ministry of HomeAffairs (MHA) through the EmpoweredSecurity Committee (ESC).The decision toprovide ISSfor all competition and non-competition/training venues for CWG-2010through Electronics Corporation of IndiaLtd. (ECIL),a PSU,on "nomination basis"was taken by the Cabinet in its meeting heldon 8 May 2009. Thereafter,

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Chapter 31 - Integrated Security System(ISS)for CWG-2010

The estimates approved were theabsolute cap.

ECILprovided equipment against 50approved BOQs - 43 for equipment tobe procured by ECILand 7 for in-houseitems. We compared the purchase priceof items procured under the 43 BOQswith their EFC-approved rates andfound that in 41 of these BOQs, theactual purchase price of the items waslower than the EFCapproved rates',Overall, ECILprocured items in the 43BOQs for just Rs 100.65 crore (againstthe EFCapproved estimate of Rs. 227.04crore), thus securing a profit of Rs.126.38 crore (126 per cent) on theseitems. Details are given in Annexe-31.1.

In respect of the seven BOQs for itemsmanufactured in-house, ECILdid notprovide us with their cost analysis. Further,we found that this analysis had not beensent to the Cost Accounts Branch of theMoF, as of March 2011. Consequently, wecould not ascertain whether there weresavings in excess of 2 per cent, whichshould have been passed on to the Gal.Further, ECILwas required to test individualISSequipment and issue a job completioncertificate, for which it charged Rs. 10 crore.However, it did not produce the relevantrecords to us.

In the remaining 2 BOQs, the EFCrate was lower thanthe actual procurement rate by 6 per cent and 16percent.

Clearly, the inflated estimates preparedby ECIL(approved at Rs. 346 crore) didnot reflect true market rates, andallowed ECILto make exorbitant profitsof at least Rs. 126 crore. Such conductby a PSUappointed on nominationbasis by the Gol amounts to a breach oftrust.Considering the unreliability of theestimates and variation between theestimated and actual costs, werecommend that final payments may bereleased to ECILonly after detailedexamination of actual costs and anappropriate certification by ECIL'sstatutory auditors after allowing aprofit margin of upto 20 per cent",

31.3 Excess Cash Advance toECILof Rs. 37 crore

We found that ECILreceived excess cashadvance of Rs.37.08 crore (out of the totalcash advance claim of Rs. 137.32 crore) forimported items. This was on account of mis-classification of items imported / procuredindigenously. ECILwas eligible for advanceof 70 per cent of the CIF6value of importedequipment and 40 per cent on indigenouslyprocured equipment. However, out of theequipment to be imported, equipmentworth Rs. 123.60 crore (at EFCrates) wasactually procured indigenously, resulting ininflated cash advances to ECIL.

This profit margin of 20 per cent has been indicated inEc/L 's estimates.CIF: Cost Insurance and Freight

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Chapter 31 - Integrated Security System (ISS)for CWG-2010

31.4 Procurement of equipmentin excessof requirement

31.4.1 Portable Explosive Detectorsworth Rs.38.55 crore wronglyprocured and not utilise

Despite being informed by the Delhi Policein July 20097 that Portable ExplosiveDetectors (PEDs) should be removed fromthe BOQs as these were being procuredseparately, ECILdid not delete this itemfrom the BOQs nor did it seek any

clarifications from the MHA. This issue wasalso not discussed in any subsequentmeeting of the Steering Committee.In March 2010, ECILprocured 176 PEDsat atotal cost of Rs. 38.55 crore for supply tothe venues. During our joint physicalverification of JLN Stadium, we found 42PEDsstill in packed condition. ECILinformedus that the Delhi Police did not use thesePEDsat any of the venues. The shelf life ofthe PEDequipment is 7 years and that of itsconsumables six months.

PEDs lying unutilised in the stores at JLN Stadium

31.5 RFIDtags not utilisedRFID8 tags, containing details of theaccredited vehicles, were to be fixed on thefront wind shield of the vehicle for easyreading by the RFID reader fixed at thevenue entry gates to control access. OCwas

7 and reiterated in August and September 20108 Radio Frequency ID- a technology that uses radio

frequency communication between an electronic tag(attached to an object) and a reader for identificationand tracking.

to give the list of accredited vehicles withthe required details and ECILwas to prepareRFIDtags.ECILprocured 18,700 RFIDtags, but only3,610 tags were used during the Games andthe remaining 15,090 tags (worth Rs.4.41crore) were lying unutilised with ECIL.Thisindicates that the BOQwas not realisticallyprepared by the ECILand approved by theSteering Committee.

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Chapter 31 - Integrated Security System(ISS)for CWG-2010

31.6 Poor Legacy Planning andNon-utilisationMHA did not have an approved legacyplan for the utilisation/redeployment ofthe security equipment. Further, therewas no Ita priori" identification of ISSitems as legacy items, non-legacy itemsand consumables.

ECIL'sagreements with the venue ownersmerely stipulated that legacy and non-legacy items were to be decided within 30days of completion of the events. ECILwould reconfigure all legacy equipment andmake them workable in the venue, whilenon-legacy equipment was to be handedover to the venue owners for subsequentusage and retention. In its report to MHAof November 2010, ECILidentified legacyequipment of Rs.86.47 crore and non-legacy equipment of Rs. 186.18 crore at the31 venues.

However, we found that the legacy andnon-legacy equipment amounting toRs.272.65 crore was lying unutilized. ECILhad dismantled all the equipment (legacyand non-legacy) in all stadiums, exceptThyagaraja Stadium. These were retainedin packed condition in the venues underECIL'scustody.The legacy items had not beenreconfigured, asvarious network switchesand cables required to operate them hadbeen provided by the ac as a part ofoverlays, and had since been removed.Although the ac had undertaken toprovide these again after CWG-2010, thiswas yet to be done. Also, no utilisationplans for the non-legacy items had beenprepared by MHA.

31.7 Security arrangementsduring CWG-2010 atKadarpur ShootingRangece

Kadarpur Shooting Range in Gurgaon,Haryana was one of the competition venuesfor CWG 2010. MHA released (February2010) a special grant of Rs. 23.23 crore,under the Modernisation of Police ForcesScheme, to the Haryana Government formaking security arrangements for CWG-2010.We found that although Rs.21.96 crore hadbeen drawn from the treasury duringJuly-October 2010 and deposited with theexecuting/ procurement agencies, noequipment had been received as ofNovember 2010, even after CWG-2010 wasover. In addition, 39 fabricated policeassistance booths worth Rs.0.74 crore wereprocured by the Haryana PoliceDepartment, but these were not handedover to the Gurgaon and Faridabad trafficpolice in time for CWG-2010.

Gol should adjust the amount ofRs. 22 crore, drawn but not utilisedfor CWG-2010, against the release ofthe next tranche of assistance underthe Modernisation of Police ForcesScheme to the Government ofHaryana.

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CAG's CWG Audit Report - Chapter - 31 (2011)

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