The Telegraph
Monday , March 3 , 2014
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Govt strikes at roots of contractor raj

Calcutta, March 2: The Mamata Banerjee government has abolished the practice of departments enlisting contractors, a move aimed at preventing delay in execution of projects, cutting down on costs and bringing more transparency.

A notification scrapping the age-old system was issued by the finance department yesterday.

Sources said the Trinamul government planned to break the alleged contractor-official-politician nexus that has developed over the years.

“This is a smart move. Over the years, a handful of contractors monopolised projects and took advantage of the enlistment system to prevent other private players from bagging contracts,” a Nabanna official said. “This resulted in delayed, and at times faulty, execution of projects at escalated costs.”

According to the official, most of these contractors were associated with the public works, public health engineering, municipal affairs and urban development departments, which undertake infrastructure projects.

Under the system that began during the Left rule, any contractor who has executed projects worth 40 per cent of the amount he wants to enlist for can apply. A contractor also needs to have a bank guarantee of 20 per cent of the amount he is enlisted for.

The official said it was an “open secret” that the contractors took advantage of the system to “inflate” project costs.

“Whenever tenders are floated, these contractors fix an inflated price among themselves. During bidding, the contractors ensure that the price does not go below the amount fixed. As contractors other than those enlisted are not allowed to execute projects that cost less than Rs 62.5 lakh, the schemes are implemented at bloated costs,” the official said.

“But the process of enlisting contractors continued because of their proximity to a section of politicians and officials,” the official said.

The official said most of the contractors made “liberal donations” to the Left when it was in power.

Officials said a handful of contractors were enlisted with each department. “Every project worth less than Rs 62.5 lakh is given to one from the set. As other private players are not allowed to participate, there is no competition,” the official said.

He said that often projects worth more than Rs 62.5 lakh were broken down to ensure that the enlisted contractors bagged them.

“A few years ago, the PWD had broken down into six parts a project to strengthen a road in West Midnapore. The project was worth Rs 3 crore. But it was shown as six projects worth less than Rs 60 lakh each. One contractor got each. By doing this, the department ensured that nobody outside the enlisted pool of contractors applied,” the official said.

According to him, such an arrangement had become “common” in several departments.

But after the change of guard in the state, Mamata Banerjee got wind of the alleged malpractice.

To find out how the contractors were inflating project costs, the PWD recently broke down a road-repairing scheme worth Rs 2 crore into five parts.

“Tenders were floated for the five parts, each shown as a separate project. When one of the projects attracted two bidders, one less than the mandatory number, the department scrapped the process and floated a tender for the entire project of Rs 2 crore. As other private players could participate, the project cost came down by around Rs 40 lakh,” another official said.

Realising the benefits of throwing the field open to more players, the government decided to scrap the practice of enlistment.