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March 3, 2014

WB Govt abolishes the practice of enlisting contractors to break the contractor-official-politician nexus

WB Govt abolishes the practice of enlisting contractors to break the contractor-official-politician nexus

The State 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.

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

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 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.

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

But after the change of guard in the state, Ms. 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.

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