AEPC used faulty tendering process to benefit pvt party: CAG

The tendering process adopted by apparel exporter body AEPC for leasing of a furnished office accommodation was "flawed" as it extended undue benefits to a private party, leading to a revenue loss of Rs 17.42 crore, government auditor CAG said today.
The Apparel Export Promotion Council (AEPC) published advertisements (August/September 2007) in newspapers for leasing of furnished office premises measuring 23,382 sq ft at Bhikaji Cama Place, New Delhi.
Three bidders -- M/s E-Square International, New Delhi (amount quoted Rs 200-250 per sq ft), M/s The Institute of Planning and Management (amount quoted Rs 235 per sq ft) and M/s Japan International Cooperation Agency (amount not mentioned in the bid) -- were short-listed and called for negotiation on September 26, 2007.

"Though M/s Teesta Urja Limited (TUL) did not participate in the tendering process, their bid was considered one week after opening of bids," the Comptroller and Auditor General said.
M/s E-Square International did not turn up for negotiations and M/s IPM sought one day to give its best offer on September 27, 2007, but finally they also did not turn up. Representatives of M/s JICA intimated Rs 175 per sq ft as their maximum price.
"It is clear that the tendering process for leasing of furnished office accommodation was flawed as AEPC failed to maintain the sanctity of the tendering process," the audit watchdog said.

"A number of post-contractual benefits were also extended to M/s TUL which were highly unfavourable to AEPC resulting in undue financial benefits being extended to M/s TUL and loss of revenue of Rs 17.42 crore to AEPC."

The remarks are part of the Union Government (Civil) Compliance Audit Observations report for the year ended March 2015, which was tabled in Parliament today.
In the report, the Comptroller and Auditor General (CAG) observed that AEPC considered M/s TUL as the highest bidder which agreed to taking the building at a rent of Rs 270 per sq ft.
AEPC entered into an agreement with TUL for leasing of office premises for six years with effect from December 1, 2007 to November 30, 2013.

As stipulated in the agreement, the lease rent was to be enhanced by 15 per cent of the basic rent after lapse of three years from the date of commencement of the lease.
"However, in November 2008, TUL informed AEPC the prevailing rental rates (based on real estate websites) for office complexes in South Delhi) and requested for reduction in office rent to Rs 150 per sq ft from Rs 270.
"Considering the request of M/s TUL, AEPC decided to reduce the rent from Rs 270 per sq ft to Rs 190 per sq ft with effect from April 1, 2009, without escalation in the rent for three years," the CAG said in the report.

Similarly, TUL again requested AEPC for considering reduction in monthly lease rent. AEPC agreed (March 21, 2012) to reduce the lease rent from Rs 190 to Rs 165 for two years with effect from April 1, 2012 to March 31, 2014.