The Ministry of External Affairs had approved a proposal for nine homes for the Indian mission in Germany in 2011. But 13 years later, the project is in limbo, due to repeated changes in cost estimates and a failed agreement with a German firm, according to a Comptroller and Auditor General of India report released earlier this month.
Hamburg-headquartered global architectural firm GMP, which had offered to do the job for Rs 5.1 crore when it was selected to offer architectural advice on the project in 2015, revised it to Rs 9.4 crore by 2019. This could’ve never happened had the Indian mission in Germany considered legal advice, defined the scope of work, and checked original documents, said the report headlined “undue favour to consultant due to execution of faulty agreement”.
As a design consultant, GMP was also responsible for the approval of agencies and tender documents linked to the project’s construction. A tender for the construction work was first issued in May 2019, but it couldn’t proceed due to legal issues. Another tender was issued seven months later, but it failed as two bidders revised their quotes midway. GMP pulled out of the contract in September 2021 due to a dispute over that failed second tender.
Apart from the architectural advice estimates, the firm also revised the total estimated cost of the project, from 29,78,300 euros with a 19.9 percent consultancy charge when its bid was selected in October 2015, to 46,28,544 euros in June 2016, to 59,18,186 euros or Rs 51.29 crore in January 2019.
These homes were for non-representational staff of the mission.
After an ad was floated, five proposals were received, and three shortlisted by May 2014. GMP’s bid was most competitive, as compared to DGI Bauwerk, which quoted 42,42,64,890 euros with 19 percent consultancy charges, and LWW, which quoted 39,22,321 euros as total estimated cost with consultancy charges at 28 percent.
On the total cost rising to Rs 51.29 crore, the auditor said, “This indicates that the scope of the final work has not been clearly spelt out in the agreement. Had the scope of the work and fees thereof been clearly spelt out at the time of the consultancy agreement, the additional charges/estimates could have been avoided.”
The CAG’s remarks come more than a decade after it had flagged favouritism in a design firm being handed over Delhi Commonwealth Games projects which GMP had also worked on as a joint venture partner.
Faulty contract overlooking legal opinion
Local law firm M/s Stassen LLP had pointed out several contradictions in the draft agreement in August 2015, but the Indian mission in Germany signed the same agreement two months later, the CAG pointed out. This resulted in a contract that was not in consonance with German laws and “lacked clarity, a fact completely exploited by M/s GMP,” the auditor said.
In April 2016, the mission faced non-cooperation from GMP in appointing inspection engineers. The CAG pointed out this is also due to a faulty agreement. The company unilaterally suspended work citing a cost escalation due to a delayed decision by Indian officials and a change in statutory building regulations, it said.
“While the mission considered it a comprehensive general planner contract, the consultant interpreted it as a standard architectural contract.”
The GMP had also sought an additional 4,58,254 euros to hand over the original documents of the project, including technical drawing and other documents. “The mission/ministry is yet to decide despite a lapse of almost two years, whether to make payment of 4,58,254 euros and obtain the documents or let the entire expenditure of 6,58,059 euros (including VAT) on the consultant go waste,” CAG noted.
The MEA told CAG that it does not have soft copies of the documents but retains its hard copies. It also said that it has not approved the payment of 4,58,254 euros as the agreement states that the selection of the contractor must be completed before payments are released. It added that the expenditure incurred to date cannot be deemed wasteful as all the relevant documents are in the possession of the mission and may be used to advance the construction of the project.
However, CAG maintained that soft copies of the documentation, especially technical drawings, are essential since they allow for better modification and preservation.
The MEA told the CAG that any initial estimate would have seen a surge in costs due to the impact of inflation and change in statutory requirements based on local laws.
However, the audit noted that even after the approval of revised estimates in January 2018, the consultant had revised the estimates again in February 2018, March 2018, and January 2019, which indicated that the scope of work had not been clearly spelt out in the agreement.
GMP’s ‘link’ to CWG ‘irregularities’
As per its website, GMP international has a very powerful portfolio with at least 376 projects across the globe. These include many prominent projects, including 171 projects in China and Germany, two central government projects each in India and Spain; and three projects in South Africa, among others.
The projects it claims to have executed in India have a chequered history. They were linked to the Commonwealth Games, including the upgradation of Jawaharlal Nehru Stadium and modification of the Shyama Prasad Mukherjee swimming pool in Delhi.
On its website, GMP claims the work for both these projects were done as part of a joint venture with Schlaich Bergermann partner, CES Consulting Engineering Services (India) Ltd, and IG Tech. The CAG had in 2011 had termed the appointment of CES Consulting Engineering Services (India) Ltd as the main design consultant for five main stadiums, including the two GMP also worked on, as “seriously flawed”. CES did not directly possess specific experience in designing sports stadia, with its experience being primarily in providing design consultancy for roads and bridges, it had noted.
GMP had also won other contracts in the country, including one to design a new complex for the Tamil Nadu assembly at Omandurar government estate in 2011. A consortium of GMP International and Intercontinental Consultants and Technocrats Pvt. Ltd was also appointed as the technical and architectural consultant for the Habibganj Railway station redevelopment programme. Notably, it is the first station to be redeveloped through the Public Private Partnership (PPP) route under the station redevelopment programme of Indian Railways.
Newslaundry reached out to the GMP, the Indian mission in Germany, and the MEA for comment. This report will be updated if a response is received.
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