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					HIGH LEVEL COMMITTEE




Organising
Committee
Fifth Report of HLC




                                          2011




             VIGYAN BHAWAN ANNEXE,NEW DELHI
          Fifth Report of HLC – Organizing Committee

Contents
Chapter   Title                                            Page No.

          Acronyms                                              3

          Executive Summary                                     5

    1     Introduction                                          26

    2     Organizing Committee’s Budget                         33

    3     Governance                                            50

    4     Revenue from Ticketing                                74

    5     Sponsorship                                           90

    6     International Broadcasting Rights                    103

    7     Overlays                                             113

    8     Timing, Scoring and Results                          141

    9     Technology Contracts through TCIL                    166

    10    Games Management System                              177

    11    Games Village Master Caterer                         185

    12    Games Village Catering - Kitchen Equipment           200

    13    Games Village - Kitchen Equipment Installation       209

    14    Venue Catering I                                     220

    15    Venue Catering II                                    230

    16    Ceremonies – Aerostat                                240




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         Fifth Report of HLC – Organizing Committee

    17   Ceremonies – Art Director                                 255

    18   Ceremonies – Lighting and Searchlights                    266

    19   Ceremonies – Wizcraft                                     280

    20   Cleaning and Waste Management                             293

    21   Games News Service                                        307

    22   Sports Equipment & Surfaces                               324

    23   Procurement of Lanyards                                   331

    24   Expenditure on NDCC Building Refurbishment                337

    25   Expenditure on Beijing Games Observer Program             349

    26   Other Instances of Adverse Procurement                    360

    27   Recruitment                                               396

    28   Appointment of Consultants/Advisors                       432

    29   Appointment of international consultant - EKS             473

    30   Summary of Major Findings                                 488

         Appendix 1: List of Contracts provided by OC              508

         Appendix 2: List of documents reviewed                    509

         Appendix 3: List of key OC officials who were consulted   511




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                Fifth Report of HLC – Organizing Committee

Acronyms
The abbreviations in this glossary are not intended to be a complete and/or authoritative
list. It was compiled to assist as a quick reference guide. There may be some abbreviations
used in the context of this report that are general and do not require further explanation,
and some are also described where it is used.

A2Z          A2Z Management & Engineering Services Private Limited
ADG          Additional Director General
BOQ          Bill of Quantity
C&C          Culture and Ceremony
CBI          Central Bureau of Investigation
CCC          Centralised Coordination Committee of the Organising Committee
CEO          Chief Executive Officer
CGF          Commonwealth Games Federation
CHF          Swiss Frank
COO          Chief Operating Officer
CWG          Common Wealth Games
CWM          Cleaning and Waste Management
DG           Director General
DNC          Delaware North Catering
D2010        Delhi 2010
EB           Executive Board
EMC          Executive Management Committee
EMD          Earnest Money Deposit
EMF          Event Management Firm
EOI          Expression of Interest
F&A          Finance and Accounts
FA           Functional Area
FSC          Finance Sub Committee


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          Fifth Report of HLC – Organizing Committee

FTC     Fast Track Committee
GBP     Great Britain Pound
GMS     Games Management System
GOM     Group of Ministers
GOP     General Organisation Plan
HLC     High Level Committee
HRH     His Royal Highness
INR     Indian National Rupees
JDG     Joint Director General
JLN     Jawaharlal Nehru stadium
JS      Joint Secretary
LOI     Letter of Intent
MOU     Memorandum of Understanding
MoYAS   Ministry of Youth Affairs and Sports
MSL     MSL Software
OC      Organizing Committee
OCFC    Organizing Committee Finance Committee
OVR     On-Venue Results
RFP     Request for Proposal
SDG     Special Director General
SMAM    Sports Marketing and Management
ST      Swiss Timing
TCIL    Tellecomunication Consultants India Ltd




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                     Fifth Report of HLC – Organizing Committee

    Executive Summary

    Background

   The Organizing Committee for Commonwealth Games D 2010 was established in February
    2005 with Mr. Suresh Kalmadi as Chairman of the OC. The executive board of the committee
    consisted of 15 members including 4 office bearers and members drawn from various
    agencies namely Commonwealth Games Federation, Government of India, Government of
    National Capital Territory of Delhi, and Indian Olympic Association. The OC was entrusted
    the organizing and hosting of the XIX Commonwealth Games in Delhi.

   The examination of the performance of OC was carried out by the HLC and its officials /
    experts against the Terms of Reference of the HLC. The key areas reviewed include
    governance, staffing, cosultants/advisors, revenue, expenditure, and procurement and
    contracting.


    Inconsistencies that permeated the OC


    Introduction

   Successful conduct of the games by OC was dependent, among other things, on timely
    procurement and availability of a complex set of services and goods. In view of the
    resources involved in these procurements and their criticality for the games, a key focus of
    this review was the procurement made by OC to achieve its mandate. This review indicated
    poor management of this key activity, inconsistencies and deliberate disregard of best
    practices and repeated indications of misconduct on the part of the OC and its functionaries
    in carrying out this activity.

   These matters have been dealt with in relevant paragraphs under the various chapters of
    this report, and a summary of the most common factors across contracts is as follows.




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                      Fifth Report of HLC – Organizing Committee

    Engagement with only a very limited set of suppliers

   In many of the major contracts, the OC seemed to attract only a very limited vendor or
    supplier base. In various instances only a single vendor qualified at the technical stage with
    the result that the contracts were awarded sans any commercial comparisons on the basis
    of the sole price bid opened by the OC.

   What is extraordinary is the limited supplier base that the OC attracted even for some of the
    contracts that were very significant in terms of commercial value (examples include Timing
    and Scoring, Press Operations and Games Village catering). For some of the contracts
    reviewed, the low response rate could be attributable to restrictive pre-qualification criteria
    that the OC adopted in these contracts. Instances noted include the following.

    -   In the case of the contract for Timing and Scoring Systems, only 2 vendors submitted
        bids in response to the RFP issued by the OC. The bid of MSL was disqualified on
        technical grounds and hence their price bid was not opened. The Swiss Timing emerged
        as the only vendor who qualified the technical round without any ensuing price
        comparison with competing suppliers.

    -   For international TV Rights contract that was awarded to Fast Track, only 2 suppliers
        actually submitted a bid in response to the RFP. There was a key misrepresentation in
        the tender document itself as these were issued for both “national and international
        broadcast rights”, whereas national rights were outside the ambit of the OC’s
        operations.

    -   In the case of overlays that were one of the highest cost contracts in aggregate value, an
        EOI was issued that resulted in only 10 responses.         Thereafter, six vendors were
        disqualified at the EOI stage and all the remaining 4 vendors obtained one or more
        packages from the OC.

    -   For press operations, a very restrictive criterion was set. Due to various mistakes made
        by the OC functionaries, the RFP was issued twice. However, each time only one
        supplier, Infostrada, submitted responses and was ultimately awarded the contract.

    -   In the case of award of the technology related contracts to TCIL, no comparative
        quotations was obtained or evaluated by the OC. Services rendered by TCIL proved
        uneconomical and unreliable.

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                       Fifth Report of HLC – Organizing Committee

    -   For the contract for Games management systems awarded to Gold Medal Systems,
        under the criteria mentioned in the RFP, only 3 vendors globally would have actually
        qualified in the technical round. Two of these ‘eligible’ vendors did not submit a bid and
        the award of the contract was in essence, non-competitive.

    -   In the case of the Master Games Village Catering contract awarded to DNC, 4 parties
        were pre qualified and only 1 bid was received against RFP from DNC. When the
        contract was re-tendered, only 2 vendors (DNC and IRCTC) submitted a bid. IRCTC were
        again rejected in the technical round and hence the OC considered the commercial bid
        of only one vendor DNC for a contract at a rate whose reasonableness can not be
        established.

    -   In the case of the purchase of the Aerostat from K-Events, there was an apparent
        unwillingness to evaluate a vendor other then k-events that resulted in the award of the
        contract to K- Events based on evaluations and recommendations of the international
        consultant.

    -   In the case of lighting, searchlight and lighting design of opening and closings
        ceremonies, one vendor got a combined order through separate RFPs issued. The vendor
        dictated terms and prices once it qualified in both bids.

    -   In the case of Art Director of scenic workshop construction works of opening and closing
        ceremonies, though five nominations were available, RFP was issued only to one vendor
        on recommendation of the consultants. The vendor was also issued an order for another
        work in this related area on nomination basis.

    -   In the case of award of contract for sponsorship rights, 4 vendors were pre qualified but
        only two of them responded to the RFP.

    -   Even in the case of small and one time procurements, numerous instances were noted
        wherein the OC managed to identify and obtain quotations on invitation basis from
        vendors who did not even appear to have a proper commercial place of business and/or
        existed at potentially non-existent addresses.

   It follows from the above, that the OC attracted interest of a very limited vendors due to the
    flawed procurement process. Such contracting resulted in only a single eligible vendor in
    some cases at the time pricing discussion commenced. The very fact that multi-crore

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                     Fifth Report of HLC – Organizing Committee

    projects enthused a low response indicates that the OC was keen to keep these contracts
    exclusive/open to only a limited segment rather than to generate competition amongst
    suppliers. A high entry barrier was a restrictive practice to achieve this objective.


    Failure to conduct ‘price’ negotiations

   In many contracts, OC did not exert any emphasis on bringing down prices at the time of
    price negotiations. In several instances, in the name of price reduction, the OC reduced
    scope of work rather than accomplishing unit price reduction. In other instances, the OC
    expressed “helplessness” in view of the shortage of time and seemingly succumbed to
    demands of vendors or provided justifications that do not appear maintainable. Examples
    noted include the following:

    -   In the case of award of the contract for TV rights, the bid of Fast Track was
        approximately INR 16 crores higher than what the OC would have paid had the contract
        actually been awarded to SMAM who were the lowest (or L1) bidder. The reason for not
        awarding the contract to SMAM (who were retained for sponsorship) was the ‘not
        putting eggs in one basket’ analogy. It is surprising that on the other hand, the OC chose
        to overlook this analogy when it gave multiple packages on cleaning and waste
        management or on Overlays or catering of venues (other than CGV) to one vendor.

    -   In the case of Overlays, the OC did not appear to take any steps to rationalize or reduce
        costs across vendors. Instead the OC chose to justify cost differences for the same item
        across vendors by looking at only the “overall cost of the package”. The computation
        prepared as a part of this review indicates that the OC may have incurred an additional
        cost of at least INR 138 crores had the prices been negotiated and contract been
        awarded on the basis of the lowest price across selected vendors for exactly the same
        items in the RFP. Instead the OC only chose to look at ‘overall costs’ with no regard to
        individual prices quoted by the vendors.

    -   In the contract for press operations awarded to Infostrada, the contract amount was
        brought down by reducing specifications. There was no evidence of any rate or price
        negotiations having been carried out with the vendor by the OC.




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                 Fifth Report of HLC – Organizing Committee

-   In the contract for cleaning and waste management awarded to A2Z, there were no
    negotiations with the vendor on reducing unit prices for manpower component which
    was already documented in the OC’s own records as             higher than ‘market rates’
    estimated by the OC. The result was a higher cost of INR 1.98 crores based on OC’s own
    estimates of “market rates”.

-   In the case of the contract for games village catering, DNC (catering contract) and PKL
    (equipment manufacturer) appeared to dictate terms to the OC that ranged from
    initiating a ‘buy’ versus ‘hire’ decision for kitchen equipment (INR 3.7 crores higher cost
    to the OC), detrimental contract conditions such as no warranty on previously used
    equipment provided, etc. In fact, DNC raised its contract price by INR 8.58 crores after
    the LOI was issued by the OC, which the OC ‘helplessly’ accepted. For the entire games
    village catering, the cost went up by INR 21 crores in aggregate from the first
    consolidated bid submitted by DNC to the individual contracts finally executed. The OC
    appeared to lose out any negotiation capacity whatsoever owing to the ‘time crunch’
    situation and instead resorted into measures such as rushing teams to Melbourne and
    London at its own expense to negotiate with suppliers on matters such as delivery itself,
    let alone price discussions.

-   In the case of the consultant Mark Fisher refused to bring down his quotation and GOM
    accepted the price having no option.

-   In the case of Bharat Bala and AR Rehman they dictated price which was accepted by the
    GOM

-   In the case of catering consultant Ajay Grover and in case of another consultant Shashi
    Tharoor, prices were dictated at their terms.


Unnecessary expenditure/lost opportunities for revenue

-   The review indicated instances where the OC and its functionaries operated in a manner
    that either burdened the games with unnecessary and wasteful expenditure or
    significant opportunities to earn revenues were lost. The following are some of the key
    instances noted during the review.




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                        Fifth Report of HLC – Organizing Committee

-      The OC freely printed and distributed tickets aggregating to INR 71 crores in value as
       complementary tickets. In terms of numbers, complementary tickets aggregate to
       around 41% of the overall ticket inventory which is an extremely substantial component
       of the tickets. These complimentary tickets were printed and distributed under the
       instructions of Chairman of the OC and Secretary General against the advice of
       consultants/third parties involved in this activity1. It is extraordinary that on one hand
       there was a demand for tickets within the general public (evident from the ticket sales
       data) and on the other hand the OC functionaries chose to deprive the general public of
       access to the games and the OC of the revenue potential of these tickets.

-      The OC awarded a contract for games news service or press operations to Infostrada
       aggregating to approximately INR 9 crore whereas this was done in-house in Melbourne.
       It is hard to imagine that in a media savvy country such as India, the OC refused to
       identify any relevant expertise (relevant even from a legacy perspective) as against
       outsourcing it completely to an overseas vendor.

-      Even for procurement of basic and standard technology items such as printers, faxes,
       VOIP, the OC paid a 9 per cent commission to TCIL which in turn sourced these items
       ostensibly from sub-vendors. This is despite the OC having a 75 member technology
       team apart from various other advisors and consultants. The OC could have clearly
       saved this 9 per cent markup had such procurement been down in-house.

-      For the opening and closing ceremony, the OC paid INR 2.9 crores for consultancy for a
       project for bandstand that was abandoned. The OC spent another INR 6 crores on
       ‘sausage’ component of the Aerostat that was not used. Further, the OC spent INR 1.4
       crores for ‘non-utilization of flight crews’ that was not deducted from the contract value.
       The total additional/wasteful expenditure in this case aggregates to INR 10.3 crores.

-      Wasteful expenditure of INR 1 core was noted on procurement of sports surfaces arising
       mainly out of procuring Badminton court mats in excess of requirements and procuring
       athletic equipment from an L2 bidder.




1
    As evident from various email obtained during forensic analysis of emails


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                           Fifth Report of HLC – Organizing Committee

    -      An expenditure of INR 5.06 crore was wasted on sending a deligation of 111 additional
           persons to the Beijing Olympics as observers. Many of these “delegates” were not
           connected with the sports sector in any way. Hence, this was a total wastage of public
           funds.


    Time delays caused solely by the OC perplexingly used to justify high costs

   The OC either seemed to commence contracting at a stage where games were at the anvil
    or otherwise took a long time to finalize contracts leading to time pressures. This factor of
    delay was then used as a ruse to accept significantly increased costs in the absence of any
    ‘alternative’ vendors given the criticality of time.

   Another offshoot of the delays was the setting up of Fast Track machinery for
    procurements. This resulted in the short cut for various procurements, established
    procedures and compromise on safeguards to protect OC’s commercial interests. The
    vendors realized the “helpless” situation of OC and price negotiations were often made in
    the context of aggressive stands of the vendors. Analysis of issuance of 517 contracts
    entered into by the OC clearly indicates that 91per cent of these contracts by number 2 were
    awarded only in 2010. This is extraordinary and points to incompetence and in several
    cases, malfeasance on the part of the OC functionaries. It is hard to imagine that a body set
    up in February 2005, waited almost 5 years till in 2010 to award contracts to vendors and
    then cited time pressures to justify inflated costs claimed by the vendors.




    2
        By value this amount to approximately 89% of the value of 517 contracts issued by the OC


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                     Fifth Report of HLC – Organizing Committee

    Issue of contracts by OC during 2006-2010




   Specific examples where the OC functionaries justified additional costs citing time delays
    include the following.

    -    The TSR contract awarded to Swiss Timing where the OC took 2 years and 9 months to
         finally award the contract to the vendor. In this case, the vendor itself has charged a
         premium on INR 18 crores citing delays on the part of the OC in awarding the contract.

    -    The overlays contracts aggregating to INR 630 crores were greatly delayed and initiated
         only in December 2009 because OC intentionally had not provided estimates / included
         provision for overlays in the several budgetary exercises it had undertaken including that
         by E&Y.

    -    The technology contract for Games Management Systems that was signed in a ‘crisis
         stage’ in March 2010 aggregating to INR 21 crores.

    -    The contract for SMAM (sponsorship) and Fast Track (TV rights) was finally decided over
         a period of 21 months.


    Price differences

   Complicated and longdrawn contracting process and substantial delays engendered
    situations in which contracts were awarded at significantly higher costs. These had a huge
    impact on the overall costs and laid the foundation of a constant barrage of requests from

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                         Fifth Report of HLC – Organizing Committee

    the OC for additional budgets and funds. It may be mentioned that had the OC actually
    taken the right steps in a spirit that fostered fair competition amongst eligible vendors, they
    would have discovered much lower costs with better results. Some of the most important
    examples where price differences between vendors were significant are as follows.

    -    In the case of the TSR contract, as per documents obtained, the commercial bid of the
         competing vendor, MSL was INR 49 crores lower than the price agreed with Swiss
         Timing.   It may be mentioned that MSL were rejected by the OC during the technical
         evaluation and hence their price bid was not opened by the OC.

    -    For Games Management, the OC paid the vendor, Gold Medal Systems approximately 5
         times or 17 crores more than what the vendor charged for the games in Melbourne for
         predominantly the same work.


    Patronage

   In some instances, it was apparent that executive decisions made by the OC functionaries
    were oriented towards seeking patronage outside of the OC and hence these were not in
    the best interests of either the games or the underlying expenditure. Such adverse conduct
    not only led to unnecessary expenditure but also contributed disrepute to the image of the
    games and the country. Examples of such conduct of the part of the OC functionaries
    include the following.

    -    Unabated printing of complementary tickets and distributing these to the detriment of
         the general public. Failure of the OC functionaries to maintain any formal records for
         such distribution indicates possible malfeasance behind the opaque nature of such
         distribution.

    -    Recruiting employees, consultants and advisors on criteria other than merit of the
         candidate. In key positions Chairman appointed loyalists, a large number from Pune
         including one Railway Guard. Many of the selected individuals had affiliations, relations
         or were otherwise connected with OC functionaries or other ‘influential’ people. This
         report indicates that such recruitments were made on the basis of “who knows who”
         rather than merit and experience of the candidate, even to extent that candidates with




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                      Fifth Report of HLC – Organizing Committee

         questionable background were accommodated specially at senior position with decision
         making power.

    -    Beijing Olympics observer program where an expenditure of INR 5.06 crore was wasted
         on the reckless exercise of patronage by the Chairman, OC led the selection of many
         peopled unrelated to sports management to go on this trip. The delegation was mainly a
         pleasure trip at government expense.


    Quelling ‘dissent’

   In was noted in the review of some contracts that key personnel within the OC hierarchy
    appeared to be changed at times when they expressed dissent or raise questions on adverse
    procurement procedures followed. The fact that such changes were made at the same time
    the relevant employee ‘questioned’ decisions was too coincidental. It is likely that such
    changes were made to ‘manage” dissidence in respect of decisions that had already been
    made in a particular manner. Examples noted include the following.

    -    In the TSR contract, Sandeep Arya (who was an Advisor) was appointed as JDG
         (Techology) to supersede Sujith Panigrahi (ADG Technology) at a time Sujith Panigrahi
         started raising red flags and concerns around the bias towards Swiss Timing and the
         resultant unfair contracting.

    -    In the ticketing FA, Sanjeev Mittal, Ticketing FA head, was reassigned at a time when
         forensic email analysis showed him raising concerns over the mass printing of
         complementary tickets. He was succeeded by another FA Head who appeared to largely
         ‘toe’ the line and philosophy of the Chaiman to support such largesse showered by the
         OC.

    -    When the differences cropped up between the officials in the reporting process of work
         or in the matter of award of contract or technical evaluation process (as in TSR case),
         there was bitter exchange of official notes between the officials. This was an indication
         of typical dysfunction in the senior ranks of OC.




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                      Fifth Report of HLC – Organizing Committee

    Involvement of local agents as representatives of foreign vendors

   A rhetoric continually provided by the OC to support many seemingly adverse decisions was
    that the conduct of games would entail and necessarily require international expertise.
    Consequently, a key feature in many of the contracts was permission to form consortiums
    under which foreign vendors would be the lead partners (from a technical evaluation
    perspective) and Indian partners may assist (from a local representation perspective).

   It was however noted that such conditions are likely to have resulted in situations where the
    presence of foreign parties may have used only to justify higher costs and most of the work
    was carried out by the Indian counterparts. An example was the case of Overlays where the
    foreign partner in one of the contract, ESA-JV, held only a minority stake in the joint venture
    company formed specifically for the purpose of contracting with the OC.

   We further noted that in certain instances, Indian entities and individuals appeared to have
    been engaged by various foreign vendors for unrelated contracts. For example, it was noted
    that Gem International and Tristar Enterprises were associated with Swiss Timing and
    Games Management Systems respectively. Both these entities have common addresses and
    individuals associated with them. Tristar also managed to secure a contract for the supply
    of Lanyards to the Accreditation FA (with some indications of unfair contracting even in that
    contract). The role of such entities and individuals needs to be examined with respect to any
    irregularities that may have occurred.


    Various other indications that contracting process was vitiated

   Additionally, a number of other inconsistencies were noted indicating serious flaws in the
    manner in which contracts were initiated, negotiated and awarded by the OC. Given that
    there was a semblance of impropriety in such cases, it is likely that that these may have
    resulted in misconduct on the part of OC and its functionaries. Some of the most significant
    examples in this regard include the following.

    -    The EOI for the TSR contract (ultimately awarded to Swiss Timing) was issued by the
         Secretary General’s office without even the FA Head or the Technology Consultant’s
         knowledge.    They both expressed their ‘surprise’ at the issue of the EOI and
         recommended its withdrawal, a request that was not acceded to.


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                   Fifth Report of HLC – Organizing Committee

-    The Chairman, OC kept the EB in the dark about detrimental contract conditions in the
     SMAM contract and the OC may have ultimately suffered a loss of INR 28.45 crores.
     Additionally a Deed of Variation was executed in seemingly great secrecy which had the
     effect of potentially compromising the position of the OC with respect to possible
     disputes over the claim of sponsorship commission.

-    In the case of Overlays, a potentially false declaration was made by officials involved that
     they based initial budgets on “standard price lists” displayed by suppliers on their
     websites when, if fact, it is unlikely that such information is available in the public
     domain on websites in the form needed by the OC. Further, there is indication that the
     OC functionaries approved the procurement aggregating to approximately INR 38 crores
     on the basis of ‘ad hoc’ prices quoted by suppliers, with full knowledge that such prices
     were not maintainable. Also, the OC may have lost an opportunity to save cost of
     approximately INR 138 crores due to its failure to conduct price negotiations. Further,
     there was complete failure to monitor any delivery of items made available by the
     suppliers under the contract.

-    The award of the contract for kitchen equipment to Constellation project revealed that
     the evaluation committee failed to spot absence of required information and overlooked
     other inconsistencies in the bid documents and yet cleared the vendor in technical
     evaluation.

-    There was change in the payment terms in respect to the contract for press operations
     with Infostrada. The change in basis of payment from the bid of the vendor, the LOI and
     the final contract resulted in an excess of payment of at least INR 0.38 crore on the basis
     of payments released so far.

-    In the case of procurements for lanyards flawed evaluations resulted in the rejection of
     vendors at the technical stage. An apparently erroneous report was overlooked by the
     technical evaluation committee that resulted in the award of a contract to a potentially
     ‘favored’ vendor. While the specifications provided for fire retardant material, a simple
     test of igniting the product immediately resulted in the lanyard catching fire.

-    In many cases, the OC functionaries acted in complete disregard for systems of
     approvals. For example, in the case of the kitchen equipment installation contract for


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                  Fifth Report of HLC – Organizing Committee

     the games village, the LOI was issued before approvals from the EB were sought. Also, a
     critical change was made to the TSR RFP without clear approval from the EB.

-    Forensic email analysis indicated that Overlays vendors may not have provided the
     requisite quality contemplated under the contracts.           Further, as there were no
     documented checks carried out by the OC to verify the quantity and quality of such
     overlays, there is no contrary evidence to dispel concerns.

-    For the cleaning and waste management contract, the OC knowingly awarded
     substantially the entire work to a vendor, whose capability to deliver as per the OC was
     doubtful. The OC did not take any appropriate risk mitigation steps and the vendor also
     was unable to provide the requisite services during the actual conduct of the games.

-    In contract for catering for the venues, the inspection carried out to verify the
     competence of the potential vender overlooked certain major deficiencies and adjudged
     it as competent. Following the award of the contract, the vendor could not supply
     hygienic and reliable food

-    Time delays resulted in an important and expensive piece of equipment such as the
     Aerostat being shipped without any testing. Further, payments were released to the
     vendor without submission of insurance documents, which was contrary to the contract
     terms.

-    A conflict of interest was noticed in relation to the kitchen equipment installation
     contract in the games village. A consultant was engaged in the catering FA in the same
     period during which the OC was negotiating a contract in a company he was financially
     interested in. The Legal FA (who possessed no legal qualification) opined that this did not
     involve conflict of interest.

-    For various small and one time procurements, it was noted that falsification of
     documents to provide legitimacy of decisions to award contracts seemed to be an
     acceptable practice. The apparent ease with which some of this documentation was
     moved and approved within the OC without raising red flags was surprising.

-    For various small and one time procurements, the OC ended up obtaining quotations
     from vendors who did not have any signs of commercial activity at their stated place of


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                     Fifth Report of HLC – Organizing Committee

         business, especially as many of these were based on comparative quotations obtained
         by the OC from the “market”.


    Potential Financial impact

   The Potential financial impact of inconsistencies and adverse contracting as identified for
    contracts reviewed is approximately INR 382 Crores.           However, some of these could
    represent notional loss, maximum possible losses and some could represent cost saving
    opportunities. Due to the absence of additional and detailed information such as true costs
    of alternate procurement, it is not possible to distinguish or isolate actual costs involved in
    all cases. The detailed findings on each of these contracts and others are set out in the
    ensuing sections of the report.

   From the above, it is evident that the conduct of OC operations saddled the games with
    additional costs that could have been avoided had the OC functionaries conducted
    themselves in a manner consistent with the trust reposed in them. However, the adverse
    behavior that marked the contracts damaged the country’s reputation and cast shadow on
    the spirit of the games.


    Factors that contributed to their perpetration

   The adverse conduct of OC functionaries resulted in multiple instances where excessive or
    unnecessary expenditure was incurred and/or the possibility to gain additional revenue was
    not adequately realized. The fact that the OC and its functionaries attempted to indulge in
    such irregular or extraordinary procurement with relative ease suggests existence of various
    factors in the operating environment in OC that enabled or facilitated such perpetration.
    Some of the key issues noted in this regard are as follows.


    Existence of a coterie and wrong tone at the top

   The tone at the top in OC was contrary to what would be expected in an organization such
    as the OC. As detailed in the review, appointments to some of the key positions (such as
    Secretary General, successive Director- General, Finance & Accounts, Members of the
    Executive Committee and consultants) were made by the Chairman based on relationships
    and influence without regard to the merit of the candidate. These functionaries were

    18
                     Fifth Report of HLC – Organizing Committee

    vested with large decision making powers either directly or through the mechanism of pliant
    committees. Consequently, it is likely that a coterie was created within the top level of the
    OC that was not conducive to the environment in the organization. In a situation where
    most of the decision making was controlled by the Chairman and his loyal appointees, it was
    unlikely that any significant challenge would be provided to decisions made by any or all of
    them. This observation assumes significance due to the following.

    -    The very fact that people seemed to be shunted, transferred or superseded at times
         when they appeared to dissent or raise concerns suggests that the philosophy was to
         recruit and promote candidates who would follow directions without question.
         Patronage in appointments appeared to have been used quite effectively to elicit such
         behavior in the organization.

    -    At many times the OC seemed to function as a ‘club’ where the criteria for recruitment
         and promotion seemed “who knows who” rather than merit. For example, the Chairman
         himself brought on individuals as employees and consultants from his constituency in
         Pune, overlooking equivalent or better talent available elsewhere.

    -    A conflict of interest was allowed to exist in as high an office as the Chairman’s
         secretariat. For example, an OSD in the Chairman’s secretariat was found to be
         associated with a private travel agency through which the travel of the Chairman was
         booked multiple times, as against using travel agencies appointed by OC.

    -    People with questionable backgrounds such as Nachiketa Kapur, who the Appointment
         Committee of the Cabinet (AAC) opined should not be given any ‘sensitive post’ were
         given appointments by the OC. Other examples such as V.K Verma (DG) and R.P Gupta
         (ADG- Venue operations) against who vigilance enquiries at previous government
         positions were being conducted, TS Darbari against whom complaints were received
         while he was working in OC were also recruited disregarding the red flags. Potentially
         inappropriate behavior by other individuals in the Chairman’s secretariat was also noted
         during Forensic email reviews.

   The existence of a coterie appeared to have resulted in a situation where unethical and non
    transparent behavior was tolerated and promoted. Consequently, it is likely that these




    19
                      Fifth Report of HLC – Organizing Committee

    factors resulted in a tone at the top that seemed to propagate acceptability of lowered
    ethical standards within the OC.


    Did not bring the ‘best’ expertise to the games

   The argument used by the OC functionaries to explain high expenditures in terms of “best
    expertise” is not maintainable and appears to be just a deflection from the real issues
    involved. While the OC was mandated to conduct the games in an effective and efficient
    manner apart from providing legacy considerations, the actions of the OC functionaries
    seemed to contradict such directives.

    -    While the chairman was empowered to appoint advisors and consultants, at his
         discretion though the “recommendations” of search/selection committee, it was clearly
         evident that appointment of many Indian advisors and consultants was motivated and
         not in the best interests of the games. There were no apparent skill sets of candidates
         that justify appointments made or compensation offered to them apart from other
         irregular practices noted in the appointment and for such individuals.

    -    In terms of in-house expertise, many FA heads did not have any relevant experience in
         their areas of operation. For example the DDG-Legal did not have a basic law degree,
         but proceeded to dispense legal opinions on matters referred to him; the FA heads for
         significant FAs such as catering, overlays, accreditation, ticketing, ceremonies, did not
         have any prior experience in these areas.

    -    The OC attempted to bring foreign consultants in many areas, but failed to create an
         environment where best possible results could be ensured from their appointment. This
         is evident from the fact that despite obtaining the purportedly best international
         expertise, the OC continued to endure difficulties in contracting in almost all areas
         where consultants were engaged.

    -    While the OC continued to contend that engaging foreign vendors would bring an
         international element to the games, it is doubtful as to what portion of work was
         actually international as most of such vendors proceeded to engage local agents and
         suppliers in their ‘consortiums’.




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                     Fifth Report of HLC – Organizing Committee

    Created ‘panic’ on timing

   It is evident that things were delayed to an extreme point causing an ostensible panic which
    was used by the OC functionaries to either obtain exceptional approvals or provide
    justifications for inflated cost. Such delays were not isolated incidents but permeated the
    entire OC across contracts and FAs. This would be established by the fact that more than 90
    per cent of contracts of the OC, by number, were awarded commencing January 2010 i.e.
    barely 9 months before the games.


    Failure of governance and oversight

   Another fact that enabled perpetration of improper conduct was the failure of internal
    control systems to identify red flags or take action against errant behavior. Documentation
    and paperwork appeared to move in line with the authority matrix without significant
    objections or concerns, even when, prima facie, inconsistent information or irregularities
    (for example comparative quotations were dated after payment was made) were noted in
    some of the procurements reviewed.

   Even where it appears that concerns were raised by some individuals in the OC, it is not
    evident if resultant action was taken on these concerns. For example, Jarnail Singh, CEO in
    OC, raised a concern on the evidence of work being done by Indian consultants and
    advisors. While letters were issued by him to consultants asking them to detail work done,
    responses were not obtained in a majority of cases.

   It is also noticeable that appropriate oversight in terms of vigilance, audit and pre-audit was
    not set up by OC for critical areas and areas of potential wrong doing especially as red flags
    or concerns appear to have been raised in the large number of issues that seemingly existed
    across the OC.

   In the case of budgeting, the Chairman continued to project the revenue neutrality of OC
    despite significance evidence to the contrary. Till late in budget making exercise, no
    provision was made for one than 1/3 of functional areas and inadequate provision was
    made for some areas.        In the initial years, this could be possible but it was utterly
    unjustifiable in 2009. Evidence suggest that Chairman was leading a budget making process
    that was unprofessional and incompetent. Even two months prior to start of the games, the


    21
                     Fifth Report of HLC – Organizing Committee

    Chairman approached Government for sanction of more than INR 900 Crores when there
    was no need for additional funds.


    Policy of appeasement

   The OC also appear to succumb to the pressures and demands made by CGF functionaries
    even though some of these may not have been conducive to the Indian environment or to
    the revenue interest of the games. For example, CGF functionaries appeared to exercise
    considerable influence in the award of contracts to SMAM (for sponsorship) and Fast Track
    (for International TV Rights) both of which resulted in additional expenditures and
    underperformance against budgeted revenues.

   The OC also seemed overly dependent on foreign consultants to engage other such
    consultants and vendors. Consequently, the OC relied heavily on foreign consultants on
    referrals and did not create any internal capacity to identify and examine relevant expertise
    through their own efforts.

   The OC paid all expenses of Mike Hooper, CEO-CGF even when ostensibly Chairman OC was
    of the opinion that he did not add value to the OC. Consequently, it is likely that actions of
    the OC were skewed towards keeping ‘allies’ happy and thus may not be have been in the
    best interests of the games or its underlying expenditure.


    Dysfunctional management

   From a forensic review of emails and correspondences between various functionaries at the
    OC, it was evident that strained relations existed at various levels that may have resulted in
    a less than conducive environment for employees to contribute effectively. While such
    dysfunction could exist in any large organization, the fact that it existed at the highest levels
    within the OC without redressal was alarming. Some of the most significant indicators in
    this regard are as follows.

    -    CEO was not given adequate responsibility when he joined the OC in 2009. Again till the
         end, he was not given crucial powers (appointment of staff, consultants, and vendors,
         signing of contracts, etc) and was not made the head of the Secretariat.




    22
                     Fifth Report of HLC – Organizing Committee

    -    The former COO, V.K. Gautam appeared to have serious differences of opinions with T.S.
         Darbari (Joint DG) and VK Verma, DG.

    -    By and large email communications showed that a number of employees and foreign
         consultants appeared extremely cynical about the governance and managerial ability of
         the OC.

    -    There were frequent reassignments and turnover of employees at key times.


    Failure of the maker-checker concept

   Though the OC created a very comprehensive and multi-layered approval and oversight
    structure, each successive level appeared ineffective in preventing abuse. A reason perhaps
    was the ability of the Chairman and other functionaries to control significant appointments
    both within the OC hierarchy and oversight committees (such as the EB and EMC).
    Consequently, a strong structure on paper hid the concentration of power as governance
    was entrusted to management in complete contrast to the maker-checker concept.


    ‘Unquestionable’ power and authority of the Chairman

   By virtue of the powers of his office, the Chairman had complete control over all aspects of
    the OC’s operations that included the power to make or divest appointments, make
    ‘emergency’ orders that would be ratified by the EB, etc. Vesting of complete power in an
    individual without compensating control was, in retrospect, a bane that led to situations
    such as those enumerated in this report.

   The Chairman also appeared to misuse these powers vested in him as was evident in
    instances such as distribution of tickets, patronage shown to various sections, contracting
    situations such as catering, changing ‘dissenting’ employees, etc, which neutralized any
    compensating controls.


    Extravagant approach in the light of revenue neutral philosophy

   Throughout the run up to the games, OC kept emphasizing on a revenue neutral position to
    justify additional expenditure and budgets whereas, in reality, the situation was different. It
    was very evident that the OC did not exercise any reasonable logic and relied on anecdotal


    23
                    Fifth Report of HLC – Organizing Committee

    estimates for budget preparation. The review of various revenue areas clearly indicates that
    the OC grossly overestimated the revenue potential. As regard expenditure, the review
    indicates that these were grossly underestimated and were prepared without basic
    diligence such as providing for expenditure on major activities. Consequently, the OC kept
    misrepresenting a revenue neutral position to justify its extravagant approach in its
    spendings.

   In reality, the conduct of OC functionaries demolished all revenue earning potential and
    contrarily subjected the government to huge inflated costs and expenditures.


    Summary and conclusions

   The irregularities and adverse conduct that appeared to permeate a large part of the OC
    affected the smooth preparation and build up of games and its image. This climate
    encouraged misconduct, misdemeanor and in cases, possible personal profiteering by OC
    functionaries, caused losses, led to missed revenue opportunities and generated
    unnecessary expenditure.

   As detailed in the ensuing sections of the report, the cause and effect analysis clearly
    indicates that it may have been possible to achieve the same level of success of the games
    with far lower costs and blemish for wrong doing had the OC conducted operations in a
    transparent, fair and equitable manner.

   A key feature of the build up of the games was the delays. The organizational failures and
    wrongdoings led to delays which in turn provided the excuse for manipulation of the
    procurement procedures and override of controls. The delays were all pervading and
    stressed the management process to an extent that it could pull down the entire build up of
    the games. OC’s ways of doing things neither conformed to best practice nor met the
    expected ethical norms.

   Fortunately, a mix of favorable factors including government intervention, though belated
    and tremendous effort by a number of dedicated officials in OC and other stakeholders saw
    that the games were held despite all the road blocks arising from incompetence,
    inappropriate behavior and extreme delays.




    24
                    Fifth Report of HLC – Organizing Committee

   The system of poor governance, failures and override of controls in the OC engendered a
    work culture where wrong doing was tolerated. As detailed analysis showed, in many cases
    the culpability of OC officials, especially those who were perceived to be close to the
    Chairman, was evident and wherever possible this review has identified such cases.
    Inevitably, the culpability factor gravitates upwards to stop at the door of the Chairman,
    who retained complete and absolute power over all aspects of OC’s operations.

   The review brings out that in many cases, the Chairman personally took steps that were
    detrimental to the OC’s interest but there was no appropriate forum in the OC where such
    actions could be called to question. Therefore, the accountability for all these failures and
    wrongdoings was never identified.




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                          Fifth Report of HLC – Organizing Committee

1       Chapter 1: Introduction

1.1     Background

1.1.1   The Organizing Committee Commonwealth Games 2010 Delhi (OC CWG Delhi 2010) came
        into existence on 10 February 2005 as a registered society under the Societies Registration
        Act, 1860. It was resolved by the Commonwealth Games Federation (CGF) in the General
        Assembly held in Jamaica on 13 November 2003 to entrust the organizing and hosting of the
        XIX Commonwealth Games to the Indian Olympic Association (IOA). As per Clause 2(C) of
        the Host City Contract, signed by the Government of India (GOI), the Government of
        National Capital Territory of Delhi (GNCTD), IOA, and CGF, the CGF delegated the
        organization of the Games to the OC CWG Delhi 2010.

1.1.2   The Host City Contract identifies and binds the five key stakeholders who are responsible for
        the successful delivery of the XIX Commonwealth Games 2010 Delhi. It was incumbent upon
        these stakeholders to undertake all measures, including adequate financial provisions, to
        deliver the Games in the most befitting manner within the framework of the Constitution,
        Protocol and Guidelines of the Commonwealth Games Federation (CGF). The key delivery
        partners are:

            Commonwealth Games Federation (CGF);

            Indian Olympic Association (IOA);

            Organising Committee (OC);

            Government of the National Capital Territory of Delhi (GNCTD);

            Government of India (GoI).

1.1.3   The requirement to fulfill multiple functional roles as well as several support areas in the
        organization and management of an event of the stature of the XIX Commonwealth Games
        2010 Delhi also includes several ministries, departments and agencies of GoI and several
        local and municipal bodies of the GNCTD.




        26
                           Fifth Report of HLC – Organizing Committee

1.2     Scope of Report

1.1.4   This report contains the findings and conclusions on the review of the organization and
        conduct of games by the Organizing Committee. The review was carried out in the light of
        the Terms of Reference( TOR) of the High Level Committee, with special focus on:

            Effectiveness of organizational structure and governance of Organizing Committee including
             recruitment, role of senior functionaries, consultants, and advisors

            Efficacy of vigilance and internal audit as a mechanism of oversight

            Planning and execution of key contracts for service delivery with reference to time, cost, and
             quality

            Alleged    misconduct,    irregularity,   wasteful    expenditure,     and   wrong    doing   in
             contracting/procurement of goods and services

            Inability to accomplish revenue targets set forth to make the event revenue neutral

            Role of individuals, employees, consultants and advisors on various aspects related to the
             conduct of OC’s operations.


1.3     Areas selected for review

1.1.5   The areas for review were selected considering their criticality and significance to the
        conduct of games and/or likely misconduct and irregularity. The review concentrated on
        following aspects of the games:


        OC’s Budget

1.1.6   The section contains review of the budget prepared at OC and revisions/revalidations
        performed on the same.


        Governance

1.1.7   The section on Governance covers the review of the organizational structure of OC, role of
        senior functionaries, and effectiveness of vigilance and internal audits mechanisms related
        to control and oversight.



        27
                                Fifth Report of HLC – Organizing Committee

        Key Sources of Revenue

1.1.8   The section on revenue covers the OC’s conduct related to revenue generation from games
        operations as well as expenditure on contracts awarded to earn such revenue.                                          The
        following are the three broad categories that comprise the core revenue generations
        aspects at the OC.

        Table 1.1: Revenue areas selected for review

             Functional Area            Scope                          Contractor                     Projected     Actual
                                                                                                              3
                                                                                                      Revenue       Revenue

                                                                                                      (INR crore)   (INR crore)

             Ticketing                  Revenue from ticket Consortium                        of 100                39
                                        sales                          IRCTC, Broadvision,
                                                                       and TicketPro

             TV Rights                  International                  M/s Fast Track                 260           2144
                                        Broadcasting Rights

             Sponsorship                Revenue               from M/S                   Sports 960                 2355
                                        Sponsorship Rights             Marketing            and
                                                                       Management


        Significant Expenditure areas

1.1.9   According to the information provided, the OC entered into approximately 517 contracts
        aggregating to INR 1,649 crores in value.6 The review was oriented towards expenditure
        incurred by functional areas that were considered most significant from the perspective of
        the TOR of the HLC. On an overall basis, the review covered examination of contracts in 10
        functional areas of the OC aggregating to expenditure of INR 1,131 crores in addition to the
        various administrative actions for which financial value was not the key signifier.

        3
            From EY/EKS revalidated budget

        4
            Revenue of USD 46.404 million (conversion rate USD 1 = INR 46.28)

        5
            Most of these revenues were received from Government/PSO where efforts of SMAM were not evident

        6
            As per the data provided by OC. A copy of all such contracts is attached in Appendix 1.


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                       Fifth Report of HLC – Organizing Committee

Table 1.2: Contracts selected for review

                                                                                                    Contract

#        Functional Area         Scope                              Contractor                      Amount7

                                                                                                    (INR Crore)

                                                                    PICO / Deepali Overlays
                                                                                                    231
                                                                    Consortium

                                                                    GL Litmus/ Meroform             165
         Overlays         and Games Overlay/ Temporary
1        Venue                   Fitments        as    a   Turnkey NUSS LI:/Comfort Net             141
         Development             project on rental basis
                                                                    ESAJV :/ D Art : Indo
                                                                                                    93
                                                                    Consortium

                                                                    Total                           630

                                                                    M/s.      Swiss    Timing,
                                 Timing Scoring & Results                                           112
                                                                    Switzerland

                                                                    Telecommunications
2        Technology              IT Procurement                                                     69.13
                                                                    Consultants of India Ltd.

                                 Games                Management M/s.           Gold   Medal
                                                                                                    21
                                 System                             Systems, Canada

                                 Master Caterer – Games Delaware                   North        –
                                                                                                    66.59
                                 Village                            Australia

                                 Venue Catering (Workforce M/s AFP, M/s IRCTC, M/s
                                                                                                    27.20
                                 and Lounges)                       Gravis, M/s Seven Seas
3        Catering
                                 Kitchen               Equipment
                                                                    M/s PKL                         8.63
                                 Purchase for game Village

                                 Installation and Supply of M/s Constellation                       9.50
                                 Kitchen     Equipment   at


7
    All values are rounded off to whole number


29
                       Fifth Report of HLC – Organizing Committee

                                                                                      Contract

#        Functional Area        Scope                           Contractor            Amount7

                                                                                      (INR Crore)

                                Games Village

                                Aerostat                        M/s K Events          36.75

                                Lighting & Search Lights        PRG                   16.46

4        Ceremonies             Event      Management      –                          21.49
                                                                M/s Wizcraft
                                D2010

                                Cultural Show                   Omang Kumar           16.49

                                Sports     Equipments      &
5        Sports                                                 Various               278
                                Surfaces

         Cleaning & Waste Main              Stadium        &
6                                                               A2Z Maintenance       19
         Management             Ceremonies

7        Press Operations       Press Operations                Info strada Sports    9

8        Accreditation          Lanyards                        Tristar Enterprises   <1

         Office
9                               Building Refurbishment          NDCC Building         32
         Administration

                                Observer    Programme      in
10       CGA Relations                                          NA                    8.00
                                Beijing Olympics

                                Small      and     ‘one-time’
11       Various FAs                                            Various               NA
                                administrative expenditure




8
    Total expense on Sports Equipments


30
                           Fifth Report of HLC – Organizing Committee

         General Administration

         Additionally, a number of other areas related to the OC’s conduct of operations were reviewed.
         These include the following.

             Staffing and Personnel

             Consultants and Advisors

             Appointment of EKS


1.4      Methodology

1.1.10   The areas identified above were reviewed in the background of timelines for conducting the
         games; financial and administrative guidelines of the OC; generally accepted good practices
         related to governance, administration and procurement; conformity to delegations of
         financial and administrative powers; general norms of proprietary and information provided
         to HLC.

1.1.11   As part of the review approximately 1 terrabyte of electronic records and information was
         obtained and reviewed. This roughly translates, in terms of paper, to a 45,000 square feet
         warehouse, having 5-feet cupboards stacked with dual side single spaced printed
         documents.

1.1.12   In several cases, original records were not available at all or were available late as OC had
         supplied concerned records and documents to the statutory agencies including the C&AG of
         India, the Income Tax authorities and agencies like Central Bureau of Investigation and
         Enforcement Directorate. In several cases the review work was carried out on the basis of
         the copies of the original records as made available by the OC. In some areas, review could
         not be taken up as the records were still in use for ongoing investigation work by these
         agencies.

1.1.13   In a few cases, review was not taken up as investigation by other agencies has made
         progress and any work by the HLC would amount to overlapping and duplication.

1.1.14   The procedures carried out generally included the following.

             Forensic imaging of computers of identified OC personnel and subsequent review of information
              including recovered deleted data, where considered necessary

         31
                           Fifth Report of HLC – Organizing Committee

            Email review of available emails obtained from the vendor managing the email hosting services
             for OC

            Data analysis over available financial data, ticketing data, bill of quantities for select contracts,
             and other information as deemed relevant for review

            Public documents and records searched including company reports available from Ministry of
             Corporate Affairs website (www.mca.gov.in)

            Correlation of information with relevant data available at other departments of Government of
             India

            Examination and desk study of relevant hard copy notes, contract and agreements evaluation
             reports, office orders, and approvals pertaining to the area under review

            Interview and discussion with various functionaries of OC

            External visits to corroborate information as necessary


1.5     Acknowledgement

1.5.1   Committee expresses its thanks to the officers and staff of the OC who cooperated by
        providing the information and documents sought. The Committee also acknowledges the
        amenities and office space provided by OC to facilitate the conduct of the review.
        Committee further places on record it’s thanks to the offcials of CBI, IRCTC, Income Tax, ECIL
        and TCIL who have extended their time and support and allowed access to their records.




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                             Fifth Report of HLC – Organizing Committee

2       Chapter                       2:           Organizing                         Committee’s
        Budget

2.1     Background

2.1.1   The Indian Olympic Association (IOA) had the responsibility for preparation of the first
        budget of the Commonwealth Games 2010. Mr. Suresh Kalmadi was the President of the
        Indian Olympic Association at the time. The first budget was to be prepared and put before
        the Cabinet for their approval prior to the commencement of the bidding process for the
        Commonwealth games. The IOA prepared a budget of INR 296.61 crore and projected
        sponsorship revenue of INR 490 crore as per the cabinet note dated 20 May 2003.

2.1.2   This first budget underwent two revisions and finally an expenditure budget of INR 656.86
        crore (i.e. USD 141 million as per the Bid document9) was submitted as part of the Bid
        document submitted to the CGF in November 2003.

2.1.3   The OC was established in February 2005. Mr. Suresh Kalmadi was appointed as Chairman
        of the OC for the Commonwealth Games D 2010. Accordingly, the baton for preparation of
        budgets was handed over by the IOA to the OC in 2005. The first budget prepared and
        submitted by the OC to the MYAS for approval in September 2006 amounted to INR 896
        crore10.

2.1.4   Subsequently, the OC realized that they needed to prepare a revised budget as the previous
        budget estimates were incorrect/ falling short of actual expenditures. Accordingly, the OC
        appointed Ernst & Young in March 200711 to revalidate and prepare a revised budget.

2.1.5   Thereafter, on the basis of the submission of the revised and revalidated budget, the MYAS
        approved the final budget of INR 1,620 crore12. The adhoc procedures adopted by the OC to
        prepare the budget for the Commonwealth Games have been dealt with in this report.

        9
            Refer Annexure 2.1 for Budget estimates as per Bid document.
        10
             Refer Annexure 2.2 for minutes of EFC meeting held on 13 September 2006 to consider the budget of OC.
        11
             Refer Annexure 2.3 engagement letter sent by OC to Ernst & Young for validation of the OC Budget.


        33
                             Fifth Report of HLC – Organizing Committee

2.1.6   A brief chronology of the key events relating to the budgeting process is set out in the table
        below.

        Table 2.1: Chronology of budgeting process for OC

         Year           Particulars




         2006           Initial Budget of INR 896.01 crore submitted to GOI.

         2007           MYAS sanctioned the First Budget of INR 767.01 crore on 9th April 2007

         2008              Revalidated budget of INR 1,323.94 crore submitted to MYAS on 15 April
                            2008
                           Revised revalidated budget of INR 1,420.67 crore submitted again after
                            correction of error on 9 July 2008
                           Revalidated Budget of INR 1,873.17 crore made after discussion with
                            Secretary MYAS on 5 December 2008
         2009              Final revised estimates of INR 1,857.89 crore submitted to MYAS on 2 June
                            2009
                           MYAS sanctioned second budget of INR 1,620 crore on 18 November 2009
                           Budget for TSR amounting to INR 52 crore and sports equipment amounting
                            to INR 35.25 crore sanctioned by MYAS in November 2009.
         2010              Overlays budget of INR 687 crore sanctioned by MYAS on 30 March 2010.
                           Additional budget for ceremonies FA amounting to INR 193.42 crore
                            sanctioned by GOM on 2 June 2010.


2.2     Preparation of adhoc budgets and repeated revisions


        First to third budget prepared

2.2.1   As mentioned above, the IOA prepared the first budget for the Commonwealth Games
        2010. As per a document retrieved through computer forensics from the computer system
        of Mr. Praveen Grover, Director, Treasurers office, “This budget was prepared by IOA based


        12                                                  th
             Refer Annexure 2.4 MYAS approval letter dated 18 November 2009 for INR 1,620 crores as OC Budget.


        34
                              Fifth Report of HLC – Organizing Committee

        on the first hand information available at that time. IOA neither had the actual facts and
        figures nor any expertise in working out the estimated cost of organising Commonwealth
        Games”13.

2.2.2   As per the same document retrieved, a second revision14 of the budget was carried out and
        the expenditure budget of INR 296.50 crore was increased by INR 103 crore bringing the
        expenditure budget to INR 399.50 crore. The GOM minutes have recorded the expenditure
        budget of INR 399.50 crore and revenue budget of INR 10 crore as the first budget
        submitted by IOA. According to the GOM minutes, Mr. Kalmadi requested the Government
        of India to underwrite this short fall and sign the Host City Contract in 2003 15. Subsequently,
        according to the GOM minutes dated 17 September 2003 and 1 October 2003, an
        expenditure budget of INR 399.05 crore16 with respect to the Organising Committee was
        approved by the Ministry based on IOA’s proposal.

2.2.3   The budget was revised a third time prior to the submission of the Bid document in
        December 2003. According to the document retrieved17 as mentioned above, “The budget
        was revised to finalise the official bid documents, after consulting the CGF and other stake-
        holders. Officials of Sports Ministry were involved in the meetings with CGF. The increase in
        the cost was due to additional components viz. Opening and Closing Ceremonies, Cultural
        Programmes, Doping and Medical Services, QBR, Youth Games (INR66.50 croes), etc.” This
        third revision brought up the expenditure budget to INR 656.86 crore (i.e. USD 141 million
        as per operational plan in the Bid document, December 2003). It was noted that as per the
        Bid document the “games operational plan has been based on the relevant data and study
        conducted by M/s A Sharma & Company, Financial consultants with the information
        obtained from the last Commonwealth Games and International Sporting events held in




        13
             Refer Annexure 2.5 for document retrieved from Mr. Praveen Grover’s computer system.
        14
          Refer Annexure 2.5 for details of second revision from the document retrieved from Mr. Praveen Grover’s
        computer system
        15
             Refer Annexure 2.6 for letter from Mr. Suresh Kalmadi to Rajiva Srivastava, Secretary, MYAS.
        16
             Refer Annexure 2.7 for break up of expenditure components for staging the Commonwealth Games, 2010.
        17
             Refer Annexure 2.5 for document retrieved from Mr. Praveen Grover’s computer system.


        35
                             Fifth Report of HLC – Organizing Committee

        Delhi”18. It must be noted that, the budget submitted in the bid document in December
        2003 was 117% higher than the budget estimates discussed in the cabinet meeting in May
        2003.

2.2.4   The revision of the budget for the third time based on the relevant data and study
        conducted by M/s A Sharma & Company, also failed to cover all aspects of the budget for
        the common wealth games. This is apparent from the document retrieved which shows
        that the budgets were revised 8 times even after the submission of the budget in the Bid
        document.

2.2.5   The document retrieved clearly reveals that even at the time of bidding for the
        Commonwealth Games, the personnel responsible for preparation of the budget had
        neither the actual facts and figures nor any expertise in working out the estimated cost of
        organising Commonwealth Games. Evidently, it was prepared in an adhoc manner with no
        reliable estimate of the nature of costs that could be incurred in organising an international
        event of such magnitude. It may be correct to say that India, went ahead with its 2003 bid
        with no clue about what the implications would be for the country in terms of the costs
        involved. This failure cost the exchequer heavily as the expenditure profile of CWG unfolded
        over the years.

2.2.6   The IOA did not make any further revisions/ changes to the budget after the submission of
        the Bid document in December 2003. All further revisions were made by the OC after its
        establishment in 2005.


        Preparation and Deliberations around the Fourth budget of INR 896 crore

2.2.7   The first budget prepared and submitted by the OC to the Ministry for approval in
        September 200619 amounted to INR 896 crore. As per the justification provided in the
        document retrieved20, increase in budget from INR 656 crores at the time of Bid to INR 896
        crore was attributable to “IOA had to make a last minute offer of US$ 1,00,000 to each CGA
        as training grant to win the bid (INR48 crores). Revision was also necessitated due to
        18
             Refer Annexure 2.1 for Bid Document 2003.
        19
             Refer Annexure 2.2 for minutes of EFC meeting held on 13 September 2006 to consider the budget of OC.
        20
             Refer Annexure 2.5 for document retrieved from Mr. Praveen Grover’s computer system.


        36
                              Fifth Report of HLC – Organizing Committee

         addition of 3 more disciplines resulting in increase of 1,000 athletes and officials, India's
         participation in M2006 Closing Ceremony, Volunteers Programme, Contingency, increase in
         the budget for Pune Youth Games by INR43.50 crores (from INR66.50 crores to INR110.00
         crores), etc.”

2.2.8    The OC submitted the proposal for a budget of INR 896 crore in September 2006. The
         proposed budget was deliberated over by the Expenditure Finance Committee(EFC) in
         September 2006. As per the minutes of the Expenditure Finance Committee meeting held
         on 13 September 2006, Suresh Kalmadi, Chairman, OC, stated that “the games would be
         revenue neutral and may in fact yield a surplus. Compared to the expenditure of about INR
         1,500 crore incurred at the conduct of the Melbourne Games, the outlay of INR 896 crore
         projected by the OC was reasonable…..”21.

2.2.9    Additionally, Mrs. Vijaylakshmi Gupta, ADG Finance, OC, expressed confidence on achieving
         the revenue projection of INR 900 crore. She mentioned that “unit cost norms in respect of
         expenditure have been worked out on the basis of the inputs from five main sources viz., (i)
         CGF, (ii) Host City Contract, (iii) Melbourne Games, (iv) government agencies connected with
         Transport/ Hospitality and (v) CGF manuals”. She also indicated that “the OC Budget could
         not be treated as final, and the OC would be on a learning curve as they move forward” 22.

2.2.10   Based on these projections of expenditure and revenue provided by OC officials and their
         assurance that the games will be revenue neutral, the Ministry approved a budget of INR
         767 crore on 9 April 200723. Considering the nature of OC budget, the Ministry of Youth
         Affairs and Sports, Government of India, approved a ‘Non- Plan expenditure budget’ of INR
         767 crores to the Organising Committee towards conduct of the Games. This budget of INR
         76724 was inclusive of the budget for the Commonwealth Youth Games in Pune.




         21
           Refer para 3 in Annexure 2.2 for minutes of EFC meeting held on 13 September 2006 to consider the budget
         of OC.
         22
           Refer para 4 in Annexure 2.2 for minutes of EFC meeting held on 13 September 2006 to consider the budget
         of OC.
         23
              Refer Annexure 2.8 MYAS approval for Non- plan expenditure budget of INR 767 crores.
         24
              The functional area wise break up has been provided in Annexure 2.9.


         37
                               Fifth Report of HLC – Organizing Committee

2.2.11   Subsequently, the MYAS approved a further increase of INR 66.50 crore for the
         Commonwealth Youth Games in Pune. Thus the total budget for the Commonwealth Youth
         Games went up to INR 110 crore25. Accordingly, the total budget for the commonwealth
         games increased from INR 767.01 crore to INR 810.51 crore.

2.2.12   Further, it was also communicated by the Ministry that the funds will be provided to the OC
         as an unsecured loan at the Government rate of interest prevailing at the time of release.
         The repayment of the loan and interest would commence only after the commencement of
         the revenue generation by the OC. On 7 August 2007, the Ministry conveyed to the OC that
         all past releases as ad hoc advances amounting to INR 127.51 crore (i.e. during the period
         2004-05 to 2006-07) may also be treated as loan instead of grants from the respective date
         of release26.


         Benchmark M2006

2.2.13   It must be highlighted at this point that the Benchmark M2006 submitted by the OC along
         with the proposal for INR 896 crore budget and as attached to the EFC minutes, clearly show
         that the M2006 games were not revenue neutral. Summary is provided in the table below:

         Table 2.2:

          Benchmark M 200627

          Expenditure                                           Revenue

          Amount in AUD Mn            Amount       in    INR Amount in AUD Mn            Amount        in     INR
                                      crores                                             crores

          450.2                       1,575.6                   240.6                    842




         25
              Refer Annexure 2.10 for approval of revised budget of INR 110 crores for CWYG, 2008, Pune.
         26
              Refer Annexure 2.11 for MYAS letter for conversion of past releases of funds to OC into loan.
         27
           Refer Annexure 2.12 for Benchmark M 2006 submitted to MYAS as part of Budget proposal of INR 896 crores
         submitted by OC.


         38
                           Fifth Report of HLC – Organizing Committee

2.2.14   Thus it is alarming that the above mentioned figures were overlooked by the OC and
         Ministry and an expenditure budget was approved on the basis that the games will be
         revenue neutral.

2.2.15   It must be noted that even after the OC prepared the above budget on the basis of the M
         2006 games, 14 functional areas were still not accounted for. Thus it is apparent that the
         2007 budget was also prepared without adequate consideration and informed decision.

         The 2007 budget had not accounted for the following functional areas and their related
         expenses amounting to INR 385.59 crores:

         Table 2.3:

          S. No.   Expenditure Area                          Revised Estimates Total

                                                             (INR Cr.) (after discussion)

          1        Sponsorship                               237.45

          2        T.V. Rights                               34.73

          3        Logistics                                 16.43

          4        Finance                                   13.54

          5        Sustainability & Environment              13.06

          6        Spectator services                        12.78

          7        Procurement                               12.36

          8        Ticketing                                 11.74

          9        Legal                                     8.22

          10       Security                                  8.19

          11       Accreditation                             7.46

          12       Cleaning & Waste Management               5.71

          13       Merchandising & Licensing                 2.11




         39
                              Fifth Report of HLC – Organizing Committee

          14          City Operations                                      1.81




2.2.16   It is surprising to note that the OC had not budgeted for as many as 14 functional areas in
         the 2007 Budget, even though they had planned to create these departments as per the Bid
         document submitted in December 200328.

2.2.17   Another point to be noted is that the cost norms used have been based on the rates of
         travel, transports, hotels and catering obtained from ITDC, Balmer and Lawrie & Co. and IHC
         etc29. There seems to be a mismatch between the assumption used for the budgets and the
         promises in the Bid document. As per the Bid document, the Federation Group, Techincal
         Officials, IF delegates/ observers, news media, VIP’s would be provided accommodation at
         appropriate first class location in first class conditions/ minimum 3.5 to 4.0 star hotel
         facilities which could be upgraded with negotiations etc will be provided 30. It is thus
         apparent that the initial budget of INR 767 crores was not prepared even in line with the Bid
         document.


2.3      Preparation of revalidated budget

2.3.1    In 2006, the OC realized that they needed to prepare a revised budget as the previous
         budget estimates were incorrect/ falling short of actual expenditures. This time OC hired
         Ernst & Young to prepare the revised budget in March 2007. A budget of INR 1,323.94
         crores was prepared by E&Y and submitted to MYAS in April 2008. This budget was revised
         to INR 1,779 crores in July 2008. Finally in December 2008, a revalidated budget of 1,857
         crores was submitted to MYAS31.

2.3.2    On 18 November 2009, the Ministry of Youth Affairs and Sports, Government of India
         approved the revised budget of the OC for the conduct of the games amounting to INR

         28
              Refer Annexure 2.1 – page 40 of the Bid Document 2003.
         29
           Refer para 4 in Annexure 2.2 for minutes of EFC meeting held on 13 September 2006 to consider the budget
         of OC.
         30
              Refer Annexure 2.1, page 138-141 of the Bid Document 2003.
         31
           Refer Annexure 2.5 for details of budgets prepared and revised as per document retrieved from Mr. Praveen
         Grover’s computer system.


         40
                              Fifth Report of HLC – Organizing Committee

        1,620 crores inclusive of INR 110 crore for the Commonwealth Youth Games, Pune 32. This
        approval was based on the revalidated, revised budget estimated by Ernst & Young of INR
        1,857 crore inclusive of INR 110 crore for the commonwealth youth games Pune.

2.3.3   It must be noted here that in 2009, the OC had already commenced issue of Expression of
        Interest and RFP’s for various contracts and were in the process of receiving commercial
        bids from contractors under some functional areas like Catering, Cleaning and waste
        management, Ceremonies, Technology, Ticketing etc.

2.3.4   It is also worth noting that even though the OC had issued RFPs for the abovementioned
        functional areas before approval of the revised budget, the revised budget in case of
        catering, cleaning and waste management, Technology and Ticketing still fell short of the
        actual expenditures and OC re- appropriated budgets from other functional areas to these
        functional areas.

2.3.5   This highlights the fact that either the OC had no idea about the expense to be incurred
        under these functional areas or were unable to negotiate the rates with the contractors. It
        also reflects on the total failure of the OC in taking ownership of the budgets and adhering
        to the same. In most cases the OC officials have cited extreme time constraints and agreed
        to the prices laid down and dictated by the contractors. This may also be an indicator of
        possible collusion among the OC officials and contractors to earn commission and kickbacks.

2.3.6   It must also be noted here that even the revised budget approved in November 2009 did
        not consist of an overlays budget. The Expression of Interest for the contracts for Overlays
        was issued by the OC in December 2009. Government repeatedly requested OC to provide
        estimates for overlays expenditure but OC did not provide the same till end 200933. The
        Ministry approved overlays budget of INR 687 crore in March 2010.

2.3.7   The total final expenditure budget as approved by the Ministry is summarized in the table
        below34:


        32
             Refer Annexure 2.4.
        33
             Refer section on Overlays.
        34
          A functional area wise break up of the initial budget and the final approved budget has been provided in
        Annexure 13.


        41
                               Fifth Report of HLC – Organizing Committee

        Table 2.4:

            Particulars                 Final approved Budget Initial 2007 Budget       % Increase
                                        (Amount in INR crore)
                                                                (Amount in INR crore)

            35 Functional areas         1,510                   700.5                   115.5%

            Common           wealth 110                         66.5                    65.4%
            Youth Games, Pune

            Overlays                    687                     -                       100%

            Additional budget for:

            - Ceremonies                193                     -                       100%

            - Sports equipment          35.25                   -                       100%

            - Timing, scoring and 52                            -                       100%
               result system
            Total                       2,587.25                767.10                  237.37%




              A document recovered through computer forensics from the computer system
               of Praveen Grover, Director and Treasurers Office revealed justification provided for
               making budgets under new functional areas / increasing budgets in certain functional
               areas35.


2.4     Re-appropriation of Budgets

2.4.1   The OC had the flexibility of + 25% for re- appropriation of funds across various heads,
        within the overall approved revised budget of INR 1,620 crore. Re- appropriation beyond
        25% would require the approval of MYAS.                 Further, this re- appropriation was not




        35
             Refer Annexure 2.14 for details.


        42
                               Fifth Report of HLC – Organizing Committee

        permissible on the items of expenditure relating to generation of revenue from
        sponsorship/ broadcasting rights etc36.

2.4.2   Further, a Finance sub- committee with the Government nominees of the Executive Board
        i.e. Secretary (Urban Development), Secretary (Sports) and Additional Secretary/ Special
        Secretary (Expenditure) of the Ministry of Finance37, was constituted to scrutinize in
        particular, all decisions that are placed before the Executive Board for approval38.

2.4.3   However, the OC was unable to adhere to the budget of INR 1,620 crore approved by the
        MYAS. On 7th June 2010, Mr. Jarnail Singh, CEO, OC, wrote to Mrs. Sindhushree Khullar,
        Secretary, MYAS, seeking permission “to cut allocation of eight FAs and give additional to
        three FAs”39.

2.4.4   The justification for increasing the budget via re- appropriation under the 3 FA’s is given in
        the table below40 :

        Table 2.5:

         Functional area             Approved         Additional       Reason for additional requirement
                                     Budget           requirement
                                                      (in INR crore)
                                     (in INR crore)

         Catering                    63.33            87.00            “INR 106 crore already committed
                                                                       for Games Village.        Majority of
                                                                       tenders yet to be finalized”.




        36
             Refer Annexure 2.4 para 1 (ii) (a).
        37
          Refer Annexure 2.15 – minutes of meeting were sent to Additional Secretary/ Special Secretary
        (Expenditure) of the Ministry of Finance,
        38
          Refer Annexure 2.15 for Terms of Reference of the Finance Sub- committee for OC, Commonwealth Games,
        2010 detailed in the minutes if the first Finance Sub- Committee meeting held on 20 November 2009. .
        39
          Refer Annexure 2.16 for re- appropriation details proposed across 11 functional areas and submitted for
        approval from MYAS.
        40
          Refer Annexure 2.16 for re- appropriation details proposed across 11 functional areas and submitted for
        approval from MYAS.


        43
                              Fifth Report of HLC – Organizing Committee

            Cleaning and waste 11.22              20.00              “High cost coming through tenders”.
            management


            Technology           185.05           60.00              “Payment of INR 30.00 Cr to MTNL
                                                                     and     additional   requirement      of
                                                                     equipments for games”. It must be
                                                                     noted that this contract had been
                                                                     entered into in October 2009 and
                                                                     thus the OC should have made a
                                                                     provision for the same.

            Total                259.6            167.00


             The above reasons given by the OC for re- appropriation of funds reek of the
              incompetence or failure in the budget process as the re- appropriations have been
              requested based on tenders received from vendors or on account of committed
              payments.

             It should be noted that there was considerable delay in the tendering process for
              important FAs like catering, cleaning and waste management and Technology ostensibly
              for ‘lack of time’ and ‘successful conduct of the games’. Detailed review of these tender
              cases showed that such delays were avoidable and deliberate in many cases and even
              collusion between the vendors and OC management was possible in these cases. End
              result was that such delays provided the grounds to demand additional money for the
              games.

2.4.5   The MYAS approved the re- appropriation in all the functional areas except the proposed
        cut in the expenditure head related to Sponsorship41. The additional re- appropriation
        approved in the three FA’s is given in the figure below:

        Table 2.6:

            Functional area                                                Approved re- appropriation



        41
          Refer Annexure 2.17 for MYAS approval for re- appropriation of funds from one functional area to another
        within the approved budget of the OC of INR 1,620 crore.


        44
                              Fifth Report of HLC – Organizing Committee

                                                                            (in INR crore)

         Catering                                                           53.50

         Cleaning and waste management                                      20.00

         Technology                                                         24.00

         Total                                                              97.50


2.4.6   Subsequently, Mr. Jarnail Singh, CEO, OC, sent two more requests for re- appropriation to
        Mrs. Sindhushree Khullar, Secretary (Sports) in June and July 201042. However, the MYAS
        did not approve these requests. Instead in July 2009, MYAS ordered the OC to prepare “a
        more realistic proposal” so that the correct position of additional requirement vis-à-vis
        savings could be anticipated under the various FA’s43.

2.4.7   The OC responded to the above mentioned request of the MYAS in November 2010. This
        request was prepared by Gp. Capt. KUK Reddy, ADG, Finance and Accounts44. As informed
        through discussion, no response has been received from the MYAS till date.


        Additional demand for budget in June 2010

2.4.8   In June 2010, Mr. Suresh Kalmadi sent a request for allocation of additional budget of INR
        913.94 crores (inclusive of the INR 194 crores approved earlier for ceremonies) to Ms.
        Sindhushree Khullar, Secretary (Sports), MYAS. According to Mr. Kalmadi, this additional
        allocations was “essential on account of certain activities under Ceremonies, Catering,
        Cleaning & Waste Management, Communication, Image & Look, Office Administration,
        Technology and Sports etc. which were either not envisaged earlier or where the scope of
        work has got enhanced”45. The Chairman’s plea for additional allocation of budget also
        stated that “in the coming days we are likely to face serious financial crunch as some of the
        42
             Refer Annexure 2.18 for letters from CEO, Jarnail Singh.
        43
             Refer Annexure 2.19 for letter from MYAS on 16 July 2010.
        44
          Refer Annexure 2.20 for letter from KUK Reddy to MYAS requesting for re- appropriation and further release
        of funds
        45
          Refer Annexure 2.21 – page 1, para 3 of the letter to Secretary (Sports), MYAS along with Annexure A and B
        giving details of additional requirement with justifications against each Functional area of the OC.


        45
                              Fifth Report of HLC – Organizing Committee

         Functional Areas have either already exhausted their approved budget or may exhaust the
         same very soon in fulfilling the contractual obligations”46. This clearly depicts the failure of
         the OC to estimate the expenses to be incurred on account of lack of understanding of the
         scope of work required in some of the most essential functional areas of the organisation.
         Further, it also clearly highlights the fact that the OC merely succumbed to the prices
         quoted by the vendors and did not negotiate to remain within the allocated budget of INR
         1,620 crores.

2.4.9    In the request letter, Mr. Suresh Kalmadi, Chairman, OC, also alleged that “our budget came
         under further strain as the Organising Committee had to bear an amount of INR 469.76 Cr47
         out of its allocation of INR 1,620 Cr which were otherwise liabilities of other Ministries of
         Government of India”48. Mr. GC Chaturvedi, SDG, Finance and Accounts stated during
         discussions, that this allegation is not supported by any agreement in writing between the
         GOI and OC. Further it must also be noted that the OC had already made an estimate for
         some of these expenses like Office space rental, Games news service, grant for participating
         countries and license fees in the revalidated budget of INR 1,620 crores, approved by MYAS
         vide letter dated 18th November 2009. Accordingly, there seems to be a contradiction
         between the Chairman’s statement and expenditure estimates made by the OC.

2.4.10   It must be noted that the MYAS did not approve this additional budget request.

2.4.11   This request for additional allocation of budget for INR 914 crores was exclusive of overlays.
         Accordingly, this demand pitched the OC expectation to INR 2534 crores excluding Overlays
         expenditure and INR 3,221 crores inclusive of Overlays of INR 687 crores which is
         astounding. Reasons for this additional allocation given in Annexure B49 to the letter clearly
         highlight the failure of the OC to estimate the expenses to be incurred, lack of
         understanding of the scope of work and lack of negotiation with vendors.

         46
           Refer Annexure 2.21 – page 1, para 5 of the letter to Secretary (Sports), MYAS along with Annexure A and B
         giving details of additional requirement with justifications against each Functional area of the OC.
         47
              Refer Annexure 2.21 – break up of expenses to be borne by GOI.
         48
           Refer Annexure 2.21 – page 2, para 3 of the letter to Secretary (Sports), MYAS along with Annexure A and B
         giving details of additional requirement with justifications against each Functional area of the OC.
         49
           Refer Annexure 2.21 – Annexure B giving details of additional requirement with justifications against each
         Functional area of the OC.

         46
                             Fifth Report of HLC – Organizing Committee

2.5     Revenue estimates were baseless

2.5.1   As per the EFC minutes of meeting held on 13 September 2006 to consider the budget of
        the OC,. Suresh Kalmadi stated that the Games would be revenue neutral and may in fact
        yield a surplus. Further, in the same meeting, the ADG Finance, OC, Mrs. Vijaylakshmi Gupta
        expressed confidence on achieving the revenue projection of INR 900 crore. As per the OC,
        revenue projections were also made keeping in mind the Benchmark M2006 Games. A
        comparison of the OC revenue budget, Benchmark M2006 and actual revenue realized is
        given in the table below:

        Table 2.7

         S.No.    Revenue streams        Initial           Benchmark   Revised        Actual
                                         Budget            M 2006 in Budget      (Nov Revenue
                                         (2007) in INR INR crores      2009) in INR realized        in
                                         crores                        crore          INR crore**

         1        Broadcasting           299.70            220.5       370            198.22

         2        Sponsorships           450               383.2       960            218.79

         3        Ticketing              100               201.2       100            28.63

         4        Merchandise            50.30             32.4        50             0.80

         5        Donations              -                 -           300            1.00

         6        Obligations       of -                   -           96
                  GOI

         7        Licensing              -                 4.70        -
                  concessions

         8        Interest         on -                    -           -              12.80*
                  revenue account

                  Total                  900               842         1,876          460.24

        *Interest on revenue account is subject to reconciliation

        **Revenue as on 29 January 2011


        47
                          Fifth Report of HLC – Organizing Committee

2.5.2   Key notings from the comparison above are as under:

            Revenue actually realized only 24.5% of the total projected revenue of INR 1,876 crores.

            CWG 2010 realised only 54.7% of the Benchmark M2006 revenue.

            The above summary clearly shows that the revenue projections were not in line with the
             Benchmark M2006 Games as mentioned by the OC officials in the EFC meeting in
             September 2006.

            The projections from Donations were made as per the following assumptions:

             -    Donations: Primarily from not-for-profit organisations / trusts promoting sports &
                  youth

             - Raffles: Currently 8 states allow lotteries –Maharashtra, West Bengal, Punjab, Kerala,
                 Goa, Sikkim & NESA

             - GOI could help if the ‘special’ Delhi 2010 lottery could be extended nationally

            Most of the sponsorship revenue has come from PSU (Government undertakings).

2.5.3   The above assumptions taken by the OC seem to be completely baseless and adhoc. No
        substantial evidence has been provided which can substantiate the projections of earning
        INR 300 crores from donations, raffles, lottery etc. This has been validated by a collection of
        only INR 1 crore from donations and raffles. Also, there is no benchmark in M2006 Games
        for donations.


2.6     Other issues


        Appointment of ex- Secretary Sports, MYAS, as Director General of OC

2.6.1   On November 13, 2003, in Jamaica, the 2010 Commonwealth Games bid was awarded to
        Delhi, with 46-22 voting in favour of Delhi, against the city of Hamilton. On the award of the
        Games to Delhi, the Host City Contract was signed by Mr. Suresh Kalmadi, President ,IOA;
        Mr. Vijai Kapur, Lt. Governor of Delhi, for the host city, and Mr. Rajiva Srivastava, then
        Secretary, Sports for the Government of India, in the presence of all member countries, at
        the CGF General Assembly.



        48
                              Fifth Report of HLC – Organizing Committee

2.6.2   Mr. Rajiva Srivastava, on retirement from the Government of India in May 2004, joined the
        Organising Committee Commonwealth Games as Director General on 10 February 200550 at
        a salary of INR 45,000 per month which was increased to INR 95,000 per month in October
        200651. In March 2007, he resigned from the OC and was appointed as Principal Advisor on
        the same date on an advisory fee of INR 80,000 per month plus other facilities 52. Further, in
        November 2009, he was also appointed to look after the overall functioning of the 23 sub
        committees set up to advise the Executive Management on matters relating to planning and
        monitoring of the Functional areas on behalf of the Chairman’s Secretariat 53.




        50
             Refer Annexure 2.22.
        51
             Refer Annexure 2.23.
        52
             Refer Annexure 2.24 – Resignation letter and appointment letter as Principal Advsior to OC.
        53
             Refer Annexure 2.25 – Office order.


        49
                                 Fifth Report of HLC – Organizing Committee

3       Chapter 3: Governance

3.1     Background

        This section of the report should be read in conjunction with the main report of the HLC.

1.1.1   In November 2003, the Commonwealth Games Federation (CGF) entrusted to the Indian
        Olympic Association (IOA)54 the responsibility of organizing and hosting the Commonwealth
        Games (CWG) in Delhi in 2010.Under a Host City Contract (HCT)55 signed in the same month,
        the IOA and Organisisng Commmittee (OC),which was                             yet to be formed, jointly and
        severally undertook to organize the games while the Government of India(GOI) and the
        GNCTD of the Host City undertook to support, facilitate and finance the organisation of the
        Games. It was acknowledged that the Games are the exclusive property of the CGF. The lOA
        delegated the organization of the Games to the OC as per the conditions of HCT.

1.1.2   Review of the records and documents made available by the OC and discussion with senior
        functionaries of OC revealed serious issues of governance in the OC.


3.2     Mandate of OC

3.2.1   The OC was formed in February 2005 and registered as a Society under the Societies
        Registration Act XXI of 1860.The GoI appointed the Chairman of the OC and authorized him
        to form the OC and the Executive Board with the approval of the GOI. Record does not show
        show that Chairman consulted or took approval of GoI before the Memorandum and Rules
        and Regulations of Organising Committee was registered. GOI provided funds to the OC for
        the organization of the games, initially as grants and later as loans from the government
        budget on the premise that the games would be revenue neutral.




        54
             IOA is also the CGA for India.

        55
          The HCT was signed on 13 November 2003 between the Commonwealth Games Federation England (CGF). Indian
        Olympic Association (IOA), the Government of India (GOI) and the Government of National Capital Territory of Delhi
        (GNCTD).


        50
                            Fifth Report of HLC – Organizing Committee

3.2.2   In short, OC’s mandate was to organize the games with the funds provided by the GOI and
        with support from the IOA. Underlying assumption was that OC would raise revenue to
        repay the loans from GOI.


3.3     Corporate structure of OC

3.3.1   The corporate structure of the OC 56 included the following:

            The Chairman (Chief Executive)

            A society consisting of not more than 500 persons in the Governing Body (GB)

            An Executive Board (EB) consisting of 15 members to manage the properties and affairs
             of the Society and to formulate/evolve rules and procedures for staffing, recruitment
             and financial transactions etc.

            Executive Management Committee (EMC)57

            A whole time Secretariat headed by Director General to carry out functional
             responsibilities in conduct of the games.

            Sub Committees to assist the various Functional Areas (FA) heads.

            The above aspects of governance in OC are discussed as following:


3.4     Chairman’s power

3.4.1   An unmistakable feature of OC’s governance structure was the centralistation of powers in
        the hands of Chairman through formal allocation of power in the Memorandum and Rules
        and Regulations of OC, use of power through Executive Board and committees like the EMC
        formed by Chairman with persons nominated by him.




        56
          Refer to Annexure 3.1 for Memorandum and Rules and Regulations of the OC (MRR) and General Organisational Plan
        (GOP)

        57
           In March 2006, EB was informed of creation of Executive management consisting of Chairman, Vice Chairman, SG and
        the Treasurer. Subsequently an Executive Management Committee (EMC ) was formed( order of Chairman allocating
        specific power to the EMC was not available) with Chairman to exercise power of approval of expenditure from INR 50
        lakh to INR 3crore. Refer Annexure 3.2.


        51
                                Fifth Report of HLC – Organizing Committee

3.4.2   It appears that there was no internal accountability framework for OC Chairman as he could
        not be called to question in any governance forum in the OC like the Executive Board or the
        General Body which were not independent enough to play this role since these institutions
        were effectively controlled by the Chairman.

3.4.3   In addition to the formal allocation of power to himself, the Chairman ensured that crucial
        powers remain concentrated with persons who enjoyed his confidence. The top heavy
        structure of OC till 2009 facilitated this process.

3.4.4   For example, the power to appoint persons up to the Project Officer level and the power of
        signing of agreements were conferred on the Secretary General. In fact the Secretary
        General was seen to be signing orders of posting and distribution of charge etc to the senior
        officials at Jt. DG Level in some cases( for example, Jeychandran). Besides, Director General
        who was handpicked by him was made the Chairman of the OC Finance Committee.

3.4.5   While the Executive Board was the highest governing body in the OC, great deal of financial
        power was concentrated in the hands of the office bearers and selected officials through the
        creation of the Competent Financial Authority ( CFA)58. Two such CFAs were EMC (Secretary
        General, Treasure and Vice Chairman and presided over by the Chairman) and Expenditure
        Approval Committee (Secretary General, Treasurer and DG, later CEO).

3.4.6   This pattern prevailed in other areas also. The Search Committees or Selection Committees
        for selection of senior functionaries and consultants were often headed by the Secretary
        General.

3.4.7   Thus the Chairman functioned through a coterie. Any person outside the coterie would not
        normally be given substantial decision making opportunities. Even when government
        deputed senior government officers, for example the Chief Executive officer (CEO) in
        October 2009 to the OC to improve its management, these crucial financial and
        administrative powers (appointment of staff and consultants and signing of agreements and
        contracts) were not delegated to the CEO.




        58
             Refer to Annexure 3.3 for Financial and Administrative Guidelines of OC, Rule 3


        52
                                Fifth Report of HLC – Organizing Committee

3.4.8   A regards external accountability, the Chairman proclaimed as per a recent news item 59 that
        he kept government informed of all decisions at every step. This was not correct as various
        actions taken by him were not adequately reported even to the EB. (The case of not
        informing or taking consent of EB in signing of a Deed of Variation which compromised the
        interest of OC in the contract for sponsorship rights with SMAM is a typical example).

3.4.9   The formal powers of OC Chairman as listed below were identified from a review of the
        relevant documents:

              Power to invite any person to become member of the OC60 and chair the meetings of
               General Body and to have full authority to conduct the meeting. Chairman’s decision on
               the conduct of the meeting shall be final.61

              Power to make additions and alterations in the composition of EB as deemed necessary
               in the interest of Society’s aim and objectives62.

              Power to create any committee or sub committees or Advisory bodies and appoint
               suitable persons to these committees63

              Power to approve contracts and agreements as chairman of EMC and EB

              In case of emergency, “the Chairman shall take decision in the interest of the Society and
               shall inform the EB in its next meeting and which shall be ratified by the EB” 64.

              Full financial powers, both in respect of capital and revenue expenditure, in emergent
               circumstances and get the same ratified by the EB (as explained earlier, EB had no option
               but to ratify such decisions)65

              Power to appoint the staff of OC from Director and above66


        59
             Times of India dated 25/02/2011. Refer Annexure 3.4

        60
             Rule 3 MRR of OC

        61
             Rule 5 (ii) Ibid

        62
             Rule 4 (ii) Ibid

        63
             Rule 6 MRR of OC

        64
             Rule 8 MRR

        65
             Rule 3 of the of Administrative and Financial Guideline


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                                 Fifth Report of HLC – Organizing Committee

               Power to engage the Consultants and Advisors67

               Power to outsource national /international consultants on the basis of recommendations
                of the appropriate committee to be constituted by the Chairman



3.4.10   The COCOM commented since end 2007 on the centralized decision making power in OC
         and by implication the lack of delegation as a weakness in OC. But its homilies were
         disregarded by the OC Chairman as he took no action to delegate his own power or powers
         allocated to the Secretary General (Lalit Bhanot). This power structure in OC remained intact
         well after the CEO was appointed by the Government.

3.4.11   Not only there was absence of delegation, an instance of further concentration of power
         was noticed from the way Rule (8) of OC’s Rules and Regulations were amended. It is seen
         from the proposal of the amendment to the Memorandum and Articles of OC, approved in
         the 16th EB meeting held on 19th December 2009,68 that Chief Executive Officer would be
         appointed by the Chairman to the Executive Board. However, this amendment withdrew the
         following provision in the rule:”The Director General shall head the Secretariat.”

3.4.12   By withdrawing this provision, a vacuum in the rule position was created as to who shall
         head the Secretariat. As there was no certainty in this regard, Chairman became the
         supreme arbiter in this matter. Thus even while he headed the OC, he also now assumed the
         power on case by case basis as to who effectively headed the Secretariat. As new
         uncertainty was created by this amendment, Chairman’s power was further increased.


3.5      Budget Making Process

3.5.1    A very crucial aspect of governance was the provision of funds and accountability for its use.
         The IOA led by Chairman in initial years and Chairman leading the OC in later years
         continued to project the revenue neutrality of games despite mounting evidence against it.



         66
              Refer to Annexure 3.6 for the Recruitment and Selection Manual, Page 6
         67
              Refer to Annexure 3.5 for Chapter 2 of the Para 6 Noted D in the Administrative and Financial Guidelines

         68
              Refer to Annexure 3.7 for the proposal for amendment of EB


         54
                         Fifth Report of HLC – Organizing Committee

3.5.2   Till late in budget making anecdotal revenue projections were made to support the
        proposition of a revenue neutral games. Again no provision was made for nearly one third of
        functional areas and inadequate provision was projected for some areas.

3.5.3   In the initial years there could possibly be an excuse for it but it was utterly unacceptable for
        its continuance in 2009.

3.5.4   Chairman was seemingly leading a budget making process that was incompetent and
        unprofessional. Even three months prior to start of games, he approached the government
        with request for additional funds for more than INR 900 Crore when there was no evident
        need for such funds.


        Executive Board

            For effective governance, the EB needed to be suitably empowered through balance
             composition and operational freedom.

            Checks and balance in the EB was affected by the rules of OC regarding its composition
             and this affected its independent and objective functioning as highest governance
             institution. Besides, serious operational constraints restrained its functioning. These
             factors contributed to significant dilution of the corporate governance of OC by the
             Chairman.

            The EB had a subservient position to the Chairman. For example, in case of emergency, it
             was provided that “the Chairman shall take decision in the interest of the Society and
             shall inform the EB in its next meeting and which shall be ratified by the EB”. EB’s
             approval was taken for granted in this situation.

            The EB had 15 members. Rule 4 of the MRR of OC provided that quorum of the EB was
             one fifth of the membership and “decisions shall be taken by simple majority of the
             members present”

            It appears that a holding a meeting of EB was legally possible with three members
             including the Chairman. If Chairman and another member agreed, any decision could be
             approved by simple majority of the members present in such a meeting. These rules of
             OC ignored best practice. For example, the Executive Board of the CGF needed a quorum
             of half the members.

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                  Fifth Report of HLC – Organizing Committee

    Of the 15 members of OC, 6 members were nominated/ appointed by the Chairman (2
     from IOA, 4 from sports federations) out of 15 members. He also had the power to
     nominate any member if there was a vacancy due to some reason. Thus government
     representation and outside members (4 from government and 3 from CGF) could be a
     minority when Chairman would vote with the persons nominated by him.

    On more than one occasion, rational objections and observations by the Secretary,
     MYAS (GOI representative) were ignored or bypassed in the EB meeting. Such situations
     could not arise if adequate representation of the main stakeholder ie government was
     ensured in the EB.

    The operational hurdles that affected its efficiency and independence included
     circulation of the agenda for EB meetings at the last moment and infrequent meetings of
     EB. Some EB members frequently raised these issues.

    The gap between two meetings was more than 6 months on several occasions. In six
     years (2005 to 2010), EB had 27 meetings of which 11 meetings were held in 2010.In
     2006 to 2008 only 8 meetings were held and in 2005 and 2009 4 meetings each were
     held. Thus on average less than 3 meetings were held in first five years.

    EB meetings often had large number of agenda items involving complex financial and
     administrative issues. For example, in the 15th EB meeting held on 10 September 2009,
     19 items were to be discussed. Often the items would have many sub items. Due to last
     minute circulation of agenda papers, the members were evidently not given enough
     time to deliberate on these matters.

    The Chairman would in many cases give inadequate information or misleading to the
     members of EB. For example, the information given to EB on the contract with SMAM
     for sponsorship rights was incomplete and even misleading. Therefore, informed
     discussion on the agenda items was not possible.

    In consequence, EB was often seen to be delegating blanket powers to the EMC to a
     point of abdicating the responsibility of governance. A few examples would be especially
     noteworthy: (1) In the case of the contracts with EKS&E&Y they authorized the EMC to
     conclude contract and inform them about it. (2) In the case of the contracts with SMAM
     and Fast Track, EB delegated the responsibility to EMC for negotiation and finalization of

56
                       Fifth Report of HLC – Organizing Committee

       contract. (3) In the case of the refurbishing the NDCCII building, the EB authorized EMC
       to finalize contract without considering the budget. EMC exceeded the budget provision
       for this expenditure many times over without prior approval of EB and reported the
       matter to EB as fait accompli.


Executive Management Committee (EMC)

      As per the General Organisational Plan (GOP)69, the EMC was entrusted with “all
       administrative and financial powers with respect to planning, execution, coordination
       and monitoring within the overall budget approved by the Executive Board”. The
       Financial and Administrative Guidelines empowered the EMC as competent financial
       authority with power of financial approval upto INR 3 crore (revised to INR 6 crore from
       March 2010).

      No specific order was available in OC which empowered the EMC to exercise extensive
       administrative power, in addition to its power as CFA. However, EMC was exercising
       such powers since its inception in its numerous meetings in 2007 and 2008.

      Additionally EB was routinely delegating various financial and administrative
       responsibilities to the EMC. Such matters included approval of tenders for various high
       value international contracts, negotiations of commercial rates with foreign contractors
       and approval of their rates, approving RFP for contracts, hiring and refurbishing of excess
       office space etc. Again on 19/11/200970, while redistributing power of CEO and DG,
       Chairman conferred on EMC the power to monitor the progress of work of the
       Organising Committee. Thus in totality, the EMC was vested with enormous power.

      The cases dealt by EMC included           the cases of various expenditure sanctions, re-
       appropriation of budget, selection and appointment of senior functionaries like DG and
       international consultants( for example Sashi Tharoor) , selecting a jumbo delegation for
       Bejing Olympics in complete disregard for propriety and economy, deciding recruitment
       process for selection for posts of Director and above, empanelment of firms for



69
     Refer to Annexure 3.8 for the GOP Page 33

70
     Refer to Annexure 3.13


57
                       Fifth Report of HLC – Organizing Committee

       taxation and        advisory services and legal services, fixation of core salary of the
       competition manager and Venue managers etc.

      Members of EMC consisting of office bearers of OC (Chairman, VC, Treasurer and SG)
       were appointed by the Chairman. While informing the EB71 of his decision in this regard,
       Chairman did not indicate the criteria for selection of these key functionaries to OC. Nor
       did the EB ask him about it as seen from the minutes of the EB.

      For the major procurements, OC had prescribed “game time experience” as eligibility
       criteria. However, the same did not appear to be applied for selection of its leadership
       team, namely the “executive management”.

      In absence of any criteria, these appointments do not manifest recorded evidence of
       transparent assessment of their competence and experience to hold these positions and
       therefore may be considered as patronage.

      Only one of the EMC members (Treasurer) had experience of working in a large
       organization. The competence and experience of EMC members to manage the multi-
       sport event like the commonwealth games, the complex management and
       administrative matters and complicated international contracts and agreements, was
       not evident. In course of this review, many irregularities were noticed in regard to the
       tenders and contracts and various other matters decided in the EMC.

      Question about the ethical conduct of the senior leadership was also important. One of
       the members of EMC (Lalit Bhanot) was arrested by CBI for suspected wrong doing in a
       case relating to Queen’s Baton Relay.

      Yet another matter was the inherent conflict of interest in the working of EMC in regard
       to the decisions relating to IOA. For example, in the case of decisions for providing fit out
       of Olympic Bhavan and approving expenditure for purchase of furniture for Olympic
       Bhavan, it was noticed that three EMC members ( Chairman, Treasurer and Vice
       Chairman) holding position in IOA) took decisions which appeared to be in favour of
       IOA. It would have been appropriate for the Chairman to entrust other functionaries in
       OC to deal with financial decision concerning IOA and Olympic Bhavan.

71
     Refer to Annexure 3.2 BE Meeting minute dated 22/03/2005 Item no 3


58
                         Fifth Report of HLC – Organizing Committee

3.6     Key Functionaries of OC Secretariat

3.6.1   Recruitment of some senior functionaries in OC Secretariat was reviewed in the context of
        the governance problems. Noticeably, several of these handpicked officials are presently
        under CBI custody or were in such custody for reported wrong doing. In an previous section,
        issues of the selection of leadership positions (EMC members) were discussed. The review
        raised several issues of poor governance:

            In recruiting retired officers from GOI, Chairman as the appointing authority, disregarded
             established procedures of GOI (cases of Rajeeva Srivastava, Jeychandren).

            Chairman allocated sensitive charges to a retired GOI officer (Jeychandren), in defiance
             of categorical advice against such practice from the government in that regard. In some
             major contract, Jeychandren was reportedly involved in suspected wrongdoing and he
             was reportedly arrested by CBI.

            Chairman gave patently incorrect information to Secretary, MYAS regarding T. S. Darbari,
             against whom serious charges were made by ED and CBI.

            Chairman OC provided employments to serving and retired officers (Rajeeva Srivastava
             and V K, Gautam) from the MYAS. This could explain at least partially the inadequate
             oversight of the nodal ministry as seen from the liberal sanctioning of funds to IOA’s
             proposals, uncritical acceptance of the Rules and Regulation of OC leading to creation of
             a potentially subservient Executive Board, vesting widespread financial and
             administrative powers in executive members appointed by the Chairman and provision
             of excessive powers for the Chairman.


3.7     Dysfunctional senior management

3.7.1   An outcome of the coterie style functioning in OC was that when the differences cropped
        up between the senior officials in the matter of reporting the progress of work , award of
        contract or technical evaluation of bids ( as in TSR case), bitter feud was noticed. For
        example, VK Gautam made stringent comments in official email, of interference in his work
        by TS Darbari in the name of Chairman’s review process and VK Verma wrote about the
        incompetence of VK Gautam. Exchanges and office notes highlight emergence of
        management silos, misalignment and communication breakdown within the top leadership

        59
                                Fifth Report of HLC – Organizing Committee

        of OC. The mail exchange in particular also indicates interdepartmental competition and turf
        war between rival factions.72


3.8     Officers deputed by the GOI were not allocated important responsibilities

3.8.1   In 2010, GOI deputed to OC a number of senior officers to improve OC’s functioning. They
        included S/Sri Jarnail Singh, a former Chief Secretary level officer, Sudhir Mittal, an
        additional Secretary level officer, Jiji Thomson and Sanjeev Mittal, both of joint secretary
        rank. Besides, G.C.Chaturvedi joined as Spl DG( F&A). It was noticed that some of these
        officers were not provided adequate responsibilities till the matter was contested. Following
        cases will illustrate the point:

3.8.2   Jarnail Singh who joined as CEO on 16/10/200973 was formally given the responsibility only
        on 06/11/200974 and that too only for Administration, Finance & Accounts and Security with
        responsibility for coordination with ministries and relating to cabinet/GOM/COS

              Following the above order , on 18 /11/2009 CEO wrote75 to the Chairman that “ it has to
               be clearly mentioned that CEO will supervise the work of DG , Special DGs , COO and
               Joint DGs and that they all will report to him…. Untill and unless this is clearly mentioned
               in that order CEO cannot be responsible for performance of OC and also cannot function
               as CEO.”

              Only when this matter was stressed, the Chairman revised the earlier order on
               19/11/200976 when 20 FAs were to directed to report to CEO with some other
               responsibilities. Other FAs were to report to the DG.

              Even then there was no direction in this order that CEO will head the Secretariat which
               was evidently main purpose of sending a CEO to OC.


        72
             Refer to Annexure 3.9 for the Key email between V K Gautam and TS Darbari

        73
             Refer to Annexure 3.10 for the Joining Report of Jarnail Singh dated 16 October 2009

        74
             Refer to Annexure 3.11 for the Office Order dated 6 November 2009 signed by Suresh Kalmadi

        75
          Refer to Annexure 3.12 for the secret note from Jarnail Singh dated 18 November 2009 to Chairman bearing no CEO/E-
        1?41/2009

        76
             Refer to Annexure 3.13 for Office Order 19 November 2009 signed by Suresh kalmadi


        60
                                Fifth Report of HLC – Organizing Committee

              Surprisingly there was no mention of the charge of COO in the order of redistribution
               dated 19/11/2009, who stopped attending to his work soon after the issue of this order.

              This above matter indicates that the Chairman was not willing to delegate responsibility
               to CEO and relented when faced with protest from the CEO. In the process, valuable
               organizational time was wasted.

              However, it still needs to be mentioned that the CEO would not be shown important files
               and cases pertaining to his area as was seen when the Deed of Variation for contract for
               sponsorship rights with SMAM was secretly approved without processing the matter
               through him.

3.8.3   G.C. Chaturvedi, who joined in April 2010 had extensive experience in Insurance Industry
        while working in the Finance Ministry (Department of Financial Services), was not given the
        responsibility of the risk management dealing with insurance policies of OC which was being
        handled by Jeychandran as Jt. DG and later OSD (Revenue).


3.9     Appointment related issues for key functionaries

3.9.1   Rajiva Srivastava, IAS retired from GOI as Secretary, MYAS on 31/05/2004. He was
        appointed as Director General (DG)by the Chairman OC on 10 February 2007.He resigned
        from the post of DG on 20 March 2007. He was reappointed by the Chairman on next day 77
        as the Principal Advisor to the Organizing Committee at an Advisory Fee of INR 80,000/- pm.
        He continued in this position till 31.10 2010.

              On 11 March 2005, the Director (AIS) in the Department of personnel and Training, Min.
               of personnel wrote78 to him in response to his letter of 7/3/2005(copy not available in
               the OC file) seeking permission of the GOI for his appointment as DG of the Secretariat
               of the forthcoming commonwealth games, that “it is understood that the aforesaid
               Organizing Committee is substantially controlled by the Government. As such,
               permission of the government for your aforesaid employment is not necessary under
               Rule26 (1) of the AIS (DCRB) Rules, 1958.” This instruction does not appear in line with


        77
             Refer to Annexure 3.14 for DO letter from Suresh Kalmadi to Rajeeva Srivastava dated 20/03/2007

        78
             Ref to Annexure 3.15 for the letter from SK Lohani Director (AIS) DOPT


        61
                               Fifth Report of HLC – Organizing Committee

               the instructions from GOI which was invoked in the case of another official
               (Jaychandran) as discussed later.

              There was a serious conflict of interest issue in this case. The MYAS was the nodal
               department of the GOI for the commonwealth games Delhi 2010 and therefore he was
               dealing directly with the organizational matters, provisions and release of funds to IOA
               for bidding for Commonwealth games and formation of OC. In this post Rajiva Srivastava
               was expected to have interacted with the Chairman and key office bearers of IOA, who
               subsequently constituted the Executive Management in the OC. However, within less
               than an year of his retirement from service, he took up employment with OC where he
               was required to report to the Chairman OC and the Executive Management who were
               mainly IOA office bearers, with whom he was dealing as Secretary MYAS in the GOI, prior
               to his joining OC. His independent functioning as Secretary MYAS vis a vis the Organizing
               Committee could be questioned in view of his subsequent employment with the OC.

3.9.2   Shri V.K. Gautam, IAS

              It is seen from the record of discussion of the Search Committee dated 10.02.2007, 79
               that based on the suggestion of Executive Secretary to Chairman, the Search Committee
               (Lalit Bhanot, A K Mattoo, Rajiva Srivastava and B.B.Kaura) considered the case of V.K
               .Gautam for the post of Chief Operating Officer(COO). He was offered appointment by
               Chairman as COO on 15 .02.2007 and was appointed to the post on 07.09.2007. He
               joined OC on 07/09/2007 as COO. Prior to his appointment in OC, Gautam was working
               as Director in the MYAS on deputation from his parent cadre and dealing with all matters
               pertaining to OC.

              From an Office Order of OC issued on 19.11.200980, it was noticed that all charges of
               Gautam (Security, catering, technology, transport, accommodation etc) was transferred
               to either CEO or the DG. Gautam stopped attending office from 21.12.2009 soon after
               this reallocation of charge. Gautam submitted leave applications in various spells for the
               period upto till 31.10.2010 He was repatriated to his parent cadre (Maharashtra) wef
               31.11.2010.

        79
             Refer to Annexure 3.16 for the minutes of the third meeting of the Search Committee dated 10/02/2007

        80
             Refer to Annexure 3.13


        62
                               Fifth Report of HLC – Organizing Committee

              He had drawn his salary from OC from 21/12/2009 to 30/09/2010.Gautam’s leave
               application was not sanctioned by the Chairman. Noting this fact, the DDG (Est) raised
               the question on 31 /12/2010 how his absence from 21.12.2009 to 31.10.2010 (10
               months and 11days) was to be regularized. DDG ( Estt)and Jt Dg ( A&F) wrote to the
               CEO on 31 December 2010 that Gautam, former COO’s leave period 21.12.2009 to
               31.10.2010 was not sanctioned by Chairman.81

              On this, the COO observed that “By delaying, we have put OC in awkward situation. We
               should not have kept him on rolls of OC and should not have paid him till 31-09-
               2010.seperate file may be moved to recover the salary from a person who authorized
               the payment of Vijay Gautam from 21-12-2009 onward without sanction of leave. This
               should be processed immediately and given to Finance FA.”82

              Available records and computer forensics revealed serious disagreement between him
               and the V.K, Verma, complained against Guatam to Chairman on 5/10/2009. Besides,
               Gautam protested against the interference in his work by the Joint DG T.S.darbari.(
               referred in an earlier section on dysfunctional management) 83

              It was noticed that Gautam was bypassed by Lalit Bhanot in matters of contract for TSR
               and in selection of the TCIL for technology contracts

3.9.3   M. Jeychandren, Jt DG. ( F&A), and OSD( F&A)

              Jeychandren, while working as FACAO, SE Railway, was selected by Chairman for the
               post of ADG, CWG Secretariat. Chairman requested Minister of Railways on 08/10/2007
               for sparing his services for appointment in OC. On 03.03/2008 M. Jeychandren, joined as
               Jt. DG (F&A). He was promoted as ADG (Finance and Accounts) on 31/07/2009. He
               retired from government service on 31/01/2010.

              Based on a recommendation in 08/12/2009 by the Treasurer84, Chairman reappointed
               him as Jt DG (Finance and Accounts) from 01/02/2010. Subsequently on 19 February,

        81
             Refer to Annexure 3.17 Office Note dated 31/12/2010

        82
             Refer to Annexure 3.17

        83
             Refer to Annexure 3.18 for the DO Letter to Laloo Jadav from Suresh Kalmadi dated 08/10/2007

        84
             Refer to Annexure 3.19 for the confidential note dated 08/12/2009


        63
                       Fifth Report of HLC – Organizing Committee

       2010, his posting order was retrospectively changed as Officer on Special Duty ( OSD)
       (F&A).

      Review of his case showed the following discrepancies:

      Though clearance of the Government of India was needed for post retirement
       employment, OC asked for permission only from Ministry of Railways in May 2010 ie 5
       months after his retirement. On 2/06/2010, Director, Railway Board gave him
       clearance85. However the Joint Secretary (Estt) DOPT stressed that obtaining prior
       permission from the government through the prescribed channel will be applicable. In
       view of this position, the reappointment of Jeychandren in OC appeared to be illegal

      Chairman OC persistently defied the order of MYAS regarding the re appointment of
       Jeychandren in the Finance & Accounts FA after his retirement as shown below:

       -   The Secretary, MYAS wrote to the CEO, OC on 01/02/201086 that” you may ensure
           that in the event of his being continued after retirement it is not proper to designate
           him as the Head of Finance and Accounts FA. Since the budget of OC has been
           considerably enhanced, and the expenditure flows are likely substantial in the next 6-
           8 months, it would be necessary to designate serving officer as Head of the Finance &
           Accounts FA.”
                                                               87
       -   On 08/02/2010, the Secretary, MYAS                       reiterated the same instructions to the
           Chairman : ” it is not appropriate to continue Shri Jeychandren as joint DG (F&A)” as
           a serving officer should be appointed as the Head of Finance and Accounts Functional
           Area and in addition budget for overlays of INR 678 crore is being proposed for
           further approval.”

      Only on 19/02/2010, this letter from MYAS was processed in OC. The Director (Estt), OC
       wrote in his note in considering this letter , to CEO “replacing such an experienced
       person by a serving officer may not be desirable at the crucial juncture when the

85
     Refer to Annexure 3.20 for Letter no 2010/E(o)11/17/2 dated 02/06/2010 from N Soman ( Deputation) Railway Board

86
  Refer to Annexure 3.21 DO letter No 9/Secy/(SP)2010 dated 01/02/2010 from Ms Sindhushree Khullar to Shri Jarnail
Singh CEO

87
  Refer to Annexure 3.22 DO Letter no 9/Secy(SP)/2010 dated 02/08/2010 from Ms Sindhushree khullar to Su8resh
Kalmadi


64
                               Fifth Report of HLC – Organizing Committee

               preparations for the games are in full swing and the time left for the game is short( 8
               months only). If we do so we may disturb the present working arrangement in the F&A
               Functional Area.” This note was approved by the CEO.

               On the same day an office order signed by Lalit Bhanot, Secretary General was issued
               in OC that ”In supersession of the office order dt 30/01/2010,Shri Jeychandren was
               appointed on contract basis as OSD( Finance & Accounts)88 wef 01/02/2010 to 31-11-
               2010 in the scale of INR 1,00,000- INR 1,50,000.”

              Evidently, MYAS instructions were totally disregarded in OC and Jeychandren was
               continued in the same charge, though on contract basis. As per information provided by
               OC, on 24/5/2010 he was appointed as OSD (Revenue) and asked to look after the
               matters of taxation also as additional charge.

              He was reportedly arrested by CBI in connection with the case of Queen’s Baton Relay
               case of OC. However, OC administration informed that, no formal information about his
               arrest or chargesheet has so far not come to Workforce FA.

3.9.4   Shri V.K. Verma, Director General

              Irregularity in his appointment has been discussed in section 27.5.1. He was appointed in
               OC in disregard of the various vigilance cases pending and reported against him. He was
               recruited even while he was a member of EB raising issue of independent governance
               role of EB. He was noticed to be engaged in suspected wrong doing and was reportedly
               arrested by CBI. Details of these cases are not available with OC.

3.9.5   Shri T.S. Darbari, Jt Director General (Revenue, Marketing and Chairman Secretariat)

              T.S. Darbari resigned on 31 January 2009 from HP where he was working as Director –
               Corporate Strategy and joined OC on the same day89 as per the recommendation of the
               Search Committee (Vice Chairman, Secretary General and Director General).In his joining
               report he mentioned that “I shall be reporting to the Chairman.”Chairman wrote to the
               MD of HP India90 “…It has therefore been decided, in public interest to appoint Sri T.S.

        88
             Refer to Annexure 3.23 Order no G/126/2008-Estt dated 19 February 2010

        89
             Refer to Annexure 3.24 Joining Report dated 31/01/2009

        90
             Refer to Annexure 3.25 letter to Neelam Dhawan , Managing Director HP by Suresh Kalmadi dated 23/12/2009


        65
                       Fifth Report of HLC – Organizing Committee

       Darbari, Director (Corporate Strategy) HP India as Joint Director General (Revenue &
       Marketing) OC for the Commonwealth Games..”

      Darbari joined OC at much lower salary package (approximately one third of his reported
       compensation in the previous job). As per the notes of the Search Committee 91 he was
       drawing in HP a compensation package of INR 50 lakhs per annum +stock option award ,
       bonus and incentives and the total package worked out to INR 50-60 lakhs per annum.
       On joining OC on 31 January 200, he was given a salary of INR 1.50 lakh plus HRA @ 30%
       of core salary, +medical allowances and other facilities like transport, mobile landline
       and internet etc.

      It is noticed that Chairman OC made a incorrect statement to Smt. Sindhusree Khullar,
       Secretary , MYAS on 11/02/2010 in his confidential Do letter92 stating that “I would like
       to clarify that Mr. T.S. Darbari is not part of Chairman Secretariat. Lt. Genl ( Retd) SS
       Dhillon, who retired as Dy . Chief of Army Staff is working as the Jt. Dir General,
       Chairman Secretariat.” The following facts contradict this incorrect statement:

      On 23.07.2009 the Director Employment Relations, OC wrote a note that “Mr Darbari is
       working in the Chairman Secretariat from the beginning. The matter relating to the
       confirmation may be decided by the Chairman.” The Chairman signed the note in
       endorsement of this position.( Copy attached )

      On 13/03/2009, the Chairman wrote in a communication marked Most Immediate that
       “Shri T.S. Darbari has joined Organizing Committee wef 31 January 2009 as Jt. Director
       General (Revenue, Marketing and Chairman Secretariat) and is reporting to me. All
       documents connected with his appointment, including his appointment letter, are
       available with the Secretary General. “

      From computer forensics it was noted that V K Gautam wrote a strong mail to Darbari on
       25 April 2009 in regard to his interference in his work on behalf of Chairman.

      On 24 December 2009 Chairman issued an Office Order stating that “Shri T.S. Darbari , Jt
       Director General shall be heading the following functions (i) Marketing , Revenue and

91
     Refer to Annexure 3.26 miniutes of Search Committee dated 22/01/2009

92
     Refer to Annexure 3.27 Confidential DO letter dated 11/02/2010 from Suresh kalmadi to Sidhushree Khullar


66
                               Fifth Report of HLC – Organizing Committee

               Sponsorship FAs (ii) Commonwealth Business Club of India (iii) He shall continue to
               support me on all strategic/important matters in the Chairman’s Secretariat.”This order
               proves that Darbari was closely involved with Chairman and was effectively working in
               the Secretariat.

              On 05/08/2010, CEO wrote to the Chairman93 that “Secretary (Sports) has been sending
               letters to us suggesting that Shri Darbari may be relieved of his duties immediately in OC
               pointing out that his name has not been cleared in the earlier inquiry also being
               conducted by the Customs Authorities. In view of the alleged involvement of Shri Darbari
               in both the cases and as this is bringing bad name to OC, it seems advisable that by
               agreeing to the suggestion of Secretary ( Sports), the services of Shri Darbari be
               terminated . Chairman may kindly sign the termination order placed below.”

              Darbari was terminated from Service wef 5 August 2010 by the Chairman94 pending an
               inquiry by the ED, Ministry of Finance into case of alleged involvement of Shri Darbari in
               the payment of unreasonable amount to a British Firm at the time of QBR ceremony in
               London. However details of the case are not available with OC.

3.9.6   Shri Sanjay Mahendru, Dy. Director General (Information Services)

              Mahendru was working as Sr. VP, Global Information Technology with DHLI-IT when he
               was selected by Search Committee on 4/05/2009 as DDG( Information Services) with
               core salary of INR 1 lakh and other allowances ( total cost to the company INR 15.72
               p.a.)95 He joined OC on 08/05/2009. On 4/05/2009 DG wrote on the note that he could
               be utilized for network solutions reg. tetra secure communications and similar project s
               in technology.

              He submitted his resignation on 19/04/201096 to be effective from 15/05/2010.It was
               accepted by the Chairman as the appointing authority and he was relieved accordingly.




        93
             Refer to Annexure 3.28 Note dated 05/08/2010

        94
             Refer to Annexure 3.29 Order dated 05/08/2010

        95
             Refer to Annexure 3.30 Appointment Letter dated 06/05/2009

        96
             Refer to Annexure 3.31 Resignation letter to CEO dated 19/04/2010


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                                Fifth Report of HLC – Organizing Committee

               He was arrested with others from OC in connection with the wrongful payment to AMC
                films in connection with the QBR launch in London. However a detail of the case is not
                available with OC.

3.9.7    Shri P.K.Srivastava, Project Officer in Chairman’s Secretariat

               The irregularity and favouritism in his appointment has been discussed in the section on
                dealing with Staffing . He was given a special raise in his pay beyond the scale of pay of
                Director vague grounds. This indicated that he was one of the close associates of
                Chairman which earned such favours for him.

3.9.8    Shri Ashok Sahota, OSD in Chairman Secretariat

               The irregularity and favouritism in his appointment and malpractice has been discussed
                in the section on Staffing. He was running a travel agency from where the air tickets of
                Chairman were booked.


3.10     Vigilance structure in OC

3.10.1   From early 2010 serious complaints and allegations started surfacing about procurements in
         CWG. The complaints were being handled by the same concerned FAs who were dealing
         with the subject matter of complaint .This unacceptable situation which was prevailing in OC
         indicated the cavalier attitude of Chairman towards accountability.

3.10.2   The CEO brought the attention of Chairman to this matter97 and proposed that a CVO should
         independently review complaints against any FA. Only in March 2010 a serving officer from
         Ministry of Defence joined and it was proposed that she should be given the charge of CVO.

3.10.3   However, selection and posting order of the Chief Vigilance Officer (CVO) in CWG was not
         processed through the CEO98. Chairman totally disregarded the established procedure in
         selection and allocation of responsibilities to the CVO and did not keep the concerned
         department and CVC in picture in this matter.



         97
           Refer to Annexure 3.32 Note from CEO dated 16/12/2011 in response to a request for information from the High Level
         Committee

         98
              Refer to Annexure 3.32


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                                Fifth Report of HLC – Organizing Committee

3.10.4   On 20/03/2010 an office order issued by the SG99 ordered that “it has been decided with the
         approval of competent authority” that Dr Gurjot Kaur, Addl. DG (Procurement) was to act
         as the Chief Vigilance Officer in addition to her present duties. This order was not marked to
         either the MYAS or the Chief Vigilance Commissioner. No records were made available to
         show the procedure followed for selection of the CVO. The CEO, who was responsible for FA
         (Administration and Work Force), has confirmed that the above posting order, signed by the
         Secretary General was not processed through him though the matter was known to him.100

3.10.5   On 27.04.2010 Secretary, Central Vigilance Commission, having noticed that a part time CVO
         was appointed in the CWG, expressed concern to the CEO, CWG101 that prescribed
         procedure was not followed in the selection of the CVO and that an officer whose
         assignment pertains to procurement related activities, which is a vigilance sensitive activity
         and can give rise to serious complaints/allegations, has been entrusted with CVO’s charge.
         He pointed out that such an officer can not be impartial/independent CVO and that it is a
         “clear case of conflict of interest when the same officer is in charge of vigilance and
         procurement.”

3.10.6   He mentioned that the procedure included that (a) a panel of officers were to be made
         available to the Commission for consideration to enable the Commission to make a selection
         and to recommend the right person for the job (2) It was incumbent on the organisation to
         consult the Commission and obtain its prior approval in r/o the officer proposed to be
         appointed as the CVO.

3.10.7   On 4/5/2010, Director MYAS wrote102 to the CVO that as advised by the CVC, the CVO
         should be divested of one of the two charges forthwith. On 17/5/2010, CEO wrote to the
         Secretary, CVC that Gurjot Kaur was divested of the charge of Procurement Function Area
         and will continue to act as the CVO of the CVC. On 24/09/2010 the Director, CVC informed
         that CVC has accorded post facto approval for appointment of Gurjot Kaur as CVO, CWG.


         99
              Refer to Annexure 3.33 Office order No H/11/2010- Estt dated 20/03/2010 dated 20/03/2010 signed by Lalit Bhanot

         100
               Refer to Annexure 3.32

         101
           Refer to Annexure 3.34 for Letter bearing 010-CVo-07-841 from K.S. Ramasubban Secretary CVC dated 27/04/210
         addressed to Jarnail Singh

         102
               Refer to Annexure 3.35 for Do letter from Promod Agarwal dated 04/05/2010 to Jarnail Singh


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                         Fifth Report of HLC – Organizing Committee

3.10.8   In practice, no preventive vigilance was set up in CWG though a full scale experienced
         officer from the GOI was available for that work. It shows also the incompetence of the
         Secretary General in dealing with such matters. Even when the CVC intervened, the remit of
         CVO was intentionally kept limited to reactive vigilance while scope of potential corruption
         and irregularities increased.

3.10.9   The CVO mentioned during discussion that she was not issued with any TOR for the job of
         CVO and no separate staff was initially allotted to her for CVO’s job and procurement staff
         was used for vigilance work. A Director and an Administration Assistant was provided to her
         after the Games were over. As for the work of CVO , she informed that the CVO was dealing
         with the complaints, which mostly was received from the GOI ( a list of 60 complaints were
         provided by the CVO).Besides, she was in charge of Central Record Room and also in some
         cases worked as the interface with CBI.


3.11     Pre audit and internal Audit

3.11.1   On 13/04/2007, the Treasurer OC wrote to Rahul Bhatnagar , Joint Secretary, MYSD that OC
         has established a comprehensive audit mechanism comprising of                  pre payment
         scrutiny(PPS),Statutory Audit by Chartered Accountants and post payment Audit by Internal
         Audit Cell of the Finance Division.


         Pre payment Scrutiny

3.11.2   It was noticed that for pre audit function, only one Project Officer (PO) was posted in the
         Accounts FA of OC for this purpose. He was working under the overall charge of the Jt DG (
         F&A). During discussion with the concerned pre audit staff, it was informed that no formal
         guidelines or procedures of pre audit were established to guide the staff.

3.11.3   It was noticed that, only one Project Officer (PO) was posted in the Accounts FA of OC for
         for pre audit function. He was working under the overall charge of the Jt DG ( F&A).

3.11.4   The PO informed that 100% payment is pre audited in OC. However, there was no evidence
         of pre audit coverage as no records are kept in the pre audit wing relating to pre audit
         observations on the payments reviewed by them. Besides, it was stated that objections
         were also raised verbally. In several cases deficiencies noticed by the pre audit staff was


         70
                                Fifth Report of HLC – Organizing Committee

         reportedly mentioned verbally by such staff to the respective FA. However, it was not
         possible to verify this information as specific cases were not mentioned during discussion.

3.11.5   The pre audit appears to be totally ineffective in view of the large number of irregularities
         noticed in payment of contracts, purchases and personal claims.


         Internal Audit and Audit Committee

3.11.6   The Internal Audit is an important oversight function particularly the activities involving
         financial implications.            Since OC’s budget expanded to significantly large amount,
         importance of internal audit increased. It was mentioned by the Treasurer in the EB meeting
         held on 21/05/2007 that an Internal Audit Firm of repute and Audit Committee of the Board
         needed to be appointed which is a normal practice in any corporate sector. EB approved this
         proposal. However, for five months after EB approved the proposal of engaging an Audit
         Firm of repute, there was no action in this regard. It appeared that that no outside firm of
         repute was engaged for internal audit of OC.                       Instead an Internal Audit Wing was
         functioning with “one man audit cell” managed by PR Roy, Sr Accountant. 103.

3.11.7   Only on 19/10/2007104 an office note issued under signature of the Treasurer stated that
         “considering the need to upgrade the level of internal audit, it is recommended to promote
         Mr.P.K.Chawla , Dy Director (Accounts) as Director- Internal Audit and Systems.” This note
         stated further that he would also assist the audit committee of the EB and interact with
         them on behalf of the OC and he would report to the Chairman. Thus the decision of the EB
         was overlooked by OC by not appointing any outside firm for conducting internal audit of
         OC. There could not be any better example of the subterfuge of EB’s authority and that too
         in the crucial area of internal oversight.

3.11.8   Subsequently, on 7/04/2008 Chairman issued an Officer Order that Ms. Shovna Narayan, Jt.
         Director General would also look after all matters relating to Internal Audit and the Audit
         Board.105 She was also required to service the Audit Committee.


         103
               Refer to Annexure 3.36 Office Note dated 19 October 2007

         104
               Refer to Annexure 3.8

         105
            Refer to Annexure 3.37 Order bearing no G/110/2007-Estt. dated 07/04/2008 signed by Suesh kalmadi addressed to All
         Officers/Staff of OC


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                                Fifth Report of HLC – Organizing Committee

3.11.9   When Shovna Narayan was given the charge of internal audit, there was no additional staff
         support for internal audit and only the supervision arrangement was changed. It continued
         to report its activities to Audit Committee. Consequently, the internal audit arrangement
         only changed form but not substance.

3.11.10 A review of the activities of the internal audit indicated that its coverage did not extend to
         major areas of financial decisions and major contracts and aimed to provide an effective
         safeguard against fraud and irregularities. The present review noticed large number of
         irregularities in payment of contracts, purchases and personal claims etc. The internal audit
         did not raise beyond its subservient and ineffective position in this dispensation.

3.11.11 An Audit Committee started with three members M. Ramachandran( Chairman),VD
         Nanavati and VK Verma. However, it did not hold any meeting till September 2008. This
         committee mostly discussed the matters pointed out in internal audit. It was also setting an
         annual plan of internal audit.

3.11.12 In its first meeting of the Audit Committee (08/09/2008),106 it was                          announced that AK
         Mattoo replaced VK Verma who had joined the OC as DG. It is noticeable that internal audit
         was expected to cover financial decisions and approvals by the Executive Management of
         which AK Mattoo was a member and participant. Besides, it was being serviced till late by a
         Director level officer in OC who was handpicked by Chairman and who was reporting to the
         Chairman. In January 2010 N Ramachandran was inducted in Audit Committee and AK
         Matto was no more the member107.

3.11.13 Evidently the efficacy of internal audit from such an arrangement was doubtful. The Audit
         Committee was manned by a person (Treasurer) whose functions were to be reviewed by
         the Committee. The Director Internal Audit had no independence; he was an employee of
         OC in another area and now in his revised and exalted role was to report to Chairman. He
         was suitably rewarded for his role as internal auditor as seen from the way he Chawla was
         promoted.




         106
               Refer to Annexure 3.38: Minutes of Audit Committee circulated under OC/AC?08-09?01 dated 08/09/2008

         107
               Refer to Annexure 3.39: Office Order dated 4 January 2010 signed by Suresh Kalmadi


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                                 Fifth Report of HLC – Organizing Committee

3.11.14 It is seen that he was promoted by Chairman as Deputy Director General (Internal Audit) on
         31/08/2010 retrospectively from 01/04/2009.108Needless to say that this order brought
         huge financial benefit to Chawla apart from the fact that such retrospective promotion
         appeared to be one of its kind in OC.

3.11.15 It was seen that following his retrospective promotion , Chawla also claimed transport
         allowance retrospectively and Jt DG ( KUK Reddy) allowed him this irregular benefit by
         recording a false comment of having discussed this matter with Spl. DG( F&A) who
         questioned the proposal of KUK Reddy to sanction such benefit retrospectively.

3.11.16 The irregularities pointed out in internal audit were not pursued to its logical end. As seen
         from the ATR of Audit Committee, these irregularities were just noted for future compliance
         by the respective FAs. There was no instance when the Audit Committee proposed action
         against delinquent officials of OC based on internal audit findings.




         108
               Refer to Annexure 3.40: Order dated 31 August 2010 signed by Lalit Bhanot


         73
                                Fifth Report of HLC – Organizing Committee

4       Chapter 4: Revenue from Ticketing
              The ticketing policy, particularly the issue of complementary tickets by OC, was against
              public interest and revenue negative in intent and purpose. The Chairman had setup a
              non-transparent mechanism to ensure unabated supply of complimentary tickets
              against advice of the ticketing agency and disregarded all norms of best practices.
              Consequently, while demand for priced tickets increased, the stadiums remained empty
              and OC suffered a staggering opportunity loss of INR 71 crore on sale of tickets.




4.1     Background

4.1.1   Sale of games tickets was one of the major components of revenue generation from the
        games. OC persistently presented to the GOI that the games would be conducted in a
        revenue neutral manner and expenses incurred by the Government of India would be off set
        from various revenue streams. Ticketing was a major source of revenue. The projected
        revenue from ticketing was assessed at INR 100 crore in EY revalidated budget of December
        2009. In contrast the actual revenue realized by the OC from ticket sales was INR. 39
        crore109

4.1.2   The Ticketing FA in the OC was responsible for the planning and delivery of the ticketing
        program. Responsibilities of this FA included all activities related to printing and sales of
        games tickets. The Ticketing FA was led by Sanjiv Mittal, JDG till 6/10/2010 and then
        onwards by Monica Jolly, Director.

4.1.3   The OC engaged Indian Railways Catering and Tourism Corporation (IRCTC) in partnership
        with Broad Vision and TicketPro as Ticketing Agency at a fee of INR 14 crore for the sales
        and distribution of tickets. The responsibilities of the Ticketing Agency included aspects of
        ticketing technology platform, administration of ticketing inventory, delivery and
        management of the call center, and delivery of tickets110.



        109
              Refer to Annexure 4.1 for copy of ticket sales report prepared by OC

        110
              Refer to Annexure 4.2 for the responsibilities of the Ticketing Agency


        74
                                Fifth Report of HLC – Organizing Committee

4.2     Overview of ticket sales

4.2.1   On an overall basis, the OC printed and distributed 1,140,532 valid tickets for use at sports
        events and ceremonies111. Ticket sales data was independently obtained from the ticketing
        agency for the purpose of analytics. A number of data analytics queries were run on the
        data sets to identify trends and patterns in the sale and distribution of tickets, as well as to
        identify red flags that may be evident of or point to misconduct. The analysis revealed the
        issues described in the following paragraphs.


        Extremely abnormal number of complementary tickets

4.2.2   The analysis of tickets issued is set out in the figures below.

        Figure 4. I: Break up of tickets between revenue and non-revenue earning tickets


                                            Ticket Sales




                Non-Revenue                                           Revenue
                  Tickets                                              Tickets
                  578,750                                             561,782
                    51%                                                 49%




        111
              Sales data obtained from Ticketpro and barcode scanner data at turnstiles obtained from ECIL: Refer to Annexure 4.3


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                             Fifth Report of HLC – Organizing Committee

        Figure 4 2: Break up of tickets non revenue tickets between complementary and others112


                                    Non-Revenue Tickets
                              Others
                             110,726
                               19%




                                                                 Complimentary
                                                                   468,024
                                                                    81%




4.2.3   There are two important issues that emerge from the analysis of the figures presented
        above.

             More than half of the tickets generated by the OC did not generate revenue.

             Majority of the non-revenue generating tickets (81%) were complementary tickets. This
              indicates that the primary distribution of free tickets comprised complementary tickets
              issued at the discretion of the OC and that a very small percentage of the free tickets
              related to actual sports related matters such as accreditation113.


        61% of complementary ticket holders did not attended the games

4.2.4   An analysis of the turnstile barcode scanner data revealed that 84% of revenue ticket
        holders attended the events while only 39% of people who held complementary tickets
        actually attended the events.                  This is contrary to the OC’s contention (discussed
        subsequently) that complementary tickets were strategically used to drive attendance of
        events. In other words free tickets necessarily did not result into large attendance as
        assumed by OC.




        112
           The other components on non-revenue generating tickets included categories such as accreditation and ground passes
        as per data provided to us

        113
           These represent add on tickets for special events provided to persons already holding an accreditation for other sports
        or activities


        76
                                          Fifth Report of HLC – Organizing Committee

        Issuing complementary tickets when demand for paid tickets was at its peak

4.2.5   Comparison of cumulative sales of Revenue & Complimentary tickets from September 15
        2010, onwards indicates that post Opening Ceremony on 3 October 2010, the sales for
        revenue tickets increased drastically. However, despite this rise in sales, OC kept on printing
        large quantities of complimentary tickets. The data indicates that though revenue potential
        from ticket sales was high as seen from strong demand for priced tickets, from 5 October
        2010 onwards OC persisted in printing and distribution of large quantities of complimentary
        tickets.

                                                                                      Complimentary                   Revenue

              600000

              500000

              400000

              300000

              200000

              100000

                   0




                                                                                                                                                           10


                                                                                                                                                           10
                       0


                                  0


                                             0


                                                        0


                                                                   0


                                                                              0


                                                                                         0


                                                                                                    0


                                                                                                               0


                                                                                                                          0


                                                                                                                                     0


                                                                                                                                                0


                                                                                                                                                            0
                     .1


                                .1


                                           .1


                                                      .1


                                                                 .1


                                                                            .1


                                                                                       .1


                                                                                                  .1


                                                                                                             .1


                                                                                                                        .1


                                                                                                                                   .1


                                                                                                                                              .1


                                                                                                                                                          .1


                                                                                                                                                         0.


                                                                                                                                                         0.
                   .9


                              .9


                                         .9


                                                    .9


                                                               .9


                                                                          .9


                                                                                     .9


                                                                                                .9


                                                                                                           10


                                                                                                                      10


                                                                                                                                 10


                                                                                                                                            10


                                                                                                                                                        10


                                                                                                                                                       .1


                                                                                                                                                       .1
                15


                           17


                                      19


                                                 21


                                                            23


                                                                       25


                                                                                  27


                                                                                             29


                                                                                                        1.


                                                                                                                   3.


                                                                                                                              5.


                                                                                                                                         7.


                                                                                                                                                     9.


                                                                                                                                                    11


                                                                                                                                                    13


        Quantification of potential loss of revenue

4.2.6   As per internal determination by ticketing FA at OC loss of revenue through the sale of
        complementary tickets is INR 71 crores.114

        Table 4.1: Summary of loss due to complimentary tickets


        S.No.          Ceremonies/Sports                                              # of Complimentary Tickets                                    Cost      of   Complimentary
                                                                                                                                                    Tickets
                       Ceremonies                                                     22,900                                                        INR 566,014,500
        1
                       Atletics                                                       197,588                                                       INR 71,246,200
        2
                       Archery                                                        1,146                                                         INR 466,600
        3
                       Badminton                                                      12,848                                                        INR 3,225,100
        4
                       Boxing                                                         3,480                                                         INR 1,873,750
        5


        114
              The OC report on the value of complimentary ticket in Annexure 4.4


        77
                           Fifth Report of HLC – Organizing Committee

        S.No.   Ceremonies/Sports           # of Complimentary Tickets    Cost      of   Complimentary
                                                                          Tickets
                Shooting -Clay Target       7,420                         INR 130,000
        6
                Cycling                     2,380                         INR 1,068,000
        7
                Diving                      8,079                         INR 2,275,550
        8
                Shooting -Full Bore         334                           INR 82,500
        9
                Gymnastics                  24,899                        INR 8,683,148
        10
                Hockey                      100,778                       INR 31,039,650
        11
                Lawnball                    7,358                         INR 900,050
        12
                Netball                     11,648                        INR 1,745,700
        13
                Shooting –Pistol            7,776                         INR 230,750
        14
                Rughby Sevens               3,580                         INR 598,250
        15
                Swimming                    3,625                         INR 2,449,450
        16
                Squash                      18,378                        INR 3,057,150
        17
                Table Tennis                15,897                        INR 3,107,000
        18
                Tennis                      15,265                        INR 3,556,550
        19
                Weightlifting               9,216                         INR 2,756,500
        20
                Wrestling                   20,143                        INR 9,126,600
        21
                Total                       494,738                       INR 713,632,998



4.2.7   According to the computation prepared by HLC team independently, the potential loss of
        revenue just for complementary tickets issued for the opening and closing ceremonies is INR
        56 crore which is included in the above and approximately equals the Ticketing FA’s
        computation for opening and closing ceremony.


4.3     Highlights of the complementary tickets

4.3.1   It is noticeable that the Executive Board (EB) approved the Ticketing Policy only in its 26th
        meeting held on 21st Sep 2010, only two weeks before the start of games, whereas the first
        tickets were already printed on 25 August 2010. This is indicative of how the issue of
        revenue generation from ticketing was neglected by the EB while the Chairman had a free
        hand in following a revenue negative approach in distribution of large number of



        78
                                    Fifth Report of HLC – Organizing Committee

        complimentary tickets in disregard of demand for priced ticket as explained in the ensuing
        sections.115

4.3.2   In the EB meeting116, a presentation was made by Sanjiv Mittal, Jt DG, on the
        Complimentary Ticket Policy, Prime Event Limitation Ticketing Policy for OC VIPs, and
        Distribution of Unsold Tickets at Games Time as Complimentary. Further to these
        presentations, Monica Jolly discussed the status of the ticket sales for Commonwealth
        Games. She mentioned that as on 21st September only 10% of tickets were sold and to
        avoid empty stands Complimentary tickets should be printed and distributed based on the
        availability of the unsold tickets. The policy approved117 by EB for the allotment of unsold
        tickets identified certain constituent groups for the distribution of these tickets.

              In the case of Sports Sessions, the policy allowed OC to distribute approx 30% of
               inventory 5-8 days in advance incase a significant number of seats in the event remained
               unsold. Further if 2-3 days before the event a significant inventory was left unsold then
               10-15% of inventory would be pulled out for complimentary issues.

              In case of Opening & Closing ceremonies the policy notes that if 7 days in advance a
               significant number of tickets are left unsold then those will be distributed as
               complimentary. The complimentary tickets will have a price printed on them and carry
               an additional line “Complimentary – Void if Sold” to distinguish from revenue tickets. No
               limit was set, in the policy, on the number of such tickets that could be distributed as
               complimentary.

4.3.3   It may be mentioned that ticketing Policy was not conclusive in defining how the Ticketing FA would
        decide the significant number of tickets that remained unsold for an event, or the quantity of
        significant number of tickets in this context.. Also, in case of Opening & Closing ceremony there was
        no maximum percentage defined for pulling out complimentary tickets from unsold inventory. The
        EB also authorized Chairman, OC to take necessary decision to fill up stadiums by distributing tickets
        beyond 30%, if required for all events.




        115                    th
              Minute of the 26 EB meeting on 21 September 2010 in Annexure 4.5

        116          th
              The 26 EB held on 21 September 2010

        117
              Please refer to 4.5 for a copy of the policy


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                                 Fifth Report of HLC – Organizing Committee

4.3.4   An example of this flawed definition of “significant” and its misuse by the OC to issue
        complementary tickets is evident from the analysis of the daily sales data for the opening
        ceremony.

              According to the ticket sales data for the opening ceremony, around 25,000 tickets were
               already printed on 27 September 2010 (7 days prior to the event) which were 67% of
               available tickets in spectator zones.

              From a review of the sales trend for the opening ceremony, it was evident that tickets
               were in high demand, as sales of the Revenue tickets increased by over 78% between 16
               Sep to 27 Sep.

              It is thus surprising that in this scenario where demand was peaking and significant
               tickets were already sold, OC took a decision to deem the balance 33% tickets in the
               spectator zones as “significant unsold tickets” and issue a large number of them (8,329)
               as complimentary118.

4.3.5   Although OC officials denied the existence of any other complimentary policy, a
        Complementary Tickets Policy, Dated 07/06/2010 sent by Mr. Nalin Pant, APO Ticketing, to
        Ms. Monica Jolly was discovered. The policy is restrictive with regards to complimentary
        tickets and clearly identifies few select custodians for the same. 119

              This policy states that Complimentary tickets result in diminished revenue, which
               impacts the budgets set out by OC and any seats distributed as complimentary
               discriminate against all other spectators who have purchased a ticket to gain entry into a
               venue and reduce the number of tickets available to the general public.

              Policy identifies only 6 categories of recipients including slum children and caps the total
               complimentary tickets to around 2-3%.




        118
              Refer to Annexure 4.6 for the details of unsold tickets at that time

        119
              Refer to the Email and Policy in Annexure 4.7


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                                Fifth Report of HLC – Organizing Committee

4.4     Potential creation of documents- complementary tickets policy

4.4.1   Through computer forensics a soft copy of a policy titled ‘Distribution of Unsold Tickets at
        Games Time Policy’120 was obtained from Monica Jolly’s computer which was also dated 21
        Sep 2010121, the day of the Executive Board Meeting where the policy was approved.

4.4.2   It was noted that the complimentary ticket distribution policy as mentioned in the EB
        meeting differs from the recovered document in following aspects.

              The policy acknowledges that last minutes sales at the venue office are expected to be
               high and an overall 25% have been allocated for distribution to various groups

              The recovered document lists down only 6 Constituent groups as opposed to 42
               mentioned in the policy attached to the EB meeting minutes

              The recovered document provides a cap of 5% for each constituent group and identifies
               various approving authorities for issuance of complementary ticket to each constituent
               group

4.4.3   Additionally, through computer forensics, an email dated 16/10/2010 was obtained which was sent
        from a generic id ticketingdelhi2010@gmail.com to Monica Jolly, Director Ticketing FA with an
        attachment “Ticketing Policy” was detected. The email states “Do not forward this to any one. Its
        post dated so imp it remains in soft copy with u only”. Upon examining the attachment, it was noted
        that the document is substantially similar as the Ticketing Policy approved by EB on Sep 21, 2010 in
        terms of the content122.

4.4.4   From the above it appears that firstly there were two materially different versions of a
        policy document that existed on a given day (21 September) and secondly the email
        communication insinuates that the actual policy document purportedly approved by the EB
        may have been created at a later date. In view of the above, it is possible that documents
        were created at a later date to ratify actions of OC functionaries at that point in time.




        120
              Refer to Annexure 4.8 for a copy of the document

        121
              The date mentioned physically on the document

        122
              Please refer to Annexure 4.9 for a copy of the document and the email


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                                Fifth Report of HLC – Organizing Committee

4.5     Adverse conduct related to printing of complementary tickets

4.5.1   Several emails were discovered that indicate attempts made by the office of the Ticketing
        FA (presumably at the instance of the Chairman) to hold back tickets for sale to general
        public while giving precedence to issue of complimentary tickets. Such a policy severely
        affected the revenue generating potential from sale of           tickets. Besides, such practices
        constituted an improper conduct that was severely detrimental from a financial aspect
        leading to loss of significant revenue to the OC. The exchanges of emails indicating how the
        potential sale of tickets was scorched are discussed below.

              From the email communication dated 17/5/2010 between Monica Jolly, Director
               Ticketing FA and IRCTC it appears that Monica Jolly wrote “…make sure that only 50% of
               inventory is only on sale at any given point of time as desired by chairman…” 123. Thus the
               office of the ticketing FA made conscious efforts to curb the sales to general public by
               not releasing the inventory for sales.

              In an email communication dated 08/10/2010 from Monica Jolly Director Ticketing FA to
               IRCTC, Monica Jolly requested IRCTC to print 1600 Complimentary tickets of Closing
               Ceremony worth INR 6.4 Cr for Chairman. Ms. Veera from TicketPro, in response to this
               email, urged Monica that only 422 tickets are left for public and they will be sold soon
               and hence it is not necessary to give Complimentary tickets. But, Monica responded
               “Vera-Please print the tickets as complementary for the chairman. No inventory will be
               released to the general public now”124.

              In an email communication dated 10/10/2010 it appears that the ticketing agency as
               well as the consultants were aware that the tickets could easily be sold and should not
               be given out as complimentary. Vibhor Jain from EY wrote to Monica Jolly with a copy to
               Sanjeev Mittal and others stating that “….Was reviewing the Closing ceremony report. As
               is clear from the report below while we have huge demand for INR 4,000 category we
               have held back 3,756 seats amounting to almost 1.4 Cr which can be easily sold out. I
               again see the repeat of Opening wherein last minute we give out these as freebie while


        123
              Please refer to Annexure 4.10 for a copy of this email

        124
              Please refer to Annexure 4.11 for a copy of this email


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                                Fifth Report of HLC – Organizing Committee

               they could have been easily sold….”125.Veera from TicketPro further wrote that “I
               completely agree with you. The tickets that can be easily and quickly sold should not be
               printed as complementary”. Rajni Hasija from IRCTC further wrote that “we propose that
               tkts should be released to public for sale as demand is high”

              In an email communication dated 2/10/2010, a day before the Opening Ceremony,
               Monica Jolly, Director Ticketing FA instructed the agency to print all remaining inventory
               (Category A & B) as complimentary thereby not leaving any additional tickets for sale to
               the general public126.


4.6     Adverse conduct related to distribution of complementary tickets

4.6.1   The Director, Ticketing FA, initially informed the HLC team that they did not maintain a
        complete record of the distribution of complimentary ticket distribution despite these
        tickets carrying a price. After several requests by the committee for this information, the
        Ticketing FA provided a high-level summary of ticket distribution for Opening/Closing
        ceremonies. These details were limited to the names of the constituent groups and number
        of tickets delivered. The note from Ticketing FA mentioned that for other sports, tickets
        were distributed in bulk by the National Federations and stake holder of OC 127.

4.6.2   Computer forensics, revealed an email drafted by Ankit Mehrotra, APO Ticketing with an
        attachment “Collated Reports Comp Tickets”. The attachment lists down the number of the
        complimentary ticket by value, given to various person/groups. This file has distribution
        details of 184,735 tickets out of a total of 468,024 complimentary tickets printed.128

4.6.3   Consequently, it appears that even though enough details were available with the Ticketing
        FA on distribution there was an apparent unwillingness to share these details.
        Consequently, in the interest of full public disclosure, the details obtained for the
        distribution of 184,735 tickets are set out in Annexure 14. While the contents of this list
        cannot be verified as the OC has not kept an official record for distribution, nevertheless,

        125
              Please refer to Annexure 4.12 for a copy of this email

        126
              Please refer to Annexure 4.13 for a copy of this email

        127
              Please refer to Annexure 4.14 for a copy of this communication to the committee

        128
              Please refer to Annexure 4.15 for the email and the attachment with distribution details


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                                Fifth Report of HLC – Organizing Committee

        this list contains names of individuals who range from politicians, media, bureaucrats,
        celebrities, sports personnel, amongst others in whose name the tickets were ostensibly
        issued by the OC. It could not be verified whether these tickets were actually received by
        the mentioned individuals in the list.

4.6.4   For the balance tickets for which no information has been received, the possibility of
        wrongful conduct related to distribution cannot be ruled out.


4.7     Printing of excess tickets over capacity of venues

4.7.1   At the instance of Mr. Suresh Kalmadi, Chairman and Mr. Lalit Bahnot, Secretary General,
        the Ticketing FA authorized printing of tickets over and above the total inventory of
        available tickets. In an email communications dated 8/10/2010 and 9/10/2010, Monica Jolly
        directed the Ticketing Agency to print complimentary tickets over and above the inventory.
        The email notes that this request has been approved by Suresh Kalmadi, Chairman and Lalit
        Bahnot, Secretary General. These tickets were printed with the following disclaimer to the
        agency:129

        “OC takes the responsibility of all kinds of possible consequences of overcrowded venues. OC
        is aware of the fact that the bar codes given to ECIL can all be used and some clients that
        have bought tickets some time ago and will come in order to have their ticket(s) redeemed
        won´t receive their ticket(s) because the bar codes will be exhausted. OC will take care of all
        claims of clients that might face this problem”

4.7.2   As the extra printing of tickets continued unabated, the ticketing agency had to finally write
        to the Ticketing FA that they will not be able to continue this. In an email communication
        dated 13/10/2010130 agency wrote to Ticketing FA stating “…With reference to your order
        below, We regret to inform you that it may not be possible for us to continue to reprint the
        tickets as desired in this order. As per your request we have done it many times with the
        following undertaking from OC although we have not agreed to it but we thought that it
        was an exceptional need of client that had to be fulfilled…” “….We as ticketing Agency



        129
              Please refer to Annexure 4.16 for a copy of the emails

        130
              Please refer to Annexure 4.17 for a copy of the email


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                                Fifth Report of HLC – Organizing Committee

        ,strongly recommend that we should not reprint any more tkts further for this event of
        hockey…”

4.7.3   The above clearly indicates the unabated and uncontrolled printing and issuance of
        complementary tickets under authorization of Chairman and Secretary General.


4.8     Possibility of misconduct related to distribution of tickets


        Printing of prices on complementary tickets

4.8.1   In an email dated June 27, 2010 Monica Jolly instructed Ticketing Agency to print
        Complimentary tickets out of Chairman’s quota of complimentary tickets. From the email
        exchange it appears that Ticketing FA wanted the price to be printed on the Complimentary
        tickets. In the email exchange, the Ticketing Agency wrote back stating the following. 131

              “…..Frankly, I didn´t expect that complimentary tickets will be requested during the Phase
               one. This doesn´t make any sense to me…”

              “….usually the complimentary tickets show no price or 0/- to avoid or at least make
               harder to tout such tickets. However it is no problem for us to show the price on the
               complimentary tickets. We will manage it for the next time….”

4.8.2   It follows from the above that even in the view of the ticketing agency, printing of prices on
        complementary tickets was not considered a normal practice. It may be mentioned that
        printing a commercial value on a free ticket provides some sort of a value benchmark
        making them susceptible to black market or unauthorized sales for a consideration.


4.9     Failure of ticketing infrastructure at games venues affected sales

4.9.1   Several email exchanges were obtained which were between the ticketing agency and
        Ticketing FA on the problems faced at the Box Offices due to unavailability of uninterrupted
        electricity and internet connections. Some examples are set out below.

              In the email communication dated 7/10/2020 IRCTC wrote “…JLN is phasing many
               problems for electricity. Electric supply is disconnected for few minutes this happens

        131
              Please refer to Annexure 4.18 for copy of the emails


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                                 Fifth Report of HLC – Organizing Committee

                three times in a day. UPS provided in JLN box office is not able to support all the
                hardware. Restart of ADSL/ broadband and printer takes 20 minutes, in normal cases but
                when transaction is taking place not only the printing is affected, the ADSL gets hanged.
                In any case booking in box office get affected for 30-40 minutes after every failure. It is
                therefore suggested that UPS of bigger capacity may be provided in the box office of JLN
                sports complex….” 132

               In the email communication dated 8/10/2010 IRCTC has complained to the ticketing FA
                on the lack of infrastructure support at the box office. In this email IRCTC has written to
                Monica Jolly, Director Ticketing FA stating “…I think we wont be able to like this in view
                complete disowning of box offices by OC. All logistics like internet, electricity etc were to
                be provided by OC which they have miserably failed…”133

               In the email communication dated 8/10/10 IRCTC wrote “…The internet connection in
                box office provided by OC has failed at JLN. Photones given by OC are not working. There
                is a huge crowd at the counters. Please resolve….”134


4.10     Concerns raised internally by other OC employees

4.10.1   Several emails were discovered where officials of the OC raised concerns related to the
         distribution of complimentary tickets, unavailability of tickets to general public despite
         empty stadiums, and a possible black marketing of complimentary tickets.

               In an email communication from Sudhir Mittal (Special DG, OC) dated 10/10/2010 he
                raised concerns related to the distribution of Complimentary tickets and over potential
                revenue loss. He also mentioned that people are complaining that tickets are shown
                “SOLD OUT” on the website as well as ticket office even when the stands are empty135.

               S.P. Gupta, Venue Administrator, in his email to Suresh Kalmadi dated 9/10/2010 wrote
                “…Stadias are empty and people are crying for tickets but those are not available at


         132
               Please refer to Annexure 4.19 for a copy of the email

         133
               Please refer to Annexure 4.20 for a copy of the email

         134
               Please refer to Annexure 4.21 for a copy of the email

         135
               Please refer to Annexure 4.22 for a copy of the email


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                                 Fifth Report of HLC – Organizing Committee

                counter even on payment…”. Mr. Gupta has requested that Venue Administrators should
                be allowed to distribute complimentary tickets on the pattern of the day passes and
                availability of the seats. Further to this, Mr. Harish Kumar, Retd IPS, wrote to Suresh
                Kalmadi endorsing the views of the venue administrators and stated “….It is perhaps the
                most saddening fact of the games that stands are empty and ticketing booths say they
                are fully sold out..”. He also mentioned in his email that on 9/10/2010 police arrested a
                Sanjiv Sanghvi having an accreditation card of OC Member on the charges of black
                marketing the complimentary tickets136.


4.11     Change in FA head at a critical juncture

4.11.1   An email was obtained from Sanjiv Mittal, JDG written to Suresh Kalmadi, Chairman on
         7/10/2010. In the email Mr. Mittal suggested that since there is a surge in ticket sales over
         the last few days, OC should not distribute unsold tickets as Complimentary for any of the
         sports except Athletics137.

4.11.2   In an office order issued by Suresh Kalmadi, Chairman, Sanjiv Mittal was directed to give
         charge of the Ticketing FA to Monica Jolly, Director Ticketing on 7/10/2010 which was the
         same date as the email above138.

4.11.3   An email was discovered through computer forensics dated 8/10/2010 written by Sanjeev
         Mittal, Jt DG Ticketing FA, where he raised further concerns over printing of complimentary
         tickets. He stated that “….I hope requisite approval was obtained before sending the order to
         IRCTC as no response to my e-mail to Chairman and CEO was received by me as I was not in
         favour of getting these tickets as complimentary except Athletics…”139

4.11.4   It is significant that Mr. Sanjiv Mittal was asked to relinquish his charge of ticketing FA on
         the same day that he voiced his dissent. While on the office order of Mr. Sanjiv Mittal, it is
         noted that his transfer was to “resolve catering issues by dedicating yourself exclusively to
         this FA”, it appears to be linked to his dissent as mentioned above.

         136
               Please refer to Annexure 4.23 for a copy of the email

         137
               Please refer to Annexure 4.24 for a copy of the email

         138
               Please refer to Annexure 4.25 for a copy of the office order

         139
               Please refer to Annexure 4.26 for a copy of the email


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                                 Fifth Report of HLC – Organizing Committee

4.12     Summary and conclusions

4.12.1   The conduct of OC functionaries with respect to issuance of complementary tickets caused a
         potential revenue loss of INR 71 crores by the OC’s own estimates. It is extraordinary that in
         a games event of this stature, more than half of the tickets issued were complementary
         given that the mandate of the OC was to conduct the games in a revenue neutral manner.

4.12.2   From the inception itself, the OC’s estimates of ticket revenues were exaggerated. Till mid
         2010, these estimates were repeatedly highlighted to project the revenue neutral position
         of the games. Clearly this indicates lack of diligence by the OC in preparing such estimates
         and smacks of lack of integrity.

4.12.3   Red flags continued to be ignored on complementary ticket printing and distribution
         throughout the period leading up to the games. The Ticketing FA was ignored signs of
         potential revenue opportunities and continued to issue instructions to print complementary
         tickets presumably with the approval of the Chairman and Secretary General of the OC.

4.12.4   The OC Chairman and the concerned ticketing staff appeared to have acted without
         accompanying accountability. Specific examples of such behavior, amongst other issues
         mentioned in this section, include the following.

               Potentially backdating policy documents140

               Failure to maintain documentation and records related to distribution of complementary
                tickets and arbitrary manner of their distribution141

               Indiscriminate printing of complementary tickets when all evidence indicates that they
                could have been sold to the general public

               Over printing tickets inspite of the opposition voiced142

               Frequent overruling of advice of managers and changing key personnel at a critical
                juncture



         140
               Please refer to paragraph 4.4

         141
               Please refer to paragraph 4.6

         142
               Please refer to paragraph 4.7


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                  Fifth Report of HLC – Organizing Committee

    Attempt to restrict the flow of tickets to the general public contrary to spirit and purpose
     of the commonwealth games




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                                Fifth Report of HLC – Organizing Committee

5       Chapter 5: Sponsorship

5.1     Background

5.1.1   Chairman OC consistently projected to the Government of India that the games would be
        revenue neutral and funds provided by the Government to OC would be recouped from its
        revenue streams. A major component of OC’s total revenue projection for INR 1876 crore in
        the revalidated budget (2008)143 was the sponsorship revenue of INR 960 crore. OC awarded
        M/S Sports Marketing & Management (SMAM) the sole sponsorship and technical services
        consultancy to deliver the sponsorship revenue. SMAM promised sponsorship revenue of
        $100 million (revised to $ 240 million equivalent to INR 1080 crores144 ). But as of January
        2010, only INR 238.30 crore in cash and INR 136.26 crore in Value in kind (VIK) was
        contracted. Of these, as of February 2011 INR 193 crore of cash was received mainly from
        Government/PSUs (INR 75 crore from the Railways, INR 20 crore from NTPC and INR 50
        crore from Central Bank) and it was determined by OC that SMAM’s efforts were not
        involved in these contracts. However, SMAM has submitted invoice to OC for sponsorship
        commission for approximately INR 50 crore for these contracted amounts including those
        from the Government and PSUs.

5.1.2   A brief chronology of the key events relating to the award of contract for sponsorship rights
        is set out in the table below:

        Table 5.1: Chronology of tendering process for Press operations

         Date                             Particulars




         13 September 2005                Chairman appraised EB that EOI was being invited for the
                                          Broadcasting and Sponsorship rights

         22 December 2005                 Approval for advertisement of expression of interest for


        143
              Refert to Annexure 5.1: Revenue projection in the revalidated budget

        144
              With a conversion rate of USD 1 = INR 45


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               Fifth Report of HLC – Organizing Committee

Date                   Particulars




                       sponsorship and broadcasting rights granted in the 4th Executive
                       Board meeting.

12 and 13 March 2006      Issue of Expression of Interest for Sponsorship and National and
                           International Broadcasting Rights.
                          EOI for the National and International Broadcasting Rights
                           received from:
                           -    Sports Marketing and Management, Australia
                           -    Sportifive International,Switzerland
                           -    Leisure Sports Management, Kolkata
                           -    Total Sports and Entertainment India, Mumbai
19 May 2006            Tender documents issued to all four companies.

3 June 2006            Response to tender documents received from:

                          Sports Marketing and Management
                          Leisure Sports Management, Kolkata
7 June 2006            Proposal received from the two companies submitted before the
                       Executive Board for approval. The Executive Board gave in-principal
                       approval for appointment of: Sports Marketing and Management as
                       consultant for Sponsorship and Commercial Rights on the basis of
                       their track record. A marketing sub-committee was constituted
                       which included O P Kelkar, Michael Hooper, Lalit Bhanot and A K
                       Mattoo( from 31.10.2006) to hold negotiation with the approved
                       party.

25 July 2006           First meeting of the Marketing Sub-Committee

25 July 2006           Mike Hooper presented the model draft agreement for
                       International Broadcasting Rights and Sponsorship Rights. The draft
                       agreement was referred to Financial experts and legal experts for
                       their view.

August 2006 to March Consultation with Financial and legal experts on draft contract and


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                             Fifth Report of HLC – Organizing Committee

            Date                   Particulars




            2007                   related issues

            22 May 2007            Second committee appointed by Chairman to discuss pending
                                   unresolved issues with SMAM and to finalise the contract for
                                   sponsorship and licensing marketing services

            25 July 2007           Second committee submits report

            25 July 2007           EMC approves the recommendations of the Second Committee

            25 July 2007           Contract Signed with SMAM, Singapore for CWG D2010

            26 October 2007        Contract Signed with SMAM, Singapore for CYG

            07 July 2010           Deed of Variation signed with SMAM, Singapore

            06 August 2010         Notice of termination of contract sent to Group Managing Director
                                   SMAM

            05 August 2010         EB in 23rd Meeting approved the termination of contract




5.2     Selection of SMAM was influenced by the CGF representatives

5.2.1   The procurement of consultancy service for sponsorship rights and international
        broadcasting rights by OC was initiated under the shadow of the Host City Contract
        conditionality that bestowed overriding rights to the CGF in sponsorship and commercial
        rights of CWG 2010. The extracts from the minutes of 6th Executive Board (EB) meeting of
        07/06/2006 illustrate how the CGF representative used the Host City contract provisions to
        press for selection of SMAM:

             “The President CGF Mr. Michael Fennel expressed his views that the Board may take a
              decision in principle approving the appointment of M/s Sports Marketing &Management
              for the sponsorship and commercial rights and M/s Fast Track for international
              broadcasting rights based on their experience , past track record and their offer “


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                               Fifth Report of HLC – Organizing Committee

              ”Mr. Mike Hooper, Chief Executive Officer of CGF noted …Host City Contract still required
               CGF approval in relation to the appointment of any agencies for the exploitation of
               sponsorship and television rights. In this regard he concurred with the observations made
               by both the Chairman and the CGF President on the credentials of the recommended
               agencies and as such if a decision was taken to appoint them then this approval would be
               forth coming.”

5.2.2   In line with these comments from CGF members, Chairman requested the EB for the
        selection of SMAM. The EB approved, in principle the appointment of SMAM for
        sponsorship rights (and Fast Track Events for international broadcasting rights).

5.2.3   It is noticed that when SMAM failed to generate the stipulated level of revenue and EB
        discussed the termination of contract, Mike Hooper disagreed to be associated with the
        process. It is seen from the minutes of 23 rd EBmeeting of 05/08/2010145 that when
        SMAM’s failure to generate promised revenue was being discussed, Mike Hooper advised
        that “as a representative of the CGF, he would abstain and would not participate in the
        discussion on the matter. “


5.3     International Partnership restricted bid response

5.3.1   It is noticed that, in the EOI issued on 12 March 2006, OC called for an international partner
        for sponsorship and commercial rights for CWG, Delhi 2010 (D2010) and Commonwealth
        Youth Games, Pune (CYG). The EOI advertisement was thus oriented towards international
        firms with experience of previous games. Though international partnership was mentioned
        in the draft EOI which was included in the agenda notes, Chairman did not specifically seek
        EB’s approval for issue of EOI for international partnership. Nor did EB specifically approve
        international partnership. Besides, the notice inviting tender for sponsorship rights issued to
        the shortlisted firms did not call for international partnership.

5.3.2   OC’s sponsorships came mainly from government and PSU sources. Thus issue of EOI for
        international partnership had no rationale. On the other hand, the call for international
        partnership appears to restrict response from Indian agencies.



        145
              Refer to Annexure 5.2: Minutes of EB meeting Page 7


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                               Fifth Report of HLC – Organizing Committee

5.4     Wasteful expenditure on purchase of rights from 69 countries

5.4.1   It is interesting to note that INR 1.37 crore was paid by OC during August 2009 and May
        2010 to 69 countries for exploiting the commercial rights associated with the international
        sector of QBR under an agreement with the Commonwealth Games Federation (CGF) 146. As
        against this, no global sponsorship was acquired. It was inconceivable that small countries
        would be a source of sponsorship revenue for CWG. Therefore this expenditure appeared to
        be a total waste of public funds.


5.5     Contracting process delayed to accommodate SMAM

5.5.1   The contracting process took 17 months (March 2006 to July 2007). The delay in contracting
        was mainly attributable to the deliberations of successive committees to sort out various
        demands of SMAM regarding taxation, fee structure and creation of special entity for
        signing of this contract. This is explained below:

              In response to the RFP147 two responses were received– one from SMAM of Australia
               and other from Leisure Sports Management Pvt. Ltd of Calcutta. Since the Indian bidder
               did not agree to quote minimum guaranteed amount and make a presentation, their bid
               was not considered by EB in its meeting of 7/06/2006.
              EB agreed to give in-principle approval of the consultancy contract to SMAM in the
               above mentioned meeting and set up a Marketing Sub Committee (O.P Kelkar, Mike
               Hooper, Lalit Bhanot and later Chairman added A.K.Mattoo to this committee) to hold
               negotiations with approved parties (SMAM and for another case Fast Track) to better
               clarify contractual obligations, including financial arrangements and the applicable fee
               structure. EB desired that then the matter should be placed before the EB.
              The Marketing Sub Committee, appointed on 31/10/ 2006148 gave its report on 22/03/
               2007. The Chairman appointed another committee on 22/05/ 2007149 to resolve the



        146
              Refer to Annexure 5.3 : Agreement dated 14 February 2008 between the OC and CGF

        147
              Refer to Annexure 5.4 :RFP dated 19 May 2006

        148
              Refer to Annexure 5.5 Office Note regarding the Marketing Sub Committee

        149
              Refer to Annexure 5.6 Office Order dated 22 May 2007 regarding formation of committee


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                       Fifth Report of HLC – Organizing Committee

       pending issues and finalise the contract. Direction for holding negotiation with SMAM
       after in- principle approval of the bid significantly weakened OC’s position.
      SMAM’s attorney vide their email of 21/03/2010                        sent the final draft of SMAM
       agreement to OC which indicated that the executing entity with whom the contract was
       to be signed was still open to be decided by SMAM after considering tax implications.
      Sometime in May 2010 SMAM proposed a new company SMAM, Singapore which was
       incorporated on 08/06/2007. From the records made available,150 it appeared that OC
       was informed that two shares of the new company were transferred by M/s Sonny Seet
       to SMAM Australia on 1/7/2001.
      We noted that final signing of the contract was a hurried affair. The second committee
       finalized its recommendations on 25/07/ 2007. On the same day, the Executive
       Management Committee (members- Chairman, Vice Chairman, Treasure, and Secretary
       General) approved the recommendations after deliberations with the representatives of
       SMAM and approved the signing of draft contract. On the same day (25/07/2007), the
       contract was signed by Secretary General, Lalit Bhanot.
      SMAM, Singapore was also awarded the sponsorship consultancy for CYG PUNE 2008151
       on 26/10/ 2007.They were paid INR 2.98 crore (TDS deduction of INR 38.18 lakh ) on
       14/12/09 as commission though most of the sponsorship for CYG was obtained from the
       PSUs. The signing of contract with SMAM for CYG Pune was not reported to EB by the
       Chairman.
      OC placed an Action Taken Report and a brief summary of the matter in the 10 th EB
       meeting held on08/01/2010. However, in this report OC management did not mention
       the date of signing the agreement with SMAM. Nor did Chairman bring to EB’s notice
       the important facts like (a) contract provision of open ended tax liability of OC (2)
       provision of payment of commission for government and PSU sponsorships and (c)
       signing contract with a newly formed company ( SMAM, Singapore). There were several
       detrimental provisions in the agreement with SMAM as explained below.




150
   Refer to Annexure 5.7: Certificate No 2 reagrding number of shares held by SMAM and Director’s Resolution dated 01
July 2007

151
      Ref to Annexure 5.8: Agreement dated 26 /10/2007


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                     Fifth Report of HLC – Organizing Committee

Potentially detrimental provisions for OC
     Commitment for minimum net revenue target was a key consideration for awarding the
      contract in favour of SMAM. The offer of the sole Indian bidder was not considered as
      they did not offer any minimum net revenues. However, the contract with SMAM
      stipulated that SMAM only agreed “to endeavor to achieve a net (exclusive of the
      contract sum) sponsorship and licensing revenue target of US$100 million (inclusive of
      cash and VIK)”. This condition in the contract was not a guarantee in any sense of the
      term. In August 2010 SMAM asserted that it “never did commit or guarantee any such
      revenues” while contesting the termination notice152.
     Contract was signed with newly a registered company without any mention of the
      SMAM, Australia, the original bidder. OC management informed that there are no
      record to show that legal opinion on change of entity and possible was consulted
      regarding change of the entity (SMAM, Singapore). Consequently any legal safeguard to
      protect OC’s interest also does not appear to have been considered.. This created
      operational and financial risks as the new company had no experience of working in
      India and no capital base.
     The commission was payable on all contracts irrespective of their sourcing from
      government and PSUs. OC agreed for payment of commission of 15% of the revenue and
      VIK upto $ 50,000, 20% from$ 50,000 to 100,000 and 22.5% beyond $100,000. The
      provision of paying commission on contracts with government and PSUs unduly loaded
      the contract in favour of SMAM. The Marketing Sub Committee and the Committee
      appointed by Chairman to examine taxation and legal aspects did not flag the issue.
      When Prof. Malhotra raised the matter in the EB on 11 May 2010, Chairman justified the
      payment of commission to SMAM for PSU sponsorship.
     Absence of penalty clause in the agreement in case of failure to raise the promised
      revenue became an even bigger risk as SMAM, Singapore had no asset base and any
      recovery action was hardly possible as SMAM Australia was not included in the contract
      as guarantor or third party (concern raised by the Legal advisor and the FA ( Finance) in
      this regard were disregarded).


152
   Refer to Annexure 5.9: Para 1 Page 2 of the letter from Mike Bushel dated 10/08/2010 while contesting the termination
notice


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                               Fifth Report of HLC – Organizing Committee

              The agreement provided exclusive sponsorship and commercial rights to SMAM (Recital
               E of the above mentioned contract). This closed all options to OC to engage any other
               consultant in the eventuality of SMAM failing to achieve their target.
              The agreement with SMAM restricted their liability to pay tax at the aggregate rate of
               12.54 %. though actual tax rates were 43% (the tax consultant raised serious concern in
               his mail of 17/05/2007 in this regard).Thus OC accepted open ended and high tax liability
               for SMAM over and above 12.54%. The tax burden assessed by OC’s revenue wing on the
               invoices submitted by SMAM for their final claim of INR 49.03 crore works out to INR
               31.53 crore.


5.6     SMAM’s failure to generate revenue was not monitored

5.6.1   OC made little efforts to periodically review SMAM’s performance. This is inexplicable as
        specific year wise milestones for contracting and realizing revenue were established in the
        contract153 . ADG (Revenue) raised the issue of SMAM’s poor performance in October 2009
        with the Chairman and called for an open advertisement to the sponsors but no action was
        taken on that proposal of ADG (Revenue). Even after the QBR rally (2009) in England failed
        to get any international sponsor, which was a key justification for award of contract to
        SMAM, they were not confronted with their failure. Only in February 2010, the Treasurer
        (Anil Sharma) wanted to formally review the performance of SMAM. A Sponsorship
        Approval Committee was set up to review the matter.

5.6.2   The internal records of OC indicated that Treasurer ( Anil Khanna) was aware of indifferent
        performance of SMAM. They were not taking OC officials’ approval for the deals in time,
        they did not deploy adequate staff and D2010 was neither getting mileage in foreign
        countries nor any international and multinational sponsors. Besides, SMAM made nil
        contribution in major deals signed so far. So action was overdue. Besides OC did not
        examine if the pricing of sponsorship designed by SMAM was too high for Indian market.




        153
              Refer to Annexure 5.10: Appendix3 of the Agreement with SMAM – Projected cash flow of Delhi 2010


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        The Deed of Variation with SMAM was a closely kept secret

5.6.3   The Chairman and other OC officials including Jeychandren, (Advisor,F&A) , Secretary
        General (Lalit Bhanot) and CEO reviewed poor performance of SMAM during March to
        April, 2010 and negotiated with SMAM. Following these deliberations SMAM sent to OC a
        Deed of Variation in May 2010 which proposed fixed fee and percentage fee thereon based
        on revenue collected for settlement of the issue.

5.6.4   The above mentioned Deed provided that commission would be payable by OC on
        sponsorship proposals received till now for INR 211.7 crore (this included contracts from
        Central Bank, NTPC and Air India), a management fee varying from 7.5% to 11.25% on the
        sponsorship proposals received/finalized from PSUs from the date of effect of DOV and tax
        liability of SMAM would remain unchanged at 10.54%. Besides, OC would apply to the GOI
        for 100% exemption from payment of tax on the total taxable income of SMAM. These
        variations in the contract had significantly compromised the position of OC in regard to
        possible dispute over the claim of sponsorship.

        Table 5.2

        S.No   Conditions mentioned in Original Agreement Conditions mentioned in DOV with
               with SMAM dated 25-07-2007                       SMAM dated 07-07-2010

        1      Commission on PSU revenue - Yes                  Commission on PSU revenue - No

                                                                Management fees on PSU revenue-

                                                                 USD 0 to 5,00,00,000 – 7.5%
                                                                 USD 5,00,00,001 to 10,00,00,000 – 10%
                                                                 USD More than 10,00,00,000 – 11.25 %
        2      Performance Targets to achieve a net (exclusive Commitment of payment of commission
               of the contracted Sum) sponsorship and on sponsorship contacted on the effective
               licensing revenue target on effected date : US $ date – INR 211.7 Crs.
               100 Million

        3      BG, Standby Letter of Credit or Escrow D2010 has agreed and under taken to
               Agreement     or opening of a current account furnish to SMAM an unconditional,
               with an Indian International bank agree on the irrevocable      and      unfettered   bank



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                               Fifth Report of HLC – Organizing Committee

                   appropriate instrument / modality with in 6 guarantee ( with out protest, demur or
                   months from the date of execution of this dispute and without reference to D2010)
                   agreement.

        4.         D 2010 has agreed that the total Income Tax No change in obligation to obtain 100 %
                   Liability under IT Act of SMAM shall be limited to Tax Exemption from GOI by OC and Not
                   10.54 % of the contracted Sum. D2010 shall by SMAM on its Income Chargeable to Tax
                   make      an   application     to    the   appropriate in India under the agreement.
                   authority in the GOI to obtain 100 % exemption
                   from payment of tax on the total Income of
                   SMAM generated in India under the agreement.


5.6.5   It appears from available records that this proposed Deed of Variation was dealt with in
        great secrecy. Records made available indicated that this DOV appeared to be mainly
        handled by Jeychandren in consultations with DDG (Legal) Stuart Corbishley154 and was
        signed by Secretary General (.Lalit Bhanot). OC management has confirmed that CEO
        informed that this Deed of Variation155 was not shown to CEO before its execution.OC
        management further stated that (a) note portion of the file/folder relating to Deed of
        Variation is not readily traceable. (b) given the OC’s functioning it is not possible that SG
        would have signed the Deed of Variation without Chairman’s approval.

              The extent of secrecy around this matter can be further guessed from the fact that when
               a few weeks after signing the Deed of Variation, a draft termination notice was sent to
               the Legal Advisors for their advice, they were not informed about it. The Chairman did
               not disclose the Deed of Variation to EB when the agenda for termination of contract
               with SMAM was presented in the in the 23rd EB meeting of 05/08/2010.




        154
              Refer to Annexure 5.11: Note dated 05/06/2010 containing 8 pages by Jeychandren Page no 6 item 1

        155
              Refer to Annexure 5.12: Deed of Variation dated 07/07/2010 containing 15 pages


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                               Fifth Report of HLC – Organizing Committee

        A notice of termination of contract issued within a month of Deed of Variation

5.6.6   Intriguingly, only one month after the signing of the deed of variation, the EMC in its
        meeting on 05/08/t 2010 decided to terminate the contract and EB approved the
        termination.156

5.6.7   SMAM contested the notice of termination157 as vague, erroneous and misconceived and
        demanded the arbitration and immediate payment of $227.7 million. An internal
        assessment by OC indicates that in three years time, SMAM have only marginally
        contributed to contracting sponsorship revenue and only INR 6.920 crore may be payable
        to them for their efforts in contracting a few sponsorships.. However, this is only an
        assessment.


5.7     Summary and conclusions

5.7.1   This is clearly a case where the OC was subjected to pressure from CGF functionaries for
        contracting a vendor preferred by them as was the case with the Fast Track The contract
        conditions were detrimental to OC’s interest. OC Chairman kept the EB in the dark about the
        detrimental contract conditions and even the Deed of Variation that compromised OC’s
        position in regard to payment of commission and additional tax burden. Chairman’s recent
        assertion in the media that he kept the Government was informed of the contracts at every
        step was false, as seen in this case.

5.7.2   Net result of this contract with SMAM was that OC lost valuable opportunity for raising
        sponsorship revenue and may have suffered a potential loss of INR 28. 44 crore. This
        excludes cost of possible litigation, fees for advisors and numerous meeting hours spent on
        the contracting process as mentioned in the table below. The Chairman and his confidants,
        who piloted the signing of the contract and the Deed of variation were fully accountable for
        this loss and wastage of OC resources.




        156
              Refer to Annexure 5.13: Notice of Termination dated 6/08/2010 containing 3 pages from Lalit Bhanot to Mike Bushel

        157
              Refer to Annexure 5.14: Letter dated 10/08/2010containing 6 pages from Mike Bushel to Lalit Bhanot


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                   Fifth Report of HLC – Organizing Committee


Potential and actual expenditure for sponsorship rights

Items of expenditure                                        Amount in INR

Payment     made      to CGF for commercial rights for
sponsorship to the CGAs of participating countries in 1.37 crore
the foreign leg of QBR

Expenditure made on support activities for SMAM by
                                                            0.21 crore
OC

Potential tax payable on the SMAM’s invoiced amount
                                                            31.54 crore
(INR04 Crore) as assessed by OC

Invoices for commission submitted by SMAM( decision
                                                            49.04 crore
is yet to be taken)

Expenses incurred on legal opinion, multiple meetings
and negotiations with SMAM         and cost of making Not assessed
variation of the contract and termination of contract

Damage for lost opportunity of         earning revenue
                                                            Not assessed
through alternate source due to failure of SMAM

Possible cost of dispute resolution potential arbitration
                                                            Not assessed
with SMAM

                                                            82.16 crore ( excluding the cost
Total
                                                            not assessed)

Income

Commission obtained with major efforts from SMAM (
                                                            INR 53.7 crore
Hero Honda and Coke)

                                                            INR 28.46 crore (excluding the
Approximate potential Loss
                                                            unassessed costs)




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                                 Fifth Report of HLC – Organizing Committee

6       Chapter 6: International Broadcasting
        Rights
        In this case, even though the contracting process commenced in 2006, the OC went ahead by
        issuing an RFP with unclear criteria at the inception itself. Further, even though there was
        enough time to negotiate prices the OC issued a contract at a higher commission rate and
        did not reduce cost by 50% or INR 16.1 crores as compared to the quote provided by the next
        vendor. In this case, it was also apparent that the OC was subject to pressures seemingly
        exerted by the CGF functionaries to favor appointment of a particular vendor.




6.1     Background

6.1.1   The TV Rights FA was responsible for sale of both National and International Broadcast
        rights for the Commonwealth Games. However, in effect, their activities were restricted to
        international TV rights as the national rights were handled by Prasar Bharti158.

6.1.2   The FA engaged a vendor, Fast Track Sales Limited, to assist with the sale of the
        international rights. The vendor sold the International broadcast rights to 19 international
        broadcasters for a total contract value of USD 46.4 million. Out of USD 46.4159 million (i.e.
        INR 214.14 crores160) OC has already received USD 37.77 million (i.e. INR 174.83 crores) till
        January 2011161.

6.1.3   The ensuing paragraphs deal with the prime concerns (primarily being deviation for general
        practices, sham magnification of revenue and faulty tendering process) noted with respect
        to the sale of International Broadcasting rights.


        158
              Refer paragraph 1.2 for further detail.

        159
              Refer Annexure 6.1 for total contracted value for sale of International Broadcasting rights.

        160
           Refer Annexure 6.2 being letter to PB from OC for settlement of accounts for International Broadcast rights. Gross
        revenue as per letter is INR 214.14 crore.

        161
              Refer Annexure 6.1 for revenue received till date from sale of International Broadcasting rights.


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6.1.4   A brief chronology of the key events relating to the award of contract for International TV
        Rights is set out in the table below.

        Table 6.1: Chronology of tendering process for Press operations

         Date                       Particulars




         22 December 2005           Approval for advertisement of expression of interest for
                                    sponsorship and broadcasting rights granted in the 4th Executive
                                    Board meeting162.




         12 and 13 March 2006          Issue of Expression of Interest for Sponsorship and National and
                                        International Broadcasting Rights.
                                       EOI for the National and International Broadcasting Rights
                                        received from:
                                        -   Sports Marketing and Management
                                        -   Sportifive International
                                        -   Fast Track
                                        -   Total Sports and Entertainment India



         19 May 2006                Tender documents issued to all four companies.




         3 June 2006                Response to tender documents received from:

                                       Sports Marketing and Management
                                       Fast Track Events




        162
              Refer Annexure 6.3.


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                         Fifth Report of HLC – Organizing Committee

         Date                   Particulars




         7 June 2006            Proposal received from the two companies submitted before the
                                Executive Board for approval. The Executive Board gave in-principal
                                approval for appointment of:

                                   Sports Marketing and Management as consultant for
                                    Sponsorship and Commercial Rights and
                                   Fast Track Events as Consultant for International Broadcast
                                    Right sales.
                                A marketing sub-committee was constituted which included O P
                                Kelkar, Michael Hooper, Lalit Bhanot and A K Mattoo to hold
                                negotiation with the approved party.




         25 July 2006           Mike Hooper presented the model draft agreement for
                                International Broadcasting Rights and Sponsorship Rights. The draft
                                agreement was referred to Financial experts and legal experts for
                                their view.




         22 March 2007          Negotiation held with Fast Track Events. Final agreement was
                                approved by the Marketing Sub-Committee in its second meeting.




6.2     Ownership of Basic feed

6.2.1   In all major International sports events the OC selects/ appoints a Host Broadcaster agency,
        funds its activities and, thus, owns the basic feed that is produced by Host Broadcaster. It
        constitutes an internal revenue committee for overseeing revenue generation activities and
        also appoints a marketing agency for maximizing its revenue from sale of feed to Right
        Holder Broadcasters (RHB). In this case, though the funds were provided by Prasar Bharti/

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                                Fifth Report of HLC – Organizing Committee

        Government of India, the ownership of feed was still claimed by the OC who appointed a
        marketing agency for negotiating amounts payable by RHB’s. This position was untenable.
        Though OC had no financial stake in the production of basic feed it decided arbitrarily to
        share revenue arising from sale of basic feed in the ratio of 70:30163 and 60:40 between OC
        and PB for International Broadcast Rights and Broadcast Rights within India.


6.3     Revenue target and actual realization

6.3.1   As per the Income and Expenditure Statement164 prepared by the Melbourne 2006
        Commonwealth Games Corporation and Melbourne 2006 Commonwealth Games Pty Ltd,
        the total revenue earned through Television Broadcast rights was AUD 62.455 million (i.e.
        INR 212.55 crores165). Fast Track, however, projected a revenue range of USD 30 to 35
        million166 (i.e. INR 136 to 158 crores167) in the bid document submitted to the OC. The
        projected revenue was 36% lower than the actual revenue earned during Melbourne 2006
        Commonwealth games and this shortfall would be much higher if revenue realized in
        Melbourne games is adjusted for inflation. Further, Delhi games were covered on HDTV
        format and justification given for this decision was that it would help in earning higher
        revenue. Thus, projected revenue figure was substantially understated by the marketing
        agency and television broadcast rights should have been sold for a much higher value.

6.3.2   The actual realization of revenue from sale of International broadcast rights to 19
        international broadcasters was USD 46.4 million (INR 214.14 crores168) which was higher
        than the projected revenue. However, out of INR 214.14 crore shown as gross receipts from
        RHB’s, the net realization169 of revenue has been assessed as INR 51.80 crore by OC of which

        163
              Refer Annexure 6.2 being letter to PB from OC for settlement of accounts for International Broadcast rights.

        164
              Refer Annexure 6.4 being the Income and Expenditure account for the period 15 July 1999 to 31 August 2006.

        165
          An average conversion rate of 1 AUD = INR 34.0328 for the year 1 January 2006 to 31 December 2006 has been used.
        The average conversion rate has been taken from www.oanda.com.

        166
              Refer Annexure 6.5 for revenue projected by Fast Track in the bid document submitted by them.

        167
          An average conversion rate of 1 USD = INR 45.1746 for the year 1 January 2006 to 31 December 2006 has been used.
        The average conversion rate has been taken from www.oanda.com.

        168
              Refer Annexure 6.2 being letter to PB from OC for settlement of accounts for International Broadcast rights.

        169
           Refer Annexure 6.2 Gross revenue less CGF license fees, withholding tax, agency commission, establishment cost and
        service tax as applicable.


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                                Fifth Report of HLC – Organizing Committee

        PB’s share is INR 15.54 crore against their expenditure of approximately INR 360 crore on
        host broadcast activities. The actual net realization is 43% lower than the net realization
        estimated in the revalidated budget prepared by prepared by E&Y. Thus it is apparent from
        the above that the earning of USD 46.4 million is only a sham magnification of revenue.


        Failure to achieve budgeted revenue target

6.3.3   Revenue to be earned from sale of International Broadcast rights as per the revalidated
        budget prepared by E&Y was INR 260 crore. According to the summary, as on 31 January
        2009, OC had already entered into contracts worth INR 212.25 crore and estimated
        contracts worth INR 47.25 crore yet to be contracted170. Thus, OC was unable to even meet
        its budgeted revenue of INR 260 crore as it has earned only USD 46.4 million (i.e. INR 214.14
        crore171) from the sale of International Broadcasting Rights.


6.4     Key ‘misrepresentation’ in the tender document

6.4.1   A fundamental mistake made in the issue of the EOI and Tender document may have led to
        inappropriate responses by vendors and could have deterred other potential bidders from
        participating in the bidding process. A review of the EOI and tender revealed that these
        were issued for the purpose of obtaining EOI/ Tenders for both “National and International
        broadcast rights” whereas the mandate of the OC was only to seek bids for international
        rights given that the OC had full knowledge that the National rights were being handled by
        Prasar Bharti only. Given that the decision on National broadcast rights to be handled by
        Prasar Bharti (Doordarshan) had already been taken as far back as in the games bid
        document in December 2003172, it is not clear why the OC chose to issue an EOI/ Tender
        document for a scope clearly outside the ambit of its operations173.




        170
              Refer 6.6 for revalidated revenue budget figures.

        171
              Refer Annexure 6.2 being letter to PB from OC for settlement of accounts for International Broadcast rights.

        172
              Refer Annexure 6.7

        173
              Refer Annexure 6.8 for advertisement of EOI and Tender document issued.


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                                Fifth Report of HLC – Organizing Committee

6.4.2   In response to the ‘faulty’ EOI the OC received 4 responses174 against which Tender’s were
        issued. In turn, only two vendors namely, Sports Marketing and Management (SMAM) and
        Fast Track Sales Limited (Fast Track) submitted their proposals in response to the Tender
        document. On the lines of the ‘faulty’ EOI/Tender document their responses included both
        National and International broadcast aspects of the tender.

6.4.3   The faulty criteria may have resulted in only two responses being received. It is possible
        that had the EOI/Tender document been issued for international rights, it may have resulted
        in generating interest from a broader base of vendors.


6.5     Substantial financial loss due to wrongful award of contract

6.5.1   In reviewing the evaluation of the responses to the tender, it was noted that the contract
        was not given to the lowest bidder which is a material departure from procurement
        procedures. In this regard, the following points were noted:

              The overall fee proposed by Fast Track for both International and National Broadcast
               Right Sales was higher than the fees proposed by Sports Marketing & Management
               (SMAM)175.

              According to the tendering process, the contract should have been awarded to the L1
               bidder which was SMAM. However, the contract was awarded to Fast Track Sales
               Limited whose commercial charges were higher.

              The EB approved the departure from the normal tender requirements. In this regard,
               the 6th EB meeting minutes on 7 June 2006 record that the vice president, CGF, HRH
               Tunku Imran stated that “OC should not put all its eggs in one basket and should appoint
               different agents for sponsorship and broadcasting rights” 176. Consequently, the EB
               justified that as SMAM had already been awarded the contract for sponsorship rights,




        174
              Refer Annexure 6.9 for names of vendors from whom responses were received.

        175
              Please refer to paragraph 1.5.5

        176
              Refer Annexure 6.9


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                               Fifth Report of HLC – Organizing Committee

               Fast Track were approved in principle177 to be appointed for international broadcasting
               rights.


        Potential loss of INR 16 crores to the OC

6.5.2   M/s Fast Track Sales Limited proposed a commission rate of 15% of total revenue from
        International Broadcast Rights sale.

6.5.3   SMAM proposed a commission rate of 12.5 % for contract of International Broadcast Right
        sales. SMAM further proposed to reduce their commission rate to 7.5% for International
        Broadcast Right sales if they were awarded the contract for both International Broadcast
        Sales Rights and Sponsorship & Licensing178.

6.5.4   In view of the above, it is clear that had the OC awarded the contract to SMAM, they would
        have agreed a commission rate of 7.5% as against the 15% quoted by Fast Track. It may be
        mentioned that the contracts for both SMAM (for sponsorship) and Fast Track (for TV
        Rights) were approved together as an agenda item in the 6th EB meeting held on 7th June
        2006.

6.5.5   Consequently, the OC has incurred a potential loss of INR 16.1 crores due to grant of
        contract to Fast Track resulting from the different commission rates quoted by SMAM. The
        computation of potential loss has been given in the table below:

        Table 6.2

         Particulars                 Fast Track          SMAM

         Commission rate             15%179              12.5%               7.5%

         Actual gross revenue        INR 2,141,400,000   INR 2,141,400,000   INR 2,141,400,000

         Commission                  INR 321,210,000     INR 267,675,000     INR 160,605,000

         Excess commission           -                   INR 53,535,000      INR 160,605,000



        177
              Refer Annexure 6.9

        178
              Refer Annexure 6.10.

        179
              Refer Annexure 6.11.


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                               Fifth Report of HLC – Organizing Committee

         % excess commission            -                           17%                       50%



6.6     OC’s failure to negotiate with vendor

6.6.1   On receipt of the in-principal approval for appointment of Fast Track, the EB constituted a
        marketing subcommittee (Please see para 1.6.2 below) for conducting negotiations with
        Fast Track. Even after prolonged180 negotiations the marketing subcommittee agreed to the
        commission of 15% as proposed initially by Fast Track181 without any changes or reductions.

6.6.2   This is inexplicable in view of the lower commission offered by the other vendor SMAM
        (12.5%) even on a standalone basis. The minutes of the marketing sub-committee meetings
        provided to us do not reveal any instances of discussion held between the committee and
        the vendor with respect to reduction in the commission rate but pertain more to the
        operational aspects. This clearly indicates that the committee did not make any effort to
        negotiate prices with the vendor.                   It is noticeable that the same committee which
        negotiated price with SMAM for the contract for sponsorship rights almost at the same time
        bargained for reduction of quoted rates and succeeded in gaining some reduction in rates.


6.7     Senior functionaries favored appointment of Fast Track


        Role of CGF functionaries

6.7.1   Review of the minutes of the 6th Executive board meeting held on 7 June 2006, revealed
        that key CGF functionaries i.e. Mr. Michael Fennel, CGF President and Mr. Mike Hooper, CGF
        CEO favored the appointment of Fast Track Events. As per the minutes Mr. Michael Fennel,
        CGF President “expressed his views that the Board may take decision in principle approving
        the appointment of M/s Sports Marketing & Management for the Sponsorship and
        Commercial Rights and M/s Fast Track for International Broadcasting rights based on their
        experience, past track record and their offer. He further mentioned that the OC may hold
        negotiations with the parties”182.

        180                                     rd                                              nd
              Tender submitted by Fast Track on 3 June 2006 and the final contract was signed on 22 March 2007.

        181
              Refer Annexure 6.11.

        182
              Refer Annexure 6.9

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                               Fifth Report of HLC – Organizing Committee

6.7.2   In the same meeting it has been noted that Mr. Mike Hooper, CGF CEO, stated “the
        commercial, marketing and broadcasting rights associated with the Games vests with the
        CGF and whilst the CGF had, through the Host City Contract, further transferred them to the
        OC the Host City Contract still required CGF approval in relation the appointment of any
        agencies for the exploitation of sponsorship and television rights. In this regard he concurred
        with the observation made by both the Chairman and the CGF President on the credential of
        the recommended agencies and as such if a decision was taken to appoint then this approval
        would be forthcoming”183.


        Role of OC functionaries

6.7.3   The EB approved in principle the appointment of the above mentioned vendors after OC
        Chairman, Mr. Suresh Kalmadi suggested that the board grant the approval 184.

6.7.4   The Executive board approved the appointment of Fast Track Events as consultant for the
        International Broadcasting Rights sales and appointed a sub committee marketing consisting
        of Mr. O.P Kelkar, Mr. Lalit Bhanot, Mr. A.K. Mattoo and Mr. Mike Hooper to hold
        negotiations with consultant185.


6.8     Summary and conclusions

6.8.1   This is clearly a case of contracting where the OC, as far back as in 2006 went ahead in
        issuing a contract with unclear criteria at its inception. Further, even though there was
        enough time to negotiate prices with a vendor, the OC went about issuing a contract at a
        higher rate and not using an opportunity to reduce cost by 50% or INR 16.1 crores as
        compared to the quote provided by the next vendor who also qualified the technical
        criteria. The reason of “not putting all eggs in one basket” was used to justify such a
        monumental increase in costs.

6.8.2   It is apparent that the OC was subject to pressures seemingly exerted by the CGF
        functionaries to favor appointment of vendors. It is extremely surprising that a committee,

        183
              Refer Annexure 6.9.

        184
              Refer Annexure 6.9.

        185
              Refer Annexure 6.12.


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as high powered as the EB, knowingly approved a contract at such inflated costs resulting
from the intervention, recommendations and comments of CGF functionaries.




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                                Fifth Report of HLC – Organizing Committee

7       Chapter 7: Overlays
        The review indicated a convoluted contracting process that resulted in the OC negotiating
        contracts at excessive costs. The excess amounts related to procuring exactly similar
        items as per the RFP at different rates across the vendors aggregates to INR 138 crore.
        Additionally the OC knowingly issued orders for purchase of items at ‘ad-hoc’ rates that
        aggregate to INR 37 crore thereby causing substantial additional loss through improper
        procurement. A number of other inconsistencies were noted that ranged from incorrect
        and flawed budgets to clear dereliction of duty by not monitoring or recording any of the
        items provided under the contract.                    The justification provided by the OC for not
        conducting negotiations appropriately was lack of time as the games were on the anvil.
        However, delays in commencing procurement activities in the first place resulted from
        OC’s own conduct in not providing estimates to Government despite repeated requests.




7.1     Background

7.1.1   The Overlays FA of the OC was primarily tasked with activities related to provision of supply,
        installation, testing, commissioning, operation, maintenance, dismantling and removal of
        Games Overlay/ Temporary Fitments at Delhi 2010 Commonwealth Games Venues as a
        Turnkey project on rental basis186. The ‘Overlays Providers’ were required to provide all
        management, labour, equipment and consumables required for successful supply,
        installation, testing, commissioning, maintenance, operation, dismantling and removal of
        the overlays equipments and any other work required to ensure successful functioning of
        the entire Overlays187.

7.1.2   In order to accommodate 17 sports, the competition events had to be held across
        23 Competition, 32 Training and 7 Non- Competition Venues located within the National
        Capital Territory of Delhi. Some of these venues were the Jawaharlal Nehru Stadium
        Complex, Talkatora Stadium, Siri Fort Complex, Yamuna Sports Complex, Delhi University,


        186
              Refer para 2, page 4 of the Expression of Interest (‘EOI’) attached as Annexure 7.1.

        187
              Refer para 1 of the Scope of Works attached as Annexure 7.2.


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                                Fifth Report of HLC – Organizing Committee

        Major Dhyan Chand National Stadium apart from other multi-sport and sport-specific
        venues188.

7.1.3   For the purpose of contracting for overlays, the OC divided the above mentioned venues
        into 7 ‘clusters’189 and asked for rates on turnkey basis for each clusters. According to the
        EOI, a maximum of 4 clusters could be awarded to one Overlays Provider subject to their
        meeting the eligibility criteria190. As a result of ‘turnkey’ basis of bids, the vendor quoted
        rates, which included add-ons. This made the rates opaque as there was no indication if the
        ‘add-ons’ were consistently applied on the basic rates of individual items.

7.1.4   A brief chronology of the key events relating to the award of contracts to these 7 clusters is
        set out in the table below.

        Table 7.1: Chronology of tendering process for venue development and overlays

         Date                              Particulars




         5 December 2009                   Issue of expression of Interest (‘EOI’)

         24 December 2009                  Request for Proposal (‘RFP’s’) uploaded on CWG web site

         6 January 2010 - 12 Submission/ opening of EOI
         February 2010
                                              10 vendors responded
                                              4 vendors were qualified for issuance of RFPs
                                              Issue of RFP to the shortlisted firms
         22 January 2010                   Pre- Bid meeting

         15 February 2010                  Submission of Bids and Opening of Technical Bids

         24 February 2010                  Technical evaluation approval




        188
              Refer para 1, page 4 of the EOI attached as Annexure 7.1.

        189
          A cluster is defined as a contracting unit comprising multiple venues. Refer page 15 and 16 of the EOI attached as
        Annexure 7.1 for detail of clusters.

        190
              Refer EOI amendment attached Annexure 7.3. Amended EOI was issued on 19 December 2009.


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                                Fifth Report of HLC – Organizing Committee

         26 February 2010                 Opening of commercial Bids

         26 – 29 March 2010               First round of negotiation

         22 to 24 April 2010              Second round of negotiation

         5 May 2010                       Issue of LOI subject to approval by Executive Board

         2 June 2010                      Signing of Final Contracts


7.1.5   The process resulted in awarding of contracts in the manner set out in the Table 7.2
        below191.

        Table 7.2: Contract awards related to overlays contracts

        Clusters                         Vendor name                         Contracted value in INR Crore




        Cluster 1 and 6                  PICO/ Deepali                          230.76

        Cluster 3 and 7                  GL Litmus/ Meroform                    165.45

        Cluster 2 and 4                  NUSS LI/ Comfort Net                   141.07

        Cluster 5                        ESAJV/ D Art Indo                      92.93

        Total                                                                   630.21



7.2     Excessive rates agreed by OC due to failure to negotiate effectively with vendors

7.2.1   Based on the analysis of the rates for 403 similar items (out of total of approximately 580
        items) contracted across the four overlays contracts, OC could have achieved at least a
        saving of INR 138.09 crores192 had the contracts been awarded based on the lowest quoted
        price for the item amongst the 4 suppliers. In many cases the differences between the
        lowest and highest rates for the same item was more than 100 times. As explained earlier,
        these rates included ‘add-ons’ by each vendor at rates unknown to OC.                                It may be

        191                                                nd
              Refer Annexure 7.4 – Brief Note-sheet dated 2 February, 2011

        192
              Refer to Annexure 7.5 for the detailed computation.


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                          Fifth Report of HLC – Organizing Committee

        mentioned that for the purposes of the analysis, the items where the specifications for
        these items are exactly the same across all clusters as per the RFP have been considered.

7.2.2   The computation for a sample of 10 items has been depicted in the Table 3 below:

        Table7.3: Computation of excess value paid

         Code      Item                  Contracted   Total     value Lowest    Value       at Excess
                                         BOQ (Qty)    at              quoted    Lowest         Value paid
                                                      Contracted      price     quoted
                                                      price#                    price

                                         (A)          (B)             (C)       D = (A)*(C)    E = (B) - (D)

         16.06     Garbage        Solid 323           583,882         4         1,292          582,590
                   Waste Bags

         16.02     Biohazard Waste 371                865,136         6         2,226          862,910
                   Bags

         16.05     Biodegradable         341          756,306         6         2,046          754,260
                   Garbage Bags

         9.141     Fridge         450L 126            10,496,184      26,808    3,377,808      7,118,376
                   Lockable_FOH

         17.05     Stepper               69           7,368,412       5,706     393,714        6,974,698

         12.11     Machinery          - 25            9,676,682       70,953    1,773,825      7,902,857
                   Tugger & Trailer

         17.04     Cross Trainer         49           12,222,524      146,765   7,191,485      5,031,039

         5.03      Chilled               27           30,683,696      307,338   8,298,126      22,385,570
                   Containers 6.0m
                   x            2.5m
                   refrigerated
                   container

         17.06     Multi Gym - 12 46                  17,291,512      220,147   10,126,762     7,164,750
                   stations       with


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                                Fifth Report of HLC – Organizing Committee

                         pulley and leg
                         extension cables

         13.46           Air conditioning 78                       43,353,153          203,151       15,845,778   27,507,375
                         HVAC - 11T



        #Total value at Contracted price: Contracted price*Contracted quantity quoted by each vendor in each cluster.

7.2.3   In respect of the vast differences in amounts as noted in the table above, the OC provided a
        broad explanation that the contracts were awarded on a turnkey basis and hence they did
        not negotiate individual prices193. The OC also explained that there was no time to re-
        tender even though they were aware of such vast differences in costs for similar items
        across vendors194.

7.2.4   It has been noticed that the DG/ CEO/ Chairman, ordered in one of the communications
        prior to the second round of negotiation meetings as follows: “Reduce BOQ where the
        operational delivery of games is not affected. These need to be arrived at in consultations
        with the vendor”. Further, the briefing note for second round of negotiation expressly state
        the orders from the DG/ CEO/ Chairman are that “re tendering was not option now” as
        overlay delivery was to commence in end June 2010195.

7.2.5   From the records of the negotiation committee it has been noticed that OC did not hold its
        ground in negotiations with the overlays suppliers and appeared to be accepting their
        demands and conditions without scrutiny. Consequently, the negotiation of item rates with
        the vendor was ineffective.

7.2.6   A summary of the minutes of these meetings mention that according to the vendors, “the
        rates across the clusters are not comparable as each cluster has its own unique feature
        depending upon its importance, type of venue, type of event, its location etc”196. Further,
        the vendors stated that “the position of the lowest is based on the overall cost of the offer


        193
              Refer Annexure 7.6 – Briefing note for second round of negotiation - para 2.8(iii), page 3

        194
              Refer Annexure 7.6 – para 2.9, page 4

        195
              Refer Annexure 7.6 –para 3(i) and para 3(c), page 4-5

        196
              Refer Annexure 7.7 – para 7.3 from summary note provided by Overlays FA.


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                                 Fifth Report of HLC – Organizing Committee

        and it is possible that rates of some individual items are high as compared to the rates of
        vendor for the same item or absolute market price for that item”. The minutes further
        mention that “An exercise to compare the individual rate is therefore neither warranted
        nor need to be undertaken”197.                      There is no indication if OC critically examined this
        contention.

7.2.7   Consequently, based on the above it has been noticed, that the OC;

              Did not carry out exercise to reduce or rationalize rates across vendors or made
               apparent attempt to negotiate or reduce rates.

              Accepted widely varying rates for same items across the venues without challenging the
               vendors rationalizations for significantly different rates.


7.3     Payments on ‘ad hoc’ rates

7.3.1   The review of item price lists agreed with overlays vendors, revealed that prices were
        provided even against certain items for which ‘zero quantities’ were ordered/ mentioned.
        The minutes of the negotiation committee, recorded that “wherever the quantities were
        zero they had not really applied detailed analysis for arriving at the rates for that item and
        these rates were ad-hoc and cannot be taken for comparison”198.

7.3.2   The OC issued a released BOQ to the overlays vendors in July 2010199. The released BOQ for
        the clusters formed almost 71.6%200 of the total contract value for all clusters.

7.3.3   The review of the released BOQ, revealed that quantities were ordered against the “zero
        quantity” items in the agreed price lists. Thus the OC clearly issued procurement orders at
        incorrect or non-negotiated rates, with full knowledge that these rates were deficient and
        did not reflect the market rates for such items as asserted by the vendors themselves.

7.3.4   As per the released BOQ numbers, the value of items released against such “ad-hoc”
        process aggregate to INR 37.40 crores201 as set out in the Table 4 below:

        197
              Refer Annexure 7.8 – Minutes of second round of negotiations meeting with vendors - para 2.1, page 3

        198
              Refer Annexure 7.8 – para 1.3 (iii), page 1

        199
              Refer Annexure 7.9 – Brief status note provided by Overlays FA. – Para 1, Page 8

        200
              Refer Annexure 7.10 – Detailed calculation


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                       Fifth Report of HLC – Organizing Committee

Table 7.4: Value of Zero Contracted Quantities

 Cluster                Vendor name                     Value       of   Zero
                                                        Contracted Quantity in
                                                        INR Crore

 I                      PICO Deepali                    3.84

 VI                     PICO Deepali                    4.45

                                                        8.29




 II                     Nussli                          2.61

 IV                     Nussli                          2.26

                                                        4.88




 V                      ESAJV                           1.53

                                                        1.53




 III                    GL Meroform                     3.66

 VII                    GL Meroform                     19.04

                                                        22.70




                        Grand Total                     37.40




201
      Refer Annexure 7.11 for detailed computation.


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                                Fifth Report of HLC – Organizing Committee

7.3.5   As the final payments have not been made by the OC, the amounts computed above are
        only indicative and subject to change based on final determinations to be made by OC.

7.3.6   Consequently, it is apparent that the OC issued BOQ’s on rates that they clearly knew were
        ad hoc and therefore needed validation. By placing order on such basis, the OC officials
        facilitated payment of large amounts at ad-hoc rates. The committee considers that this
        constitutes intentional misconduct on the part of these employees.


7.4     Inconsistencies in tender procedures


        Global tender was not global

7.4.1   During discussions with various OC functionaries including Mr A.K. Saxena, JDG, Venue
        Development and Overlays, it was informed that the OC felt that only foreign vendors would
        be eligible to bid for the overlays contracts as no Indian vendor had the experience or
        competence to deliver an overlays contract on a turnkey basis.

7.4.2   Given this contention, the OC should have issued a global tender as per para 2.5 of its
        financial and administrative, guidelines that state the following. “Where it is felt that the
        goods of the required quality, specifications etc., may not be available in the country and it is
        necessary to also look for suitable competitive offers from abroad, the copies of the tender
        notice may be sent to the Indian embassies abroad as well as to the foreign embassies in
        India. The selection of the embassies will depend on the possibility of availability of the
        required goods in such countries”202. Further, this condition is also mentioned in the
        General Financial Rules (GFR) of the Government of India.

7.4.3   However, the EOI and RFP for overlays were not sent to “the Indian embassies abroad as
        well as to the foreign embassies in India” in order to make the tender “global” as per the
        OC’s own guidelines. The EOI was published only on the website of the OC and Indian
        newspapers between 5th and 7th December 2009203.




        202
              Refer Annexure 7.12 – Extract from the financial and administrative guidelines of OC

        203
              Refer Annexure 7.13 – Archived tenders from the CWG 2010 website.


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                               Fifth Report of HLC – Organizing Committee

        Eligibility criteria for vendors circumvented

7.4.4   During discussions with various OC functionaries including Mr. A.K. Saxena, JDG, Venue
        Development and Overlays, it was noted that:

              The primary purposes for floating a global tender for overlays was the ‘inexperience and
               lack of competence’ in India to deliver items contemplated.

              The vendors were permitted to form a consortium for the purpose of the contract. The
               consortium would identify the lead partner who would be termed as the respondent to
               the EOI. The respondent would be the lead partner in the consortium and only their
               turnover shall be considered for the evaluation.

              There was a requirement to have an Indian partner in the consortium bidding for the
               overlays contracts as it was felt that an Indian partner would be able to ‘understand the
               Indian conditions’ and be able to execute the contract effectively and efficiently.

7.4.5   An analysis of the EOI terms showed that there were no provisions for identifying the lead
        partner on objective criteria such as percentage of allocation of work or percentage of share
        of the partner in the joint venture entity. It was left to the discretion of the vendors to
        decide which party would form a lead for the consortium. Under this scenario, an Indian
        partner could project the foreign partner as the ‘lead partner’ and use its credentials to
        qualify under the criteria. The work however would predominantly be performed by the
        Indian partner who may have otherwise been ineligible. The gap in the EOI provision was
        fully exploited for selecting an Indian vendor with only an ostensible involvement of the
        foreign partner as explained below.

7.4.6   Basis the above example, it is evident from the structure of the legal entity formed, that the
        Indian partner owned and controlled the entity rather than the lead partner whose
        credentials may have been used to qualify under the EOI.

              Review of the Memorandum of Association (MoA) for ESAJV D-ART INDO India Pvt. Ltd204,
               which won the contract for Cluster V, it was observed that the shareholding between the
               companies which formed the joint venture, was skewed towards the Indian partner of



        204
              Refer Annexure 7.14 – Memorandum of Association (MoA) of ESAJV D-ART INDO India Pvt. Ltd.


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                   Fifth Report of HLC – Organizing Committee

      the consortium i.e. D-ART INDO India Pvt Ltd. The lead partner in the consortium i.e.
      ESG Arena JV held only 1% of the total equity share capital in the joint venture.




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                        Fifth Report of HLC – Organizing Committee

       Table 5: Shareholders of ESAJV D-ART INDO India Pvt. Ltd.

         Name                                                                No. of Shares         % of Total




         Sanjay Malhotra                                                     100                   1%




         D-ART Furniture Systems Pvt Ltd                                     8,300                 83%

         (Authorized Representative – Sanjay Malhotra)




         Indo Office Solutions Pvt Ltd                                       1,500                 15%

         (Authorized Representative - Sanjay Malhotra)




         ESG Arena Joint Venture                                             100                   1%




         Total Equity share capital                                          10,000




      In the technical bid submitted by this joint venture, the details of experience by both the
       companies in the joint venture were listed. The ESG Arena JV was the foreign company
       that met the conditions for turnover and experience required by the EOI but they held
       only 1% share.

      However, the only experience listed against D-Art Furniture System/Indo Office Solutions
       is “2010 Delhi Commonwealth Games” in the technical bid. It is very surprising that the
       consortium partners bidding for the contract mentioned that they were working for the
       Commonwealth Games, Delhi, even before they were appointed205. In other words they



205
      Refer Annexure 7.15 – Technical Bid 1 – Form 1 – Respondent details (copy made from the originals seized by CBI)


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                               Fifth Report of HLC – Organizing Committee

               had no experience of the overlays supply work. The technical evaluation of the offers
               should have noted this fraudulent assertion of the responding vendor.


        Arbitrary disqualification of vendors at EOI stage

7.4.7   The EOI for overlays contracts received responses from 10 vendors, of which 6 206 were
        selected by the evaluation committee for participating in the next stage of the bidding
        process. The summary has been set out in the Table 7.6 below:

        Table 7.6: Selection of Vendors

         Name                                Selected by Evaluation Final          selection    by Remarks
                                             Committee – EOI stage Evaluation           Committee
                                             on 14 January 2010            on 19 January 2010

         M/s Pavillion & Interiors           No                            No

         M/s EPS Gmbh, Germany               No                            No

         M/s Uniplan                         Yes                           No                       Refer para
                                                                                                    1.5.9

         M/s Pico Deepali                    Yes                           Yes

         M/s Nussli                          Yes                           Yes

         M/s Cityneon                        Yes                           No                       Refer para
                                                                                                    1.5.9

         M/s ESAJV                           Yes                           Yes

         M/s Kingsmen/ Sercon                No                            No

         M/s GL Meroform                     Yes                           Yes

         M/s JKW Ventures                    No                            No



        The evaluation committee comprised the following members207:


        206
              Refer Annexure 7.16 – EOI evaluation committee minutes – Last page


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                                 Fifth Report of HLC – Organizing Committee

               Mr A.K. Saxena, JDG, Venue Development and Overlays
               Mr. M. Jeychandran, JDG, Finance and Accounts
               Mr. R.P. Gupta, ADG, Venue Development and Overlays
               Mr. Surjit Lal, DDG, Procurement and Overlays

7.4.8    The evaluation committee, on 14 January 2010, recommended that the RFP should be
         issued to 6 applicants. However, Mr. VK Verma, DG, OC, suggested through a note to the
         evaluation committee that the following four vendors should be selected and approval
         should be sought from the OCFC for this208. Given the sensitive nature and the magnitude
         of the contract, it is not clear if Mr. V.K. Verma was specifically entrusted this task in his
         capacity as the Director General of the OC. These vendors were as follows.

               M/s Pico Deepali,
               M/s Nussli
               M/s ESAJV
               M/s GL Meroform

7.4.9    Subsequent to the suggestion made by Mr. VK Verma, DG, OC, Mr. Jarnail Singh, CEO, OC,
         through a note to the evaluation committee dated 16 January 2010 suggested that the issue
         be discussed in the OCFC209. The issue was thereafter discussed in the OCFC meeting
         chaired by Mr. Jarnail Singh, CEO on 19 January 2010.

7.4.10   According to the note to the evaluation committee prepared by Mr. Surjit Lal, DDG,
         Procurement and Overlays, the issues raised and discussed in the OCFC and course of action
         suggested are as under210:

               “The experience details submitted by M/s Uniplan and Cityneon did not qualify them as it
                was not related to games. The OCFC suggested that clarifications should be obtained
                from them as to whether they had any experience relating to the games overlays. The




         207
               Refer Annexure 7.16 – Submitted for approval to these committee members, Last Page

         208
               Refer Annexure 7.16 – Approval notes by Mr. V.K. Verma, Last Page

         209
               Refer Annexure 7.16 – Approval notes by Mr. Jarnail Singh, Last Page

         210
               Refer Annexure 7.17 – Note prepared by Surjit Lal, DDG (Procurements & Overlays)


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                                 Fifth Report of HLC – Organizing Committee

                OCFC also recommended that they should submit the supporting certificate from the
                relevant Games Organising Committee”.

               The OCFC held the view that this proposal was not required to be placed before them at
                this stage as the issues involved needed to be resolved by the ‘Organising Committee’.

7.4.11   On 2 February 2010, the evaluation committee verified the clarifications received from the
         vendors as per note prepared by Mr. Surjit Lal, DDG, Procurement and Overlays and
         considered and approved the disqualification of M/s Cityneon and M/s Uniplan on account
         of the reasons as set out in the Table 7 below211:

         Table 7.7: Reasons for disqualification of vendors

             Name                              Reason for disqualification




             M/s Uniplan                          Non submission of certificate from Beijing Olympic
                                                   Committee/ Organising Committee, as the Committee was
                                                   no longer in existence.
                                                  The Committee believed that the vendors experience at the
                                                   world games/ UEFA Euro 2008 and FIFA World Cup 2006 was
                                                   not adequate to qualify as vendors for delivery of overlays
                                                   for Commonwealth games.



             M/s Cityneon                         The letter of award from DOHA Asian Games Organising
                                                   Committee for development, production, supply and
                                                   installation of the DOHA 2006 culture exhibition stands and
                                                   display units was “considered to be not meeting with the
                                                   eligibility criteria” by the evaluation committee”.
                                                  Further, the matter was also referred to Ms. Samantha
                                                   Cotterel, who was Overlays Director in DOHA Asian Games
                                                   Organising Committee and Overlay Expert Advisor to OC.
                                                   She stated that “the experience detailed in the letter of
                                                   award” “doesn’t qualify as relevant experience required by a

         211
               Refer Annexure 7.17 – para 3 and para 4.


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                                 Fifth Report of HLC – Organizing Committee

                                                   overlay vendor for the supply of games, overlay, commodity
                                                   and services”.

7.4.12   In this fashion, the bids of Uniplan and Cityneon were disqualified based on the issues
         mentioned above. From a reading of the above, it appears that the disqualification of the 2
         additional vendors at the EOI stage appear to be subjective as the evaluation committee
         could have considered the experience of the organizations:

               In case of M/s Uniplan, even though they were unable to submit certificate of work done
                from Beijing Olympics Orgainising Committee, they had submitted experience of
                providing overlays at other world games which could have been considered.

               As the OC had non-competition venues for the games for which overlays had to be
                obtained, the experience at the DOHA Asian Games should not have been overlooked/
                discounted.

7.4.13   It is pertinent to note that all the 4 vendors who were short listed under the EOI received an
         award of a contract from the OC related to overlays212.


         ‘Pragmatic view’ during evaluation of Technical Bids facilitated certain bidders

7.4.14   At the time of evaluation of the Technical Bids submitted by the selected 4 vendors, the
         evaluation committee had the following observations with respect to the solvency
         certificates submitted213:

               The certificate by Pico Deepali, was in the name of Pico Far East Holdings Limited and
                not in the name of the Lead Member of the consortium i.e. Pico Hongkong Limited.
                Thus, the evaluation committee stated “As solvency is of the parent company, a parent
                company undertaking may be necessary”.

               In case of Nussli the evaluation took a view that due to Swiss laws it is not possible for
                their bank to provide financial disclosers of customers. In this regard the evaluation
                committee noted that a parent company undertaking may also be necessary with



         212
               Refer Annexure 7.4 – Page 1

         213                                                       th
               Refer Annexure 7.18 – Minutes of meeting held on 19 February, 2010 to consider the technical bids for overlays


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                                 Fifth Report of HLC – Organizing Committee

                amounts mentioned to decide the maximum number of clusters that could be awarded
                to this entity.

7.4.15   The final recommendation by the evaluation committee was that the requisite clarifications
         and documents that were mentioned in the minutes should be obtained from the relevant
         vendors. Mr. VK Verma, DG, OC, overruled obtaining of clarifications/ documents with
         respect to solvency certificates and stated that “With a view to derive maximum competitive
         advantage, pragmatic view should be taken on financial certificates. In almost all other
         tenders finalized by the OC, to the best of my knowledge, net worth of the company or
         solvency status of the parent group is a safe enough premise to consider a company sound.
         In any case, performance guarantee, I am sure will be secured from vendors who are
         awarded the work”214.

7.4.16   The above recommendation by Mr. VK Verma was read and agreed by Mr. Jarnail Singh,
         CEO, OC, A.K. Saxena, JDG and ADG, Venue Development and Overlays215. Consequently,
         the points raised in the evaluation committee minutes were not followed up further based
         on the “pragmatic view” as suggested by Mr. Verma.


7.5      OC did not maintain records to verify the receipt and return of materials

7.5.1    During the review, the OC has not provided a reconciliation of the list of items received,
         used and taken back from each venue under the overlays contracts.

7.5.2    According to discussion with Mr. A.K Saxena, JDG, Venue Development and Overlays, the OC
         was still in the process of preparing the reconciliation of items. It is not clear how the
         reconciliation would be done at this stage when the after 4 months of the conclusion of the
         games, the entire overlays structure has been dismantled.

7.5.3    Further, Mr. Saxena informed, that the CVC had deputed 9 technical examiners from 9
         September 2010 onwards to verify overlays. However, till date OC has not received any
         detailed comments, reports regarding the verification/ visits undertaken by the CVC 216.


         214
               Refer Annexure 7.18 – Approval note by Mr. V.K. Verma, last page

         215
               Refer Annexure 7.18 – Approval signatures on the note by Mr. V.K. Verma

         216
               Refer Annexure 7.19 – Note provided by OC FA with respect to the overlays verification.


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                                Fifth Report of HLC – Organizing Committee

7.5.4   Considering that the items provided by the overlays contractors were required only for
        temporary period i.e. during the games time, the OC should have, in the last, maintained a
        record and reconciled items received, used and sent back. It is extraordinary that at the
        outset the OC did not appear to set up any processes to verify the items or institute
        appropriate checks in this regard internally when it is known that the overlay items would
        be returnable.

7.5.5   As no records have been maintained by the OC and considering that the contracts were on a
        turnkey basis, most of the items have been taken back by the overlay vendors. Therefore, it
        is now impossible to verify the quality of the material supplied by the vendors. OC has not
        maintained any records to corroborate what was provided.


7.6     Poor quality of material supplied by vendor

7.6.1   There were a lot of concerns raised in the media and in other quarters on the quality of
        materials provided by the overlays vendors given the rates at which these were procured by
        the OC and that these were expected to conform to “international standards”.

7.6.2   As an example, computer forensics revealed an email by Col Ashok Matlotia (Retd), PO
        Venue Development and Overlays to Mr. A.K Saxena, JDG, Venue Development and
        Overlays, describing the poor quality of material supplied by one of the overlays vendors i.e.
        Nussli217.


        Email dated 8/9/2010

7.6.3   In the email dated 8/9/2010 Retd. Col Matlotia mentioned that Nussli “maintain that all
        these items have OC's approval. Who in OC can approve such substandard old local branded
        items?” Col Matlotia also attached photographs as examples of allegedly sub-standard
        products to his email which are reproduced below218.




        217
           We were unable to separately determine the cost paid for these items by the OC due to the absence of additional
        details to trace these back to individual contract components and also as final bills are not available

        218
              Please refer to Annexure 7.20 for the full email and attachments


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                                Fifth Report of HLC – Organizing Committee

        Local Made Sockets Non ISI Tubelights Fittings




        Old ACs




        Email dated 15/9/2010219

7.6.4   In an email dated 15/9/2010 Col Matlotia further wrote that “….M/s Nussli has not left any
        subject where he did not deliberately diluted the standards much lower than INDIAN forget
        about the INTERNATIONAL…… M/S Nussli still deliberately delaying all the works to force us
        in the situation where we have no option but to accept Poor standard of workmanship,
        substandard equipments materials, All who have seen these are laughing at us.               As
        intimated through me earlier mails M/s Nussli has installed VERY OLD window types ACs. ALL
        electrical fittings are local make and assorted local makes. In the name of Tubelight fittinghs
        inside the tents The Tents give shabby look. They are dirty. structures are not properly
        anchored. Electrical DBs not of standards….. Now the toilet works within the stadium was




        219
              Please refer to Annexure 7.21 for the full email and attachments


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                                Fifth Report of HLC – Organizing Committee

        deliberately delayed becouse he is using all local sanitrywares and materials for the
        plumbing. ….Furniture quality is one subject which one discuss every day….”


        Email dated 17/9/2010220

7.6.5   In an email dated 17/9/2010 Col Matlotia wrote that despite clear instructions to replace
        old air-conditioners no action was taken by the contractor to install these. He mentioned
        that the contractor had tried to give “cosmetic treatment” to the old machines by changing
        the outer grill only but had not replaced the machine. He attached the following picture as
        an example.

        “Old AC clearly Visible”




7.7     Flawed budgeting and planning


        Background

7.7.1   The OC entered into an Advisory services agreement with EKS in July 2006221 to provide
        Venue Development Support services to the OC. In November 2006, the OC not only
        extended the advisory agreement but also increased the scope of service to include Venue
        development programme management and Facilitation support (Project scheduling review
        and monitoring).             According to clause 2 of the revised agreement, the planning and


        220
              Please refer to Annexure 7.22 for the full email and attachments

        221
              Refer Annexure 7.23 – Advisory services agreement with EKS.


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                                Fifth Report of HLC – Organizing Committee

        implementation of the overlay programme would continue through to 2010 and would be
        important to continue the programme support role until final delivery222.

7.7.2   In accordance with the above mentioned advisory agreement, EKS submitted a Games
        Overlay Strategy paper in July 2007223. The strategy paper addressed the scope and options
        for the delivery of the Games Overlay for the commonwealth games D 2010.

7.7.3   However, the OC did not act upon the suggestions in the strategy paper submitted in July
        2007224. In October 2008, EKS submitted a revised overlays strategy paper. According to
        para 3.2.2 of the revised paper, “The report’s findings were not acted upon and neither the
        recommended solution, nor any other solution was adopted. At that time, the Organising
        Committee had two and a half years before most of the venues were completed and handed
        over. Now, there is just over a year and the change in timescale means that alternative
        solutions need to be investigated”225.

7.7.4   The preferred recommendation according to the revised strategy was that, the OC adopt a
        separate expert supplier to deliver overlays and avoid the problem of multiple agencies
        delivering the overlay226. However, for this recommendation to be implemented, the OC
        would have to carry out an initial games overlay scoping exercise and then tender the
        complete games overlay design and delivery package. EKS believed that it was unlikely that
        the OC will establish a Games Overlay programme before the end of the year. Therefore,
        they recommended that the OC adopt the turnkey solution with outsourced management,
        design and delivery. Accordingly, the OC adopted the Turnkey solution for provision of
        overlays during the games227.




        222
              Refer Annexure OVR 24 – Extension to Advisory technical services agreement with EKS.

        223
              Refer Annexure OVR 25 – Extract of the Strategy Paper for Games Overlays by EKS

        224
              Refer Annexure OVR 26 – Revised strategy paper - para 3.1.

        225
              Refer Annexure OVR 26 – para 3.2.2.

        226
              Refer Annexure OVR 26 – para 3.3.1.

        227
              Refer Annexure OVR 26 – para 3.6.


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                               Fifth Report of HLC – Organizing Committee

        Budget chronology

7.7.5   The initial budget of the OC amounting to INR 767 crores, approved by the MYAS in April
        2007 did not include a budget for expenses to be incurred under overlays. Even after
        repeated requests in the CGF CoCom meetings and MYAS, the OC failed to take the requisite
        action and prepare a budget. The OC was finally able to appraise and prepare estimates for
        overlays only in December 2009228.

7.7.6   Overlays were identified as a critical area and serious concerns were raised repeatedly in all
        meetings of CGF CoCom starting from November 2006. The key issues raised in these
        meetings with regard to overlays are summarized in Table 8 below229:

        Table 7.8: A summary of issues related to Overlays discussed in CoCom meetings

        Meeting           Date             Key Issues Raised




        1st CoCom         20-23                The venue briefs establish Games time requirements but do
                          November              not define detailed overlay as this is not possible until more
                          2006                  detailed operational planning has been undertaken.
                                               The scope and responsibility for overlays is yet to be defined.
        2nd CoCom         14-16 May            In the OC budget the financial responsibility and final
                          2007                  allocation of funds are yet to be determined for Overlays.

        3rd CoCom         14-18                There is no effective Overlay planning process in place.
                          January              An immediate priority is to secure overlay and operational
                          2008                  planning staff and consultants to ensure that infrastructure
                                                development does not stall.
        4th CoCom         10-11                An immediate priority is to secure overlays and operational
                          November              planning staff and consultants to ensure that infrastructure
                          2009                  development does not stall.
                                               There is no current overlay solution in place.
         th
        5 CoCom           11-13 May            Overlay design and delivery program is high risk and very


        228
              Refer Annexure 7.27 – Office memorandum issued by the MYAS for consideration of budget of OC for Overlays.

        229
              Refer Annexure 7.28 – Extracts of CoCom minutes.


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                               Fifth Report of HLC – Organizing Committee

                          2009                      tight.
                                                   OC planning does not support early resolution of Overlays
                                                    requirements.

7.7.7   Even after continuous prodding from CGF the CoCom, the OC did not take any initiative to
        prepare the overlays budget. Accordingly, it can be concluded that the OC deliberately
        delayed preparation of the overlays budget.

7.7.8   In addition to the prodding in the CGF CoCom meetings, Mr. Mike Fennell, President, CGF,
        also emphasized the need to take immediate steps to finalise the fit out of the venues which
        essentially included the concept and design of the overlays in the 9 th Executive Board
        meeting held on 14th August 2007.                      In response, Mr. Suresh Kalmadi, Chairman, OC,
        mentioned “the overlay issue was discussed in the Group of Ministers meeting on 6 th August
        2007 wherein while accepting, in principle, a tentative budget of INR 400 Cr, it was decided
        that the OC had to finalize the concept design of overlays as per requirements of the Games
        and prescribe the timelines for fit out so that the venue agencies can deliver the same in
        time”230. Accordingly, the OC was of the opinion that the overlays would be provided by the
        venue owners.

7.7.9   Subsequently, in July- August 2009 it was decided that overlays shall be procured by the OC.
        According to the agenda note for the 6th meeting of the Coordination Committee for CWG
        of MYAS with the Chief Minister GNCTD and Chairman OC to be held on 27th July 2009 it was
        stated that the following decision with respect to overlays was taken in the Infrastructure
        Monitoring Committee held on 15th July 2009: “These are temporary fittings and fixtures
        required only during Games Time. It was decided that the overlays will be budgeted and
        procured by the OC. The venue owners in consultation with OC will decide the items to be
        retained by them. After the Games, financial adjustment for items retained by Venue
        owners would be made”231. Thereafter in the 3rd meeting of the Infrastructure Monitoring
        Committee held on 6 August 2009, chaired by Secretary (Sports), it was stated with respect
        to Equipments and Overlays “It was decided earlier that these items will be procured by OC



        230                                    th
              Refer Annexure 7.29 – Extract of 9 Executive Board meeting minutes.

        231                                     th
              Refer Annexure 7.30 – Minutes of 6 meeting of Coordination Committee held on 27-7-2009


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                                 Fifth Report of HLC – Organizing Committee

         and the items, which will be retained by venue owners shall be decided later”232. Thereafter
         the OC began the process of preparing a budget for the procurement of overlays.

7.7.10   A brief chronology of the Budgeting process for overlays is set out in the Table 9 below:

         Table 7.9: Chronology of budgeting process for venue development and overlays

          Particulars                       Date                Budget                  Budget                   Remarks
                                                                prepared/               approved         by
                                                                submitted        for GOI                for
                                                                Overlays                Overlays

          Initial budget approved 9 April 2007                  -                       -                        Refer para
          by Government of India                                                                                 1.7.10
                                                                                                                 below.

          Budget figure per initial June                   – Over INR 1,500 -                                    Refer para
          exercise                          August 2009         crore                                            1.7.11
                                                                                                                 below

          EFC meeting to discuss 28 July 2009                   -                       -                        Refer para
          revised                budget                                                                          1.7.14
          submitted by OC                                                                                        below

          EFC          meeting        for 5         January INR 948.52 crore            INR         687.06 Refer para
          consideration                of 2010                                          crore233                 1.7.16
          Overlays budget                                                                                        below


7.7.11   There was no expense head budgeted for overlays in the initial budget prepared by the OC
         in 2007. As stated in the paragraphs above, this was probably as the OC was of the opinion
         that the overlays would be provided by venue owners.




         232
               Refer Annexure 7.31 – Minutes of meeting of the Infrastructure Monitoring Committee held on 27-8-2009

         233
               Refer Annexure 7.32 - Approval from Ministry of Youth Affairs and Sports granted in March 2010.


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                                Fifth Report of HLC – Organizing Committee

         Misrepresentation in making budget estimates

7.7.12   The initial budget for overlays amounting to approximately INR 1,500 crore, was prepared
         by the OC Overlays FA for their internal working. The negotiation committee meetings234
         mention that this budget was prepared on the basis “of list prices/ prices on the web of
         overlays suppliers (i.e. M/s PICO and M/s GL Meroform)”

               It is highly surprising that the OC officials found standard price lists on the sites of the
                vendors mentioned above as currently their websites (and of others) do not display any
                such ‘standard information’. It does not appear to be an industry practice to exhibit the
                price list in that manner as even currently no such rates are displayed on these websites.
                Therefore the above statement could be a misrepresentation. There is no evidence such
                as prints or screen shots available with the OC to support this statement.

               Even in the unlikely event that such lists were available, there is no information on what
                judgments and adjustments were used to prepare budgetary estimates that were almost
                4 times the final contracted amounts.

               It follows that the negotiation committee comprising of Mr. Sudhir Mittal (Spl, DG), Mr.
                Jiji Thomson (Spl DG (V. Ops), Mr. A.K. Saxena (JDG V&D), Mr. Harsh Kumar (JDG,
                Technology), Gp. Capt. KUK Reddy (ADG, F&A) and Mr. R.P. Gupta (ADG, VD&O) 235, took
                cognizance of the above mentioned budget figure and presentations made by Mr. A.K.
                Saxena, FA Head, and the negotiation committee did not raise concerns on the process
                adopted for estimation, which prima facie, appeared inflated.


         OC did not provide Overlays budget estimate to GOI despite repeated request

7.7.13   Review of the Coordination committee meeting minutes, revealed that the Committee, in
         several meetings of the coordination committee taken by the MOS, MYAS in 2008-2009
         where Chairman OC was present, Secretary, MYAS repeatedly raised concern at the delay in
         furnishing the budget estimates for overlays by OC. In the 4 th Meeting236 on 29 January
         2009, the Secretary stated that, in the COS meeting held on 9 September 2008, OC had
         234
               Refer Annexure 7.33 - Minutes of the Negotiation Committee meeting dated 26-29 March 2010

         235
               Refer Annexure 7.33 - Minutes of the Negotiation Committee meeting dated 26 to 29 March 2010.

         236                                        th                                        th
               Refer Annexure 7.34 – Minutes of the 4 Meeting of Coordination Committee on 29 January, 2009


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         indicated that this information would be available by 19 September 2008. This was later
         reviewed at the level of Cabinet Secretary again on 23 October 2008, where commitment
         was given that all details would be made available by 31 October 2008. As yet, this
         information is not available with the OC. This problem has been brought to the notice of
         OC. He also noted that as the budget of the OC is being finalized, this would need to be
         indicated quickly so as to be incorporated in the budget in time.

7.7.14   In the 5th meeting237 held on 12 June 2009 the committee noted that in issues related to
         scope and design of overlays and plan for conduits, cabling etc. of various venues, most of
         the venue owners informed that they have yet to receive the detailed plan.

7.7.15   Therefore, there was no clear basis of the estimate adopted by the government in
         December 2009. Subsequently, in the EFC in its meeting held on 28 July 2009, the non plan
         expenditure of INR 1,620 crore for OC, CWG Delhi 2010 was recommended towards the
         conduct of the games. In the same meeting Secretary, MYAS informed the Committee that
         “the following 5 items of expenditure were yet to be appraised and approved:

         (i) Overlays,
         (ii) Equipments
         (iii) TSR System
         (iv) Expenditure related to telecom
         (v) Security equipments”238.

7.7.16   Accordingly, it was decided in the EFC meeting that, a separate EFC/ CNE proposal would be
         moved for Games overlays after the detailing was completed and cost estimates were made
         available by OC.

7.7.17   The note in the EFC Memo dated 30 December 2009 states “No firm costs estimate for
         overlays was available earlier and therefore a tentative estimate of INR 400 crore on account
         of overlays had been made”239. As the cost estimates were significantly more than the INR
         400 crore, as suggested in the EFC meeting in July 2009, the OC considered “substantial


         237                                        th                                         th
               Refer Annexure 7.35 - Minutes of the 5 Meeting of Coordination Committee on 12 June, 2009

         238
               Refer Annexure 7.36 - Minutes of Meeting of Committee of Non- Plan expenditure (CNE) on 28 July 2009.

         239
               Refer Annexure 7.27 – point 2.b)


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                                 Fifth Report of HLC – Organizing Committee

         discounts”240 and prepared a revised budget of INR 948.52 crore, which was submitted to
         the Ministry of Youth Affairs and Sports for review and approval in December 2009. The
         Ministry of Youth Affairs and Sports finally approved a budget of INR 687.06 crore in March
         2010241 for overlays.


         Substantial delays in the planning stage

7.7.18   The entire process from the release of the EOI to the awarding of the LOI took a period of
         almost 6 months to complete. It may be mentioned at this stage that commencing the
         tendering process so late in the run up to the games, in itself, subjected the process to a
         stress test. It is highly surprising that key decisions related to contracts that constituted a
         core component of the games apart from being a third of the OC’s financial expenditure
         were subjected to such delays.


         Deeply flawed estimates

7.7.19   It follows from the above that the OC made little effort, despite prodding by the Ministry to
         acquire any clarity or appreciation with respect to the nature of activities involved on
         overlays. This is evident from the absence of the expense head in the initial budget and the
         ‘adhoc basis’ (i.e. basis list prices/ prices available on the websites of overlays suppliers)
         adopted for preparation of budgets by the OC. This was further substantiated by the
         recommendation made in the EFC meeting held on 28 July 2009 as already mentioned in
         italics in para 1.7.16 above.

7.7.20   It must also be noted that the OC issued the EOI and RFP in December 2009, even before
         the finalization of the quantities and cost estimates required for the games. Further, the
         commercial bid from the four bidders was opened on 26 February 2010, prior to the receipt
         of approval of the overlays budget from the Ministry.

7.7.21   The lack of clarity with respect to the nature of activities involved in the FA had a direct
         impact on costs related to overlays.


         240
            Refer Annexure 7.33 - para 6 of Minutes of Negotiation Committee Meeting held between 26 to 29 March 2010. We
         have not been provided with any information with respect to these “substantial discounts” considered.

         241
               Refer Annexure 7.32 - Approval from Ministry of Youth Affairs and Sports granted in March 2010.


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                                Fifth Report of HLC – Organizing Committee

              As against the cost estimates of INR 400 crore242 in July 2009, the sum total of lowest
               bids for all 7 clusters in February 2010 came to INR 1,534.92 crores243. It is not surprising
               therefore the budgets were made by OC post receipt of commercial bids, reflecting the
               high rates’ quoted by vendors without any independent validation of rates.

              The final budget for overlays was approved by the GOI only in March 2010 for INR
               687.06 crores and the only option used by the OC was to reduce quantities ordered.
               This was a compulsion as the tendering process was delayed and the delivery was to
               commence in early June 2010.


7.8     Summary and conclusions

7.8.1   From the review of the contracting process, it is evident that significant questionable
        practices were adopted in by the OC officials in awarding and monitoring contracts that
        resulted in undue benefit to suppliers. This summary is based on the following key points.

              For large part of 2008- 2009, OC officials did not provide budgetary cost estimate to the
               Government despite repeated request from them.                          This prevented preparation of
               realistic budget for overlays on the ground of ostensible lack of knowledge of cost of the
               contracts. Therefore the budgeting process was delayed.

              OC contended that the first budget of INR 1500 crores was based on “standard price lists
               available on the website” of 2 suppliers. On one hand the OC claimed that they could
               not correctly estimate cost and on the other hand they claimed that standard price lists
               were available on websites, which inherently, contradict each other.

              The prolonged non submission of budget estimates to the government and then reliance
               on the commercial bids for preparation of budget gives the impression that it was a
               deliberate ploy to make purchases at unsupportable costs.

              Of the 6 vendors who responded to the EOI, 2 were disqualified on technical grounds. In
               the case of some of the 4 short listed vendors who were finally awarded contracts, OC
               took pragmatic views to overlook some important financial and technical parameters.

        242
              Refer para 1.7.16 above.

        243
              Refer Annexure 7.33 – para 2.3 of Minutes of Negotiation Committee Meeting held between 26 to 29 March 2010.


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                  Fifth Report of HLC – Organizing Committee

      Thus selection of vendors was not transparently made and arbitrary considerations were
      cited to award the contracts.

     OC failed to negotiate prices effectively with vendors. The costs were reduced on the
      basis of reduction in quantities and not reduction of unit prices. Despite high tendered
      cost, re-tendering was not done on the ground of time considerations.

     Failure to negotiate prices with vendors cost the OC a potential loss of at least INR
      138.09 crores simply based on the lowest price contracted amongst selected vendors. If
      the price of the items would have been negotiated down further, the loss/overpayment
      would even exceed this amount.

     Further, the OC issued BOQ’s against certain items to vendors with full knowledge that
      the rates quoted by the vendor were ad-hoc and not backed by the vendors ‘detailed
      analysis’. The quantum of such items as per the BOQ aggregated to INR 37.4 crores.

     The OC completely failed to monitor items provided by the vendors under the contract.
      No records of verifications have been provided to us and we were informed that these
      were not maintained. It is not apparent to us how the OC intends to certify final bills of
      these vendors as they have denied existence of any corroborative information to verify
      these. In fact, they have represented to us that they had asked the CVC to verify these
      amounts but did not receive reports. The failure of the OC to introduce any internal
      monitoring mechanisms is extraordinary given that this was the most significant
      expenditure by value in relation to the overall expenditure of the OC.




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                          Fifth Report of HLC – Organizing Committee

8       Chapter 8: Timing, Scoring and Results
         Certain key officials of the OC consistently indulged in malpractices, manipulated OC’s rules
         and procedures and misled the Executive Board and OC Sub Finance Committee solely with the
         intention to eliminate competition and favor a particular vendor. The loss caused due to their
         misconduct would be at least INR 18 crores due to delayed award of a contract to ‘pre-
         decided’ vendor and at a cost of INR 49 crores higher as compared with the bid of the rejected
         vendor.



8.1     Background

8.1.1   The OC appointed M/s Swiss Timing – Omega for provision of Timing, Scoring, & Result (TSR)
        services for the Commonwealth Games, 2010. The total value of the contract was INR
        1,124,550,000. (Please refer to Annexure 8.1)

8.1.2   The key details pertinent to this contract are provided in the table below:

        Table 8.1: Overview of the contract

        Contract                              Timing, Scoring and Results System Services

        Contractor                            M/s Swiss Timing – Omega

        Contract Date                         11 March 2010

        Contract Value                        CHF 24,990,000/INR 112,45,50,000

        Details of Work                       Services including, but not limited to:

                                              Timing and Scoring Equipment, Equipment Management,
                                              Local Results Service, Record Management, TV Graphics,
                                              Central   Results    Service   integration,   Integration   and
                                              Connectivity, Complete Testing, Operational Planning, and
                                              Program Management

        Details of Bids Received              Two bids received:

                                              1   Swiss Timing (Omega)
                                              2   MSL Software, Spain

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                        Fifth Report of HLC – Organizing Committee

        Details of Bidders selected in Pre- Only one bidder qualified, i.e. Swiss Timing – Omega
        qualification




8.1.3   The selection process for awarding TSR contract took around 2 years and 9 months since the
        first presentation made by Swiss Timing and 1 year since the publication of EOI. The key
        events during this time are presented below in a chronological order.




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                                                               Fifth Report of HLC – Organizing Committee

Figure 8.1: Timeline and Key Events


                 July 22, 2008            March 23, 2009               October 1,           November 4,         December 4,                 December            December 29,             March 11,
                                                                         2009                  2009                2009                      19, 2009               2009                  2010

      June 25, 2007              March 6, 2009         July – August                October 4,       November 30,           December 17,            December 20,           January 15,
                                                            2009                      2009               2009                   2009                    2009                  2010




 Presentation by Swiss            Draft EOI           TSR Planning at        Amendments to       Approval by EMC to         Ratification of           Commercial Bid         EB approves ST
     Timing/Gem                   circulated            Venues with               RFP                open only ST        Decision to Select ST       Evaluation of Swiss      revised offer
     International
                                                       Visits by Swiss                              Technical Bid          by Finance Sub-                 Timing
           ST recommended by              Publication Timing Officials
                                                      of           Publication of    Pre-qualification                        Committee
                                                                                                           Technical Bid Evaluation     Ratification of Decision     Negotiation          TSR Contract
           Committee for Sports                EOI                      RFP           Evaluation (No                                      to Select ST by EB     Meeting with Swiss awarded to Swiss
 Presentation by Swiss
         Surface
     Timing/Gemand Equipment                                                       consensus on MSL)                                                                    Timing              Timing
      International
                                                                                                   Critical changes in the Technology FA during this time
                                                            September 7, November 17,            November 19,       November 24, November 27- December 16,           December 20, February 3,
                                                                2009         2009                    2009               2009       30, 2009       2009                   2009        2010



                                                                                               All FA’s are                          Sandeep Arya                    Sandeep Arya
                                                           Appointment of
                                                                                          distributed between                      obtains approval               Resigns. Ajit Sirohi
                                                           Sandeep Arya as
                                                                                            CEO and DG (VK                        for opening only ST              takes the reins as
                                                            Advisor (Tech)
                                                                                          Verma). Technology                         Technical Bid               Head (Technology FA)
                                                                           Promotion of     FA reports to Mr.        Sujit Panigrahi                   Ajit Sirohi                   Ajit Sirohi
                                                                        Sandeep Arya to JDG Verma thereafter             resigns                    appointed as ADG                  Resigns
                                                                        (Tech) thus assuming
                                                                         the role of head of
                                                                           technology FA




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                                Fifth Report of HLC – Organizing Committee


8.2     Dissent amongst OC officials and futility of EOI for TSR contract

8.2.1   TSR would ordinarily be handled by the Technology FA, whose work was to be coordinated
        by the COO244. However, the OC issued an EOI on 23rd March 2009 for TSR contract, without
        consultation with Technology FA or the concurrence of COO.

8.2.2   Mr. V K Verma, the DG, involved himself in this matter though his role was defined in the
        GOP as “DG will be head of the OC Secretariat and shall be responsible for execution and
        administration of the Secretariat. He will coordinate the activities of the OC Sub- Committees
        that require coordination with government agencies and delivery partners.245”

8.2.3   The manner in which the EOI was issued raises concerns about the OC’s intention to seek an
        active interest from service providers. Following observations point towards the discord
        amongst OC officials and futility and failure of the EOI process.

              EOI for TSR, which is primarily a technology driven component, was published on OC’s
               website and in the Hindustan Times on 23 March 2009 without any consultation or the
               knowledge of Technology FA.
              The notes exchanged by Mr. VK Gautam, COO and Sujit Panigrahi, ADG Technology on 23
               March 2009, the same day that the EOI was published, indicate that both officials were
               unaware of this EOI. Mr. Gautam expressed that the EOI was generic, non-technical in
               nature, and sufficiently vague in terms of scoping of specification and deliverables. Even
               the technology consultant, Brian Nourse expressed his surprise and disappointment with
               the EOI and recommended that the same be withdrawn until a clear agreement on the
               TSR scope, and responsibilities is reached within OC246.
              In the Coordination Committee meeting held on 29 January 2009, Mr. Sudhir Nath,
               Secretary of Sports mentioned that OC should place the short listing done by them of




        244
           As per the GOP Page 54, “COO: Responsible for all Games services, the COO is key position in the OC Secretariat and
        will require an individual with tremendous project management expertise and experience and leadership qualities related
        to handling multi dimensional functional groups.”: Annexure 8.2

        245
              Refer role of DG as per GOP: Annexure 8.3

        246
              Refer notes exchanged between Sujit Panigrahi, COO, and Brian Nourse after the issuance of EOI: Annexure 8.4


        144
                                Fifth Report of HLC – Organizing Committee

               TSR provider on their website and give opportunities to other suppliers also by way of
               EOI, if they think that they also satisfy the conditions on which short listing was done 247.
              According to the OC records, on 6 March 2009, Lalit Bhanot issued a letter to Rahul
               Bhatnagar with the detailed criteria for the EOI248.
              A note for approval to the JDG (Venue) and DG, (with the EOI attached) was issued by
               Surjit Lal on 21 March 2009, which stated "...The contents to be placed on website as
               approved by the Ministry of Sports are enclosed. It is for approval and instruction to the
               concerned officer to place the enclosed matter on the website of OC, CWG Delhi 2010 on
               urgent basis...” This was approved by AK Saxena and VK Verma on the same date249. It
               should be noted that no member of Technology FA approved this note.
              Email for publication of this EOI on OC website was sent by Mr. Arun Kumar Kesri (office
               of Mr. Lalit Bhanot, Secretary General) on 21 March 2009 after 6:00 PM. Although Mr.
               Kesri copied Sujit Panigrahi on this email it was possible that the same would not have
               been noticed by Mr. Panigrahi before Monday 23 March 2009250.
              The OC received responses to this EOI from two vendors, M/s Mondo and M/s
               Technovision. These responses were disqualified by the evaluation committee for not
               meeting the prequalification criteria since they were both in the business of supplying
               video boards and were not TSR suppliers.251 Consequently, this left only M/s Swiss
               Timing as the short listed vendor, as mentioned in the published EOI, for further stages
               of procurement process. However, OC issued the RFP on 1 October 2009 under the open
               tender system by disregarding the entire EOI process followed earlier.

8.2.4   This whole process resulted in wastage of 6 months worth of time and effort and
        significantly delayed the procurement process for TSR.




        247                     th
              Refer Minutes of 4 CoCom Meeting: Annexure 8.5

        248
           Refer Letter from Bhanot to Rahul Bhatnagar 6 March 2009: Annexure 8.6 No response email/letter from the Ministry is
        available with the OC

        249
              Refer Note put up by Surjit Lal and Approved by AK Saxena and VK Verma on 21 March 2009: Annexure 8.7

        250
              Refer emails from Arun Kumar Kesri and Ananda Swaroop dated 21 March 2009 : Annexure 8.8

        251
              Refer Evaluation Report of Responses to EOI : Annexure 8.9


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                                Fifth Report of HLC – Organizing Committee

8.3     Apparent bias of OC officials towards Swiss Timing

8.3.1   OC showed strong bias towards Swiss Timing, even much before the tendering process
        commenced. Events/actions to this effect were as follows.

              Swiss Timing was appointed as the TSR service provider at Pune Youth Games, 2008 on a
               Single Tender basis252.
              OC officials were in constant contact with personnel from Swiss Timing and Gem
               International, who were Swiss Timing’s India representatives even prior to the issuance
               of RFP for TSR.253
              Swiss Timing and Gem International made presentations on TSR for Pune Youth Games
               2008 and CWG 2010 on 27 June 2007 to officials of the OC 254. It was noted that the
               pages related to the “Financial Offer” were missing in these documents provided to us
               whereas these were mentioned in the index of the presentation. OC could not explain
               the disappearance of these pages from the presentation copy.
              Minutes of meetings held on various dates between 25 July and 1 August 2009 (6-8
               months prior to the award of contract), to review Timing and Scoring Requirements for
               competition venues indicate that apart from OC Officials such as Vijay Kumar Gautam
               (COO), ASV Prasad (JDG, Sports) and Jamaal Raazi (Director, Venue Technology), these
               meetings were attended by Claude Favre of Swiss Timing, and A.K. Madan, P.D. Arya and
               Yogesh Sharma from Gem International. Moreover, all the discussions regarding
               planning of TSR requirements at these venues were centric to suggestions and inputs
               provided by Claude Favre from Swiss Timing255.

8.3.2   At various meetings prior to the award of contract, Senior OC officials had asserted that
        Swiss Timing would be awarded the contract for TSR. Excerpts from the minutes of some of
        these meetings are summarized below.

              In the 3rd meeting of the Committee for Sports Surface and Equipment, held on 22 July
               2008, Mr. Lalit K. Bhanot mentioned that in the case of TSR choice is very limited and
        252
              Refer note from DG dated 19 November 2009 : Annexure 8.10

        253
              Please refer to Annexure 8.11

        254
              Refer Agenda for Swiss Timing and Suis Ascor Presentation : Annexure 8.11

        255
              Refer minutes of meetings for review of TSR requirements: Annexure 8.12


        146
                                Fifth Report of HLC – Organizing Committee

               “Swiss Timing has monopoly in multi sporting events”. In this meeting, it was
               unanimously resolved to recommend Swiss Timing for “all games except Shooting for
               which SUIS ASCOR was recommended256”.
              In the first meeting of the Centralised Coordination Committee (CCC) of OC for the
               finalization of Overlays held on 26 September 2008, Mr. Lalit Bhanot again
               recommended Swiss Timing as the TSR provider257.
              In the second meeting of the CCC held on 16 December 2008 it was clarified that the
               budget provision for Timing and Scoring system would be made by the Venue owners as
               this was a legacy requirement (and NOT an overlay) and the hardware would be supplied
               by Swiss Timing. It was also noted that the procurement needs to be centralized to bring
               about effective process of tender and selection258.


8.4     Eligibility criteria of EOI and RFP tailored towards Swiss Timing

8.4.1   The eligibility /qualification criteria in the EOI published by OC on 23 March 2009 appear to
        be restrictive towards Swiss Timing with the OC clearly mentioning in the EOI that only Swiss
        Timing qualifies on the basis of criteria mentioned259.

              The committee discovered an email dated 30 March 2009 written by Brian Nourse
               (Technology Consultant) to Sujit Panigrahi. In this email, Brian attached the Technology
               Review Report, where he mentioned that OC should determine the scope of the TSR
               provider based on its strategic requirements, and this should not be driven by the TSR
               provider 260.
              Also, in the official communication between Vijay Kumar Gautam and Sujit Panigrahi on
               23 March 2009 (day of EOI issuance) Mr. Gautam stated that the EOI was ‘too generic,
               non-technical in nature and sufficiently vague in terms of scoping of specifications and



        256
              Refer Minutes: 3rd Meeting of the Committee for Sports Surface and Equipment-22 July 2008: Annexure 8.13

        257
              Refer First meeting of the CCC for finalization of Overlays: 26 September 2008 : Annexure 8.14

        258
              Refer Second meeting of the CCC for finalization of Overlays: 8.15

        259
              Refer to EOI in Annexure 8.16

        260
              Refer Brian Nourse’s email and Technology Review Report dated 30 March 2009 : Annexure 8.17


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                               Fifth Report of HLC – Organizing Committee

               expected deliverables’261. This further highlighted that not only had the EOI been issued
               without the knowledge of key stakeholders, it was also vague and not drafted as per the
               objectives of D2010.

8.4.2   The eligibility criteria was altered at the draft stage.

              Sujit Panigrahi prepared a draft RFP on 29 August 2009 that listed 7 eligibility criteria,
               and referred to past experience in ‘at least 3 previous Olympics or Asian or
               Commonwealth, Pan-American or Similar International Games in the past 5 years’.
               However, in the 8th OC Finance Committee Meeting on 22 September 2009 Pan-
               American games were removed from the list of eligible past experiences on the
               intervention of Mr. V K Verma, DG (who was the chairman of the committee) 262.
              The inclusion of Pan-American games as a qualifying event in the RFP was proposed by
               VK Gautam, COO (who was directly responsible for Technology FA). The minutes also
               document that Mr. Jeychandran, Member Secretary, mentioned that Pan-American
               games had indeed been taken into consideration by OC in some of the tenders, in which
               he was a member. No other counter argument was put forth by any other member of
               OCFC as per the documented minutes. However; the committee minutes indicate that by
               “unanimous” decision Pan-American games was deleted from the RFP263.
              It may be mentioned that Brian Nourse, Technology consultant to OC, in his email dated
               21 May 2009 to COO and ADG had recommended Pan American games as a relevant
               event for consideration for TSR experience264 which was thus disregarded by the
               invention of Mr. V.K.Verma, as above.
              Mr. Sujit Panigrahi, in his mail to the Tender Committee members dated 11 November
               2009, mentioned that RFP was prepared keeping in mind that at least all qualified global
               TSR providers should be able to bid and qualify. He further iterated that the idea of
               broad basing the requirement was to have “fair competition”. However the OC Finance



        261
              Refer Note from COO dated 23 March 2007: Annexure 8.18

        262
              Refer note by COO dated 25 September 2009 in Annexure 8.19

        263                    th
              Refer Minutes of 8 Meeting of OCFC 22 Sept 2009: Annexure 8.20

        264
              Email from Brian Nouse in Annexure 8.21


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                               Fifth Report of HLC – Organizing Committee

               Committee restricted competition by allowing only one edition of Olympics,
               Commonwealth Games and Asian Games265 as suggested by Mr. Verma.

8.4.3   OC, on the behest of Mr. VK Verma, made an unauthorized and critical change to the
        eligibility criteria in the RFP 3 days after it was published on 1 October 2009 making the
        criteria even more restrictive than what was previously agreed.

              One of the criteria in the RFP published on 1 October 2009 mentioned: “The bidder
               should have the experience of operating Timing and Scoring Equipments and/or
               delivered Local Results Systems in any of the previous Olympics, Asian or Commonwealth
               Games in the past 5 years”.
              The above criteria was altered on 4 October 2009 pursuant to a note from VK Verma 266
               to read as: “The bidder should have the experience of operating Timing and Scoring
               Equipments delivered Local Results Systems in any of the previous Olympics, Asian or
               Commonwealth Games in the past 5 years”267. It is peculiar that in his note Mr. Verma
               has referred only to a discussion in his room between him and Sujit Panigrahi where Mr.
               Rahul Bhatnagar, Member OC Finance Committee was present. He did not deem
               necessary that an approval from OC finance committee or another apex body was
               needed for such a change. The change in the two criteria is the removal of and/or in the
               line “Timing and Scoring and/or Local Results System”.
              It was noted that in the 8th OC Finance Committee meeting, held on 22 September 2009,
               where the TSR RFP was approved no decision was taken for making the above change.
               The change was discussed in the meeting and committee only suggested to seek legal
               opinion on this matter268. The 9th OC FC meeting was held on 6th October 2010, i.e. after
               the changes in the RFP were already published. Thus, implying that not only was the
               change restrictive in nature it was also unauthorized.
              Other discrepancies indicative of foul play were noted in the documented minutes of
               subsequent OC Finance Committee meetings (9th, and 10th)

        265
           Email from Sujit Panigrahi dated 11 Nov 2009 in Annexure 8.22 The global TSR providers as mentioned by Sujit Panigrahi
        are : Swiss Timing/Omega, MSL, Ssangyong, Seiko, Delta Tra, and Data Entry Systems

        266
              Refer Note from VK Verma dated 3 October 2009: Annexure 8.23

        267
              Refer Amended RFP: Annexure 8.24

        268                                th
              Refer Extract from Minutes of 8 OCFC Meeting: Annexure 8.25


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                       Fifth Report of HLC – Organizing Committee

       -    In the 9th OCFC meeting held on 6th October 2009 it was noted that VK Gautam
            circulated modified minutes of 8th meeting and the same modifications were
            confirmed by the committee269. In contrast, the minutes of the 10th OCFC meeting270
            held on 16th November 2010 noted that with regard to TSR discussions, the
            modifications submitted by Mr. Gautam were not confirmed by the committee and
            Mr. VK Verma advised that minutes should be confirmed only after all the members
            of committee had perused and agreed with Mr. Gautam’s revised comments.
            Incidentally, Mr. Gautam did not attend the 10th meeting and any other OCFC
            meeting thereafter.

       -    The 10th OCFC meeting, held on 16th November 2009, notes that Mr. Jeychandren,
            Member Secretary, informed the committee that RFP related to TSR was put up on
            the website on 4th October 2009 and technical evaluation of the bids has already
            taken place. In view actual timelines for the pre-qualification evaluation of the bid it
            is noted that Mr. Jeychandran’s comments were false and misleading. This
            misinformation led to the conclusion of Finance Committee to not pursue any
            discussion/decision that could have an effect on altering the RFP condition. The
            committee noted “If any attempt to make such changes is done it would definitely
            lead to allegations /litigations which in the opinion of the undersigned are highly
            avoidable”.

      In reference to the discussion of 9th OCFC meeting Mr. VK Gautam, in his office note
       dated 7/10/2009 to Sujit Panigrahi, mentioned that the only changes to the draft RFP
       discussed and agreed upon in the 8th FC meeting held on 22nd September 2009 pertained
       to exclusion of “Pan-American or Similar other International Events” from the eligibility
       criteria. With regard to V K Verma’s note dated 3 rd October 2009 for the changes in RFP,
       Mr. Gautam mentioned that he has only seen that note on 7 th October 2009 and in 9th
       OCFC meeting Mr. Rahul Bhatnagar, JS (ISD), clearly mentioned that no changes to be
       made in the published RFP except the change mentioned above. Mr. Gautam also wrote
       that “In the light of above, we cannot be more restrictive in terms of prescribing


269                                                                                    th
      OC was not able to provide these modified minutes of the meeting: Refer Minutes of 9 OCFC Meeting: Annexure 8.26

270                     th
      Refer Minutes of 10 OCFC Meeting: Annexure 8.27


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                                Fifth Report of HLC – Organizing Committee

               eligibility and evaluation criteria other than what is already been incorporated as per
               deliberations/recommendations of the FC”271

8.4.4   It appears that the change made to the RFP, as mentioned above, was simply uploaded to
        the website of the OC and there was no public dissemination made through either
        newspapers or notification on the website that these had been revised. Instead, OC
        resorted to sending emails to all bidders who had downloaded the RFP till that date. Record
        of such emails were not provided. Additionally, apparent contradictions between OC’s claim
        of sending emails and enquiries received from one of the bidders were noted.

              According to the minutes of the 16th EB meeting, held on 19th December 2009 an email
               was sent by Sujit Panigrahi to all prospective bidders, who had downloaded the RFP till
               that date, requesting them to download the revised TSR RFP again from the website 272.
              However, in response to an enquiry from Juan Leon of MSL on the modified TSR tender
               document Sujit Panigrahi in his email dated 17 November 2009 wrote “…There is some
               discussion going on regarding this clause. I will update when I know about the exact
               situation..”273. This clearly indicates that Sujit Panigrahi was probably not even aware of
               any change and thus may not have sent the letters as suggested in the minutes above.
              It may also to be noted that Juan Leon of MSL in his enquiry with reference to the
               removal of ‘and/or’ from the eligibility criteria wrote, “…We are regularly monitoring the
               website and content to check for changes, and today we have noticed that the TSR
               tender document that is published for the TSR tender has been modified and does not
               match the original one that was published, which is the one we have responded to in our
               response for TSR…”. He further stated that “…I please urge you and the rest of the
               Organising Committee of the 2010 Delhi Commonwealth Games to find out what has
               happened, who are the people responsible for this event, and what are the penalties
               applied to them. Further, if any of these changes clearly benefits any of the tenderers in
               this bid, I would like to ask for the rejection/disqualification of such company...”




        271
              Please refer to Annexure 8.28 for Mr. Gautam’s note dated 7 Cctober 2009 to Sujit Panugrahi

        272                                                  th
              Please Refer to Annexure 8.29 for Minutes of 16 EB Meeting

        273
              Refer to Email Exchange between Juan Leon and Sujit Panigrahi: Annexure 8.30


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                                Fifth Report of HLC – Organizing Committee

8.5     Disqualification of MSL at Pre-Qualification Stage

8.5.1   Only two vendors i.e. MSL Software and Swiss Timing responded to the RFP published by OC
        for TSR. OC decided to disqualify MSL Software at the pre-qualification stage on grounds
        that are not maintainable. The chronology of events is summarized below:

              The pre-qualification bids were opened and evaluated on 4 November 2009. A four-
               member committee was formed for the evaluation of these bids, comprising: Gp. Capt.
               KUK Reddy (ADG Finance), Mr. V.K. Saksena (ADG Revenue), Sujit Panigrahi (ADG
               Technology) and Surjit Lal (DDG Procurement)274.
              There was no unanimous conclusion reached at this meeting, with KUK Reddy and Surjit
               Lal expressing a view that MSL Software did not meet the eligibility criteria, and V K
               Saxena, and Sujit Panigrahi expressing the view that both bidders qualified. 275It is to be
               noted that the views of Sujit Panigrahi and VK Saxena were also technically endorsed by
               Mr. Derek Philips (Venue Technology) and Mr. Brian Nourse (International Consultant,
               and ex-head of Technology, Melbourne 2006)276.
              This disagreement led to a long drawn procedure of evaluation of MSL’s pre-qualification
               bids, including evaluation by V K Verma and TCIL and involvement of Mike Hooper to
               opine on the same in order to reach a decision. It should be noted that Mr. VK Verma
               expressed his preference to include TCIL’s opinion in the evaluation of TSR bids in the 8 th
               OCFC meeting held on 22 September 2009277 i.e. long before this issue came up. Mr.
               Verma finally recommended obtaining and considering TCIL’s views with respect to the
               pre-qualification evaluation of MSL and ST in his note dated 19 November 2009 278.
              Around this time Mr. Sandip Arya, a former Advisor (Technology) was promoted as Joint
               Director Technology FA at the time the evaluation was being committed 279. As result of
               this change, Sujit Panigrahi would now be required to be reporting to Sandip Arya. The

        274
              Please refer to the Evaluation of Pre-qualification bids on 4 November 2009: Annexure 8.31

        275
              Detailed comparison of the views of committee members on MSL: Annexure 8.32

        276
              Please refer to Sujit Panigrahi’s email dated 9 November 2009: Annexure 8.33

        277                       th
              Refer Extract from 8 OCFC on TCIL: Annexure 8.34

        278
              Refer Note by DG: 19 November 2009: Annexure 8.35

        279
              Refer Paragraph 1.6 for details


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                               Fifth Report of HLC – Organizing Committee

               decision to disqualify MSL was finally put up for approval by Sandeep Arya, a former
               advisor on 27 November and approved by the EMC on 30 November 2009.

8.5.2   The entire process for pre-qualification evaluation of MSL took more than 20 days, and
        involved deliberations of 4 senior officials of Evaluation Committee, opinion by TCIL,
        suggestions of Mike Hooper, intervention by VK Verma, and “interpretation” by Sandeep
        Arya, who was elevated as FA head of Technology at s critical stage. The following
        discrepancies in this process were noted:

              The response from Mike Hooper received via email on 25 November 2009 advised that
               he was not aware of a situation whereby MSL Spain provided the full TSR Systems for
               Games consistent with the Scope of Work detailed in the RFP, but he acknowledged that
               they had provided some of the elements of OVR Services at previous Commonwealth
               Games as sub-contractor280. This was interpreted by Sandeep Arya as CGF’s opinion that
               only Swiss Timing qualifies for the further evaluation.281.
              The note prepared by Sandeep Arya on 27 November 2009 to disqualify MSL required
               EMC approval. The note carries a line “EMC Approved” signed and dated 30 November
               2009; however no such approval could be located in OC EMC minutes made available to
               the HLC.
              While the evaluation committee was divided on the matter of MSL’s disqualification, Mr.
               VK Verma, DG, performed his own evaluation and submitted a report dated 19
               November 2009282. The key observations made by Mr. VK Verma, DG, have been
               evaluated and our remarks are summarized in the table below.




        280
              Refer Email from RK Sacheti to Mike Hooper and Response: Annexure 8.36

        281
              Refer Note by Sandeep Arya dated 27 November 2009 : Annexure 8.37

        282
           Annexure 8.35. Further Technology FA was aligned to DG (Mr. V K Verma) on 19 November 2009 there by allowing him
        to give his advice in the matter


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                        Fifth Report of HLC – Organizing Committee

Figure 8.2: DG’s observations and remarks on the same


 DG’s Observations                                              Remarks


 …As regards Timing, it is concluded that M/s On their website, MSL state “…MSL provides
 MSL are not in the business of Timing automatic timing, measurement and scoring
 equipment and services, nor have they systems, integrating these with the results
 provided any Timing function in any of the systems. Video capture systems are also available
 three designated multi-sport events…                           for those sports that require them. This service
                                                                includes the installation and operation of all
 As regards Timing, which is the most complex
                                                                systems by qualified MSL personnel…”283
 and critical technology package, which covers
 athletics, swimming and cycling, M/s MSL Further, MSL were contracted by the OC of the
 Spain neither have the equipment nor the Asian Games, Guangzhou to provide Timing &
 capability and experience of providing and Scoring, scoreboards and Operational Support, as
 delivering this service…                                       specified in their pre-qualification paperbook284.
                                                                Further, in response to an email from Sujit
                                                                Panigrahi, MSL have furnished details of specific
                                                                Timing and Scoring in the last Olympics, Asian and
                                                                Commonwealth Games285.




 …In the Doha Asian games they have done no As per the MSL pre-qualification documents, MSL
 timing and have neither claimed to have have provided Timing and Scoring for Golf at the
 provided these services…                                       Doha Asian Games




 …In the Beijing Olympic Games also, they As per the MSL pre-qualification documents, MSL
 have not provided any Timing service or have provided Timing and Scoring for the following
 equipment…                                                     events at the Beijing Olympics:




283
      Report from MSL’s website: Annexure 8.38

284
      Refer MSL Eligibility Criteria Documents: Annexure 8.39

285
      Refer email from MSL to Sujit Panigrahi regarding relevant experience: Annexure 8.40


154
              Fifth Report of HLC – Organizing Committee

DG’s Observations                 Remarks


                                   Beijing Olympics       Beijing Paralympics

                                   Baseball               Equestrian

                                   Football               Football 5

                                   Softball               Football 7

                                   Tennis                 Goalball

                                   Taekwondo              Wheelchair Rugby

                                                          Wheelchair Tennis

                                  Further, MSL also stated in their pre-qualification
                                  paper book that they have provided Timing &
                                  Scoring in the following events at the Athens
                                  Olympics in 2004:


                                   Event                    Services


                                   Baseball                 Timing & Scoring Data
                                                            Entry


                                   Equestrian               Timing & Scoring


                                   Hockey                   Timing & Scoring Data
                                                            Entry


                                   Football                 Timing & Scoring Data
                                                            Entry


                                   Softball                 Timing & Scoring Data
                                                            Entry


                                   Tennis                   Timing & Scoring Data
                                                            Entry




155
                                Fifth Report of HLC – Organizing Committee

8.5.3   Based on the above facts it appears that certain OC officials deliberately created a situation
        to eliminate MSL Software during prequalification stage. The arguments used by Mr. V.K.
        Verma appear to be false, when seen                       in the light of information available either in the
        public domain or in MSL’s bid itself. HLC is of the view that officials like V.K Verma and
        other senior OC functionaries, like Lalit Bhanot and Sandeep Arya, were deeply interested
        and involved in the concerted wrong doing to manipulate facts and the procurement
        process to favor a certain vendor. The evaluation by TCIL is also suspect in the light of these
        same facts. The ultimate beneficiary of this situation was Swiss Timing as a sole vendor to
        whom the RFP was issued.


8.6     Critical management changes in Technology FA during the selection process

8.6.1   OC made critical organizational changes in Technology FA at key junctures of the selection
        process that included appointment of Mr. Sandeep Arya a former advisor to the OC position
        of Technology FA head (JDG - Technology) followed by the resignation of serving ADG (Mr.
        Sujit Panigrahi who appeared to dissent against the conclusions being reached to issue the
        RFP to the sole bidder). The nature and timing of these changes appear to be closely and
        directly linked to the selection process in the EOI stage. It appears that such changes may
        have been made to deliberately supersede existing employees in the OC such as Mr.
        Panigrahi who proved inconvenient to achieve the designed objective of discarding the offer
        from MSL.

              Sandeep Arya, who was appointed as Advisor (Technology) in September 2009 was
               promoted to the position of JDG Technology on 17 November 2009, thus superseding
               Sujit Panigrahi who was ADG (Technology) Head of Technology FA. The following issues
               were noted while examining Sandeep Arya’s personal file286:

              Sandeep Arya was appointed as Technology Advisor with the approval of Mr. V K Verma,
               DG, Mr. Lalit Bhanot, SG, and Mr. Suresh Kalmadi, Chairman. His appointment was based
               only on a proposal submitted by Mr. Abrar Hussain,(Director, Workforce) and
               subsequent approval by the above. No member of Technology FA or COO’s office was
               involved in his selection as Technology Advisor.

        286
              Refer Sandeep Arya’s personal file: Annexure 8.41


        156
                         Fifth Report of HLC – Organizing Committee

      His appointment as JDG, Technology was based on the report by a selection committee
       that comprised of Mr. AK Mattoo, Treasurer, Mr. Lalit Bhanot, SG, and Randhir Singh,
       Vice Chairman. Again, no member of Technology FA or COO’s office was involved in this
       selection. Also, his selection is preceded only by a note from NP Singh, ADG Admin &
       Workforce, where Mr. Singh has indicated that Sandeep Arya is available for Full Time
       employment with OC and OC may want to utilize his services more gainfully.

      His personal file does not include any of his educational/experience certificates.

      According to his CV in the file, he was the chairman of ‘Amtrak Group’ and MD of ‘Presto
       Infosolutions Limited’. Research indicates that both the companies listed in his bio-data,
       Amtrak Group and Presto Infosolutions; have the same office address i.e “6 Community
       Center, East of Kailash, New Delhi”.287

      His public profile on a professional networking website www.linkedin.com indicates that
       he is the MD of Amtrak Technologies (P) Ltd. since February 1991. However, the
       company was incorporate only on 12 February 1996288 as per ROC records.

      Through an office order dated November 19th 2009 Mr. Suresh Kalmadi, Chairman OC
       distributed all FA’s between Mr. Jarnail Singh, CEO and Mr. V K Verma, DG. The
       technology FA from that date reported to Mr. VK Verma289.
      Sujit Panigrahi submitted his resignation on 24 November 2009 expressing discontent
       over creation of this new position in the Technology FA and stated, in his note to Jarnail
       Singh, CEO and Mr. Suresh Kalmadi, Chairman that ‘I sometimes wonder is it by taking a
       straightforward, professional stand on evaluation of TSR Tender, despite internal
       pressures, has put me into this disadvantageous position by higher management!290’.
      Sandeep Arya prepared an office order on 27 November 2009 that disqualified MSL
       based on the TCIL evaluation report and his interpretation of Mike Hooper’s comments.
       He also attended the Swiss Timing’s technical bid evaluation on 4 December 2009 and
       obtained approval to open commercial bid from Finance Sub-Committee on 17

287
      Details of the two companies in Annexure 8.42

288
      Incorporation Certificate & Linkedin Profile in Annexure 8.43

289
      Refer Office Order Dated 19 November 2009: Annexure 8.44

290
      Refer Sujit Panigrahi’s HR Records - resignation letter : Annexure 8.45


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                                Fifth Report of HLC – Organizing Committee

               December 2009291 and the Executive Board on 19 December 2009292. Thereafter, Mr.
               Arya ceased coming to office with effect from 20 December 2009 due to ill-health and
               resigned from his position on 24 December 2009.
              Ajit Sirohi joined as a replacement for Sujit Panigrahi on 16 December 2009 293. From his
               personal file it was noted that Mr. Sirohi had no notable prior work experience. He took
               over the responsibilities of the TSR contract with effect from the date of the opening of
               the Commercial Bid on 20 December 2009 on account of the absence of Sandeep Arya
               (his immediate supervisor and head of Technology FA). It is to be noted that Ajit Sirohi
               was known to Mr. Surjit Lal, DDG Procurement (also involved in the TSR tender
               evaluation) as he cited him as his reference in the job application form. Ajit Sirohi
               submitted his resignation on 3rd February 2010.

8.6.2   Inducting certain employees/new employees with doubtful or unclear credentials into
        decision making positions at times when existing officials were their dissent or had reported
        being under ‘internal pressures’ to appoint a particular vendor was not simply accidental. It
        is very likely that these changes were orchestrated to facilitate selection of Swiss Timing as
        the TSR vendor.


8.7     Financial impact of MSL’s rejection

8.7.1   The financial bid of MSL was opened by CBI as part of their investigation of TSR related
        allegations in Commonwealth Games, 2010. The contents of the financial bid were obtained
        from CBI to assess the loss incurred by OC in respect of the decision to disqualify MSL. From
        a comparison of financials quoted, it appears that the actual cost agreed with Swiss Timing,
        was INR 49 crores higher than the quote of MSL as summarized out in the table below.




        291
              Refer Minutes of FSC Meeting 17 December 2009: Annexure 8.46

        292
              Please refer to Annexure 8.29

        293
              Refer Ajit Sirohi’s HR Records: Annexure 8.47


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                               Fifth Report of HLC – Organizing Committee

        Table 8.3: Notional Saving on Comparison with MSL Bid

                                                                         Conversion
            Particulars                          Currency   Amount       Rate         INR

                                                 CHF
            Commercial       Bid   of   Swiss (Swiss
            Timing                               Frank)     24,990,000   45           1,124,550,000

            Commercial Bid of MSL294
            (Inclusive of GMS & Inclusive
            of Taxes)                            Euro       12,738,053   66           840,711,498



            Difference                                                                283,838,502

            Saving on GMS (included in
            MSL bid)                                                                  210,000,000

            Total Notional Saving                                                     493,838,502


8.7.2   On a review of the financial arrangements agreed with Swiss Timing, it is noted that there
        was a further financial loss of INR 18.5 crore that was quantified due to substantial delays in
        the process of awarding TSR contract.

              During the meeting of the Negotiation Committee with Swiss Timing held on 29
               December 2009, the committee observed that Swiss Timing’s bid was much higher than
               the rate charged for Melbourne 2006. When this question was posed to Swiss Timing,
               they gave a percentage break-up for the components in the differential amount. They
               attributed 25% of the increase in amounts due to shorter timelines in the case of the
               games at Delhi.




        294
              Refer MSL Commercial Bid: Annexure 8.48


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                               Fifth Report of HLC – Organizing Committee

        Table 8.4: Approximate Financial Impact of Delayed Award of Contract

                                                                                        Amount

         Particulars                                                   Currency

         Amount Spent in Melbourne for TSR in 2006
         (approx)295 (A)                                               AUD              12,000,000

         Average Conversion AUD to INR March 2006296
         (B)                                                                            0.0310509

         Approximate expenditure in INR on TSR
         (Melbourne 2006) (C=A/B)                                      INR              386,462,228

         Commercial Bid for TSR - D2010 (D)                            INR              1,124,550,000

         Approximate Increase in Amount (E=D-C)                        INR              738,087,772

         25% of the same297, attributable to shorter
         timelines as per bidder (F=Ex25%)                             INR              184,521,943



8.8     Incorrect representation that offer was within budget

8.8.1   The negotiation committee recommended that Swiss Timing’s offer entailed a cashflow of
        INR 107.95 crore and should be accepted by the OC as this amount was ‘less than the
        budgeted INR 109.23 crores298’.

8.8.2   In this regard, it was noted that the budgeted amount included INR 7.7 crores for legacy
        equipments that were not a part of Swiss Timing’s offer. Thus it appears that the committee
        misinformed the Executive Board that amounts quoted by Swiss Timing were within the
        budget, without taking into consideration budget reductions for items not quoted by Swiss
        Timing. Excess value of contract over budget is set out in the table below.

        295
              Refer Email from Brian Nourse dated 21 May 2009: Annexure 8.49

        296
              Refer X-rates page: Annexure 8.50

        297
              Please refer to Minutes of Negotiation Committee Meeting: Annexure 8.51

        298                              th
              Please refer to Minutes of 17 EB Meeting and Budget as Discussed by Negotiation Committee: Annexure 8.852


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                                Fifth Report of HLC – Organizing Committee

        Table 8.5: Budget vs Cost of TSR services

         Particulars                                       Amount (Cr.)

         Budget for TSR Services (A)                       109.23

         Less Budget for Legacy Equipment 7.7
         included therein (B)

         Budget Available (C=A-B)                          101.53

         Net Cash Outflow as a result of TSR 107.96
         Contract         (exckusive      of    legacy
         equipment) (D)

         Excess of Cost over Budget (E=D-C)                6.43



8.9     Role of Indian representative of Swiss Timing

8.9.1   As per minutes of meetings and other records, officials of Swiss Timing in their meetings at
        OC were accompanied by representatives of a firm, Gem International. Though Gem
        International was not party to the contract between the OC and Swiss Timing, their
        representatives had been attending the meetings with OC along with Swiss Timing right
        from 2007299. They also accompanied Claude Favre (of Swiss Timing) during the meetings
        with the OC to plan for the TSR requirements at venues during July and August 2009, much
        before Swiss Timing was contracted for this work300. Incidentally, Gem International also
        represented Suis Ascor, the selected vendor for TSR for Shooting Sports301.

8.9.2   In the contract for Games Management Systems (a separate contract) the selected bidder
        M/s Gold Medal Systems, nominated M/s Tristar Enterprises as their local point of
        contact302. An internet search on Tristar Enterprise and Gem International revealed that the
        key personnel of Gem International and Tristar Enterprises are same individuals, i.e. Mr. A.

        299
              Please refer to Annexure 8.11

        300
              Please refer to Annexure 8.12

        301
              Please refer to the Gem International Visiting Cards: Annexure 8.53

        302
              Please refer to minutes of the Commercial Bid Clarifications for GMS: Annexure 8.54


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                                 Fifth Report of HLC – Organizing Committee

         K. Madan and Mr. P.D. Arya. Further, on viewing the location of their office addresses via
         Google Maps, it was observed that both the offices exist in the same building. 303

8.9.3    It was further noted that Tristar Enterprises was awarded the contracts for the procurement
         of lanyards and printing of accreditation cards. The total amount paid to Tristar Enterprises
         by OC till date is INR 1.3 crore304. Certain irregularities were noticed in this procurement as
         reported in chapter 24.

8.9.4    The above clearly indicates the involvement of Gem International and Tristar Enterprises in
         multiple areas where contracts were awarded by the OC. The committee feels that that
         their roles and financial dealings should be examined with respect to any irregularities that
         may have been committed.


8.10     Summary and conclusion

8.10.1   It follows from the above that the key officials of the OC have consistently indulged in
         malpractice to manipulate OC rules and procedures and to mislead the Executive Board and
         OC Sub Finance Committee solely with the intention to eliminate competition and to favour
         a particular vendor. The loss caused due to their misconduct would be at least INR 18 crores
         due to delayed award of a contract to ‘pre-decided’ vendor and INR 49 crores as compared
         with the bid of the rejected vendor. This is evident from the following.

               The OC officials deliberately delayed the tender process resulting in a 2 year 9 months
                long process. The vendor included an amount of approximately INR 18 crores in the bid
                citing delays as a reason for cost increase.
               EOI’s were issued from the office of the Secretary General (Mr. Lalit Bhanot) without the
                knowledge of the concerned FA and the Technology Consultant. Significant dissent was
                expressed by the FA head and the foreign consultant also expressed the view that this
                EOI should be withdrawn.
               There was an apparent bias of the OC functionaries towards Swiss Timing. There is
                adequate evidence that Swiss Timings was interacting with OC officials long before the
                EOI was issued. This opportunity was not provided to any of the other potential

         303
               Results of the search on M/s Tristar Enterprises and M/s Gem International on internet: Annexure 8.55

         304
               Report from OC F&A


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                    Fifth Report of HLC – Organizing Committee

      vendors. The perceived bias went to the extent that in one meeting, Lalit Bhanot
      expressed that Swiss Timing had “virtual monopoly in multi-sporting events”.
     The eligibility criteria for past experience in the RFP were changed at the intervention of
      Mr. VK Verma. The apparent reason for such change was to make the pre-qualification
      of vendors more restrictive.
     The RFP was changed 3 days after it was published in a manner that again made it more
      restrictive on past experience perspective. The direct benefit of this change accrued to
      Swiss Timing as they were potentially the only one vendor who would meet the criteria.
      It is worthwhile to note that there is no evidence that the change in EOI conditions was
      communicated to vendors who “downloaded” the RPF as asserted by the OC. In fact,
      there is email evidence that representatives of MSL, who submitted the competing bid,
      wrote to the OC stating that the tender was modified and they were not made aware of
      the change.
     The competing bidder, MSL, was disqualified at the pre-qualification stage itself, without
      reviewing its technical and commercial packages and without sufficient cause, especially
      as they were the only other vendor who responded to the RFP. The cost difference
      between the MSL financial bid and the contract awarded to Swiss Timing for the same
      scope of work is estimated to be INR 49 crores.
     The decision to disqualify MSL at the RFP stage was taken on the basis of a note
      prepared by Sandeep Arya, a previous advisor to the OC, who was designated as the
      technology FA head when the evaluation process was on. Sandeep Arya was brought in
      to supersede Sujit Panigrahi, who was raising the red flag and expressing concern abount
      the bias towards Swiss Timing and the resultant unfair contracting. Sujit Panigrahi
      resigned immediately as the management change was made. Further Sandeep Arya
      resigned on “health grounds” as soon as the contract was signed.
     There is evidence that suggest documents were falsified. There is a file note by Sandeep
      Arya that states the disqualification of MSL was approved in an EMC meeting on 30
      November. There is no record available with the OC for an EMC meeting held on that
      date.
     There is also evidence that suggests untrue statements were made in order to show that
      award of the contract was within the budget. While stating that the contract amount for
      Swiss Timing for INR 107.95 crores was within the budget of INR 109.23 crores the

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                           Fifth Report of HLC – Organizing Committee

               negotiation committee omitted to reduce INR 7.7 crores from the budget for legacy
               equipments that was not a part of the Swiss Timing bid. Thus, on a like to like
               comparison, the amounts quoted by Swiss Timing were over the budget.

8.10.2   The adverse conduct of the following officials of the OC that led to the significant losses as
         referred to above is clearly evident.

              Lalit Bhanot, who first recommended that Swiss Timing had a monopoly in TSR for multi-
               sport events and chaired the meeting where it was resolved to recommend them as the
               vendor. He also issued the draft eligibility criteria skewed to favour Swiss Timing, which
               was finally incorporated in the EOI which was published on the OC website.
              V.K. Verma, who was responsible for narrowing the eligibility criteria in the RFP
               published in November before its publication, and further narrowing it after publication.
              V.K. Gautam and other OC officials who held the TSR planning meetings in July-August
               2009, where Swiss Timing and Gem International representatives were closely involved
               in the planning process.
              Sandeep Arya, who recommended the disqualification of MSL and opening of only Swiss
               Timing’s Technical and Commercial Bid during his brief stint as JDG Technology, after
               which he resigned.
              The Chairman for approving the appointment of Sandeep Arya in a manner that
               appeared to be directly related to awarding of the contract to Swiss Timing.

8.10.3   The role of the apparent Indian representatives of Swiss Timing, Gem International and their
         associated company Tristar should be examined in detail as apart from this contract, their
         involvement was also clearly visible in other contracts such as Games Management Systems
         (refer chapter 11) and Lanyards (refer chapter 24). It appears that these entities and their
         related functionaries such as A.K. Madan and P.D. Arya clearly operated as agents for
         multiple foreign vendors in dealings with the OC.

8.10.4   Even though officials at OC showed an unprecedented inclination towards Swiss Timing in
         awarding the contract, Swiss Timing considers the support and efficiency of OC as inferior
         and cites the additional costs and risks in Delhi as one of the key reasons for charging a
         higher amount. In a full page advertisement by Swiss Timing in Hindustan Times, dated




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                        Fifth Report of HLC – Organizing Committee

08/03/2011 the agency clarified its position on the TSR controversy and mentioned the
following besides other reasons:305

      “Before, during and after the Games, the Swiss Timing experts had to work under
       disastrous, chaotic conditions. Despite this situation, Swiss Timing delivered an
       impeccable service to the athletes of the Commonwealth Games 2010”
      “Finally, the financial and the administrative conditions, as well as the support and
       efficiency of the Organizing Committees in Delhi and Melbourne were unfortunately
       absolutely not comparable; the additional costs and risks in Delhi of course reflected in
       the offer”




305
      Please refer to Annexure 8. for a copy of the Advertisement from Swiss Timing in Hindustan Times dated 8/3/2011


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                                 Fifth Report of HLC – Organizing Committee

9       Chapter 9: Technology Contracts through
        TCIL
          Our review of this case indicates that outsourcing of procurement without any safeguard
          against an irregular selection of contractors and/or excess purchase, created opportunity for
          wrong doing. Additional layers in the procurement resulted in an additional and avoidable
          cost incurred by OC.



9.1     Background

9.1.1   The OC appointed Telecommunications Consultants India Ltd. (TCIL) in October 2009 for
        providing Telecom, IT and Networking Projects for Commonwealth Games. The scope of
        services for TCIL covered turnkey implementation on such projects on a cost plus basis. OC
        agreed that as part of the contract, TCIL will subcontract most or all of the projects and
        would be paid a management fee for its services. We reviewed the records of procurement
        files and records as made available in the office of TCIL, Delhi.

9.1.2   The contract with TCIL was signed on 22 October 2009 by Mr. Lalit Bhanot, Secretary
        General, based on approvals of the EMC306.

9.1.3   The scope of work for TCIL was initially 4 contracts which was further increased to 13
        contracts for total value of approximately INR 80 crores307. The TCIL’s fees was payable at 9
        % of the landed cost (total cost of products and services including all the applicable taxes
                                                                           308
        which are charged by the vendor / supplier)                              . We reviewed 5 contracts valued at INR
        69.13 crores (77% of the total value of all contracts) engaged into by TCIL based on
        significance of spend and nature of services. For all these contracts, payments were made
        by the OC to TCIL who paid its sub-vendors.


        306
              Copy of Agreement – Annexure 9.1

        307
           The final invoices for some contracts through TCIL are still pending submission to OC and hence, exact amount cannot
        be determined.

        308
              The detailed list of contracts finalized through TCIL – Annexure 9.2


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                                Fifth Report of HLC – Organizing Committee

               Table I: Summary of TCIL Contracts reviewed


         Tender Tender Name                                                                Value
         No.
                                                                                           (` in crores)


         T-2            Tender for Supply, Installation, Testing & Commissioning of Cabling 11.62
                        System for Commonwealth Games Delhi 2010.


         T-3            Tender for Supply, Installation, Testing & Commissioning of Voice 1.63
                        over IP (VoIP) Telephony Solution at GHQ, Commonwealth Games
                        Delhi 2010, New Delhi City Centre Tower-II


         T-4            Tender for Supply and Operational Support for Network Equipment 28.94
                        for Commonwealth Games Delhi 2010.


         T-5            Providing Computer Hardware for Commonwealth Games Delhi 8.05
                        2010.


         T-10           Providing Office Automation Equipment for Commonwealth Games 18.89
                        Delhi 2010.


         Total                                                                             69.13



9.2     Selection of TCIL without the knowledge or concurrence of COO

9.2.1   TCIL introduced themselves to OC via proposal dated 09/09/2009 from R K Upadhyay,
        Chairman & MD TCIL, addressed to Mr. Suresh Kalmadi, Chairman OC. In this proposal TCIL
        expressed their interest in taking up the assignment on turnkey basis for telecom and IT
        projects at CWG D2010.309 This proposal was forwarded to EMC for consideration by Mr.
        Sandeep Arya, Advisor (Technology) through his note dated 09/09/2009. 310 It should be
        noted that Mr. Arya was appointed on 07/09/2009 (2 days before this proposal) without any
        selection/search committee or involvement of any member of Technology FA related to his


        309
              Proposal sent by TCIL to Chairman, OC – Annexure 9.3

        310
              Please refer to Annexure 9.4 for the note sent by Sandeep Arya


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                               Fifth Report of HLC – Organizing Committee

        appointment. His adverse conduct in the award of the TSR contract as set out in chapter 9 of
        this report has already been discussed.

9.2.2   Further to the above proposal the EMC met on 11/09/2009 at 6:00 PM in the office of Mr.
        Suresh Kalmadi, Chairman to discuss and decide upon the proposal sent by TCIL. In this
        meeting EMC considered the proposal sent by Mr. Arya for the appointment of TCIL and
        approved the same. However, the committee did not discuss or decide upon the
        prospective fee for TCIL and neither is there any mention of the fee by TCIL in their
        proposal.311

9.2.3   In a letter dated 16/09/2009, from J S Chabra, TCIL to Chairman, OC, Mr. Chabra mentioned
        that TCIL’s cost shall be 10% of the landed cost of the procured goods. Following this Mr.
        Lalit Bhanot wrote to TCIL in his letter dated 17/09/2009 and confirmed that OC will engage
        the services of TCIL at 9% fee of ‘landed cost’. The same was confirmed by TCIL via their
        letter dated 21/09/2009.312

9.2.4   From the minutes of 8th OCFC meeting held on 22nd September, 2009, it is evident that
        appointment of TCIL was not done in consultation with VK Gautam, COO to whom the
        Technology FA reported. In fact Mr. Gautam expressed his surprise as per the minutes when
        VK Verma, DG informed the OCFC about their appointment. In this meeting, Mr. Gautam
        stated that he is not in agreement with appointment of such an agency in his FA without his
        knowledge.313 Mr. Gautam also opined that by appointing an agency with no games time
        experience as the interface will not only hit the whole principle of engaging agency with
        games time experience in Olympics, Asian or Commonwealth Games but will also lead to
        operational risks as well as wastage of limited OC resources.


9.3     Multiple layers of contracts causing significant extra costs

9.3.1   The Technology FA, was a strong team of about 75 professionals. Additionally, as set out in
        the consultants section, a number of consultants were also engaged for the Technology FA.
        Given that the OC already has put in place significant infrastructure, it is not evident why a

        311
              Please refer to Annexure 9.5 for the EMC meeting minutes

        312
              Please refer to Annexure 9.6 for copies of communication between TCIL and OC

        313                    th
              Copy of MoM of 8 OCFC meeting attached in Annexure – 9.7


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                               Fifth Report of HLC – Organizing Committee

        third party was brought in for the sole purpose of sub-contracting on a cost plus basis, with
        its consulting fees at 9% of the total landed cost of the tenders. Besides, it is not clear why
        some of the consultants or OC staff could not be associated with TCIL team for ensuring that
        OC rules were broadly observed in the contracting process. We noticed that OC did not
        inquire with the TCIL about the fairness and transparency of procurement or reviewed their
        tender files to safeguard OC’s interest. No audit clauses or service level agreements to this
        effect were in the TCIL contracts. In fact, OC issued a directive to TCIL stating that they
        should ensure that all queries and tasks be handled by them directly without any back
        reference from OC unless absolutely essential314.

9.3.2   Our review of the contracting procedures followed by TCIL indicated multiple layers of
        contracts and sub-contracts executed in relation to the final delivery of services for which a
        contract could have directly been executed between the OC and the supplier. By default,
        each extra layer contributed to additional cost which was paid by the OC. One such example
        for the procurement of VoIP based telephony system is set out below. Even if one were to
        conservatively assume a mark up of 5% at each level (even though TCIL had a 9%), a INR 100
        procurement that could have been made directly from the supplier, cost the OC INR 122 (a
        22% inflation) through 4 layers of sub-contracting.




        314
              Copy of Letter attached – Annexure 9.8


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                           Fifth Report of HLC – Organizing Committee

              Figure I: Layers in the VoIP contract



                                          st
                                         1 Layer



                                                      nd
                                                      2 Layer


                                                                 rd
                                                                3 Layer




                                                                          4th Layer




9.4     VOIP contract

9.4.1   TCIL awarded the VOIP solutions contract for INR 1.63 crores to M/s eRoads with multiple
        layering of sub-vendors as set out in figure I above. It may be noted that there were 3
        vendors short listed by TCIL based on the responses to the tender received by them. The
        underlying technology provided by all these 3 vendors was of Avaya Inc.

9.4.2   We noted that M/s Avaya Global Connect Ltd. (AGCL) was one of the rejected bidders on
        technical grounds in this tender and that they were the subsidiary of Avaya Inc in India. A
        summary of the evaluation of AGCL by the technical committee of TCIL is set out below.




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                                Fifth Report of HLC – Organizing Committee

               Table 9.2.: TCIL technical evaluation

         TCIL        Technical      evaluation       committee Remarks
         comments

         AGCL         had     not    submitted       any     OEM AGCL had actually submitted the OEM
         authorization.                                               authorization certificate from Avaya Inc.315

                                                                      Surprisingly, the other 3 short listed bidders
                                                                      (M/s eRoads, M/s Intec and M/s TelExcel) also
                                                                      submitted OEM authorization from Avaya Inc
                                                                      which stated that the services would have to
                                                                      be procured from AGCL only.316

         AGCL did not submit the ISO certificate.                     M/s AGCL were the subsidiary of Avaya Inc at
                                                                      the time the determination was made. They
         AGCL submitted the ISO certificate of Avaya
                                                                      submitted the ISO certificate of M/s Avaya Inc.
         Inc.       The technical evaluation committee
         rejected the bid of AGCL citing that Avaya
         Inc is different from AGCL.317




9.4.3   TCIL rejected the bid of AGCL citing that they did not have an ISO certificate and awarded
        the contract to M/s eRoads318. In reviewing the award of the contract, we observed that the
        manufacturer of the equipment, Avaya, clearly mentioned in its OEM authorization to M/s
        eRoads that they would have to procure the equipment through M/s AGCL. The extract of
        the authorization is reproduced below.




        315
              AGCL OEM authorization certificate copy attached in Annexure 9.9

        316
              OEM authorization certificates attached in Annexure 9.10

        317
              ISO Certificate of Avaya Inc submitted by AGCL – Annexure 9.11

        318
              Please refer to Annexure 9.12 for the TCIL technical evaluation report


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                                Fifth Report of HLC – Organizing Committee




9.4.4   Based on the above, it is evident that TCIL rejected the bid of AGCL on a technicality with
        the full knowledge that the vendor to whom the contract was being awarded would
        necessarily have to source the equipment from AGCL.

9.4.5   Thus the TCIL technical evaluation committee members indulged in a blatant malpractice to
        favor a particular supplier in the award of this contract. The OC Technology FA has denied
        any knowledge of such sub-contracting at this stage.


9.5     Office Automation Equipment contract

9.5.1   TCIL awarded a contract of the supply of office automation equipment (comprising printers,
        scanner, copiers, etc) to M/s A2Z Maintenance and Engineering Services Limited (A2Z) for
        INR 18.89 crores. This is the same entity that obtained the contract for cleaning and waste
        management from the OC (supply of labor and materials).


        Lack of credentials of the vendor

9.5.2   A2Z are an engineering and infrastructure company and as mentioned on their website,
        have a service portfolio which includes Transmission, Distribution, Feeder Renovation, Rural
        Electrification, Railway Electrification, IT Application – Power Sector and Service Value
        Chain. Providing Office Automation Equipments like Printers, Photocopiers, Scanners and
        Fax Machines does not figure anywhere in their service portfolio listed on its website319.

9.5.3   Most of the equipments sourced from them are manufactured by Xerox, a well known
        brand. The website of Xerox provides a detailed list of 12 authorized dealers in the Delhi
        Region. M/s A2Z Maintenance & Engineering services do not figure in that list320.




        319
              Service offerings of A2Z – Annexure 9.13

        320
              List of authorized suppliers of Xerox in Delhi region – Annexure 9.14


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                                Fifth Report of HLC – Organizing Committee

        No bid submissions by parties other than selected vendor

9.5.4   The tender was issued on 31 March 2010 and representatives of Xerox, Canon, HP, Ricoh
        India and A2Z attended the pre-bid meeting on 6 April 2010321. Following this meeting, only
        one bid was submitted and that was of A2Z in consortium with Xerox. Considering the high
        value of the bid amount, it is surprising that no bids were received from any of the other
        parties such as Canon, HP or Ricoh India.


        Notice inviting tender was misleading

9.5.5   Notice inviting tender published in the newspapers appears to be ‘misleading’. The text
        mentioned in the NIT advertisement published in 4 newspapers was: “Tender No.:
        TCIL/S&TC/CWG/OAE/T-10 dated March 30, 2010 for Providing Audio Visual equipment for
        Commonwealth Games Delhi 2010.”322 This could possibly explain the low response to the
        tender notice.


        Access by bidder to confidential information- potential wrongful conduct

9.5.6   As per tender documents, the initial deadline for submission of bids was 13th April, 2010.
        However, there were six (6) extensions to the deadline and bids were finally opened on 17th
        May, 2010. The corrigendum to revise the submission deadline was published only on TCIL’s
        website323 whereas the NIT was published in daily newspapers.

9.5.7   On 11th May, 2010, representative of M/s A2Z Maintenance & Engineering services Ltd,
        (“A2Z MES Ltd.”) wrote a letter to the General Manager, TCIL saying “Since we have already
        submitted our bid in original well before the defined deadline for the subject tender.
        However, your organization has taken a decision to extend the tender date on account of
        single bid that too from us, so you are kindly requested to return our bid for resubmission as
        per revised date.”324



        321
              Minutes of the pre-bid meeting attached in Annexure 9.15

        322
              Newspaper advertisement and NIT attached in Annexure 9.16

        323
              Copy of Corrigendum – Annexure 9.17

        324
              Copy of Letter attached in Annexure 9.18


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                                Fifth Report of HLC – Organizing Committee

9.5.8   It is highly questionable how the vendor(s) got to know that they were the sole bidders for
        this contract as none of the corrigendum’s issued mention the reasons for extension. In our
        view, access of the vendor to such information at that stage could be possible if the TCIL
        officials would facilitate the matter.

9.5.9   The original sealed bid was returned to A2Z MES Ltd. on the same day 325 and they submitted
        a revised bid. This action of returning the original bid was highly questionable. Given that
        A2Z had full knowledge that they were the sole bidders, the possibility of manipulation of
        rates in the resubmitted bid cannot be excluded. This however cannot be verified as
        original bids were returned by TCIL to them.


9.6     Network equipments and servers

9.6.1   We noted that in case of certain procurements for network equipments and servers, there is
        potential over invoicing by TCIL for equipments that as per OC Technology FA have not been
        used.

9.6.2   The summary of initial estimates (as per LoI issued to the supplier), final procurements and
        actual quantity per OC’s report based on NMS (Network Management System)326 is
        summarized below:




        325
              Please refer to Annexure 9.18 – Highlighted in the letter

        326
          Report provided to us by OC Technology FA – Annexure 9.19


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                                Fifth Report of HLC – Organizing Committee

        Table 9.3: Summary of Wasteful Procurement in Network Devices and Servers


        Hardware           Initial Estimate        Final     Quantity Actual            functional Extra Procurement
                                                   Procured                  quantity
                           (as per BOQ in
                           Letter of Intent)       (as per final BOQ (as per OC’s report Quantity               Cost

                                                   from TCIL)                based on the NMS)


        Network            1206327                 2502328                   1926329               576          INR     5.04
        Devices                                                                                                 Crore


        Servers            38330                   106331                    83332                 23           INR 31.55
                                                                                                                Lacs


9.6.3   Potential losses due to such extra procurement aggregate to INR 5.04 crore333 for network
        devices and INR 31.55 lacs334 for servers as per data provided by the Technology FA. We
        have been informed that these invoices pertaining to excess billing by TCIL have been
        withheld and will not be paid by the OC. However, the reasons for such over-billing by TCIL
        and failure of OC to check this aspect earlier have not been provided.


9.7     Summary and conclusions

9.7.1   Sourcing of contracts by the OC through a third party, TCIL, in the manner was without
        much justification. This created opportunity for potential misconduct on the part of TCIL
        due to the following.




        327
          Copy of LoI attached in Annexure 9.20

        328
              Copy of TCIL report sheet attached in Annexure 9.21

        329
              Copy of NMS report sheet attached in Annexure 9.22

        330
          Copy of LoI attached in Annexure 9.23

        331
              Copy of TCIL report sheet attached in Annexure 9.24

        332
              Copy of NMS report sheet attached in Annexure 9.22

        333
              Our comparative analysis of actual vs billed – Annexure 9.25

        334
              Our comparative analysis of actual vs billed – Annexure 9.26


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                          Fifth Report of HLC – Organizing Committee

             For procurement of items such as printers and copiers, OC paid a 9% commission when
              the technology FA itself had more than 75 employees apart from various “consultants”
              and there was a full-fledged procurement FA in OC.

             The third party vendor, TCIL, issued contracts through a chain of sub-contractors without
              going directly to the actual supplier of products. This again caused a cost loading at each
              level of sub-contracting the burden of which was borne by the OC.

             There were some clear indications of misconduct in awarding contracts

             AGCL were disqualified for a technicality by TCIL under the contracting terms whereas
              they actually supplied the goods to the winning bidder. Procurement could have been
              made from them in the first instance.

             A2Z appeared to have access to inside information as they had knowledge of them being
              the single bidder, while the deadlines were extended multiple times.

9.7.2   The probable misconduct on the part of TCIL officials involved in the contracting for IT
        projects that led to irregularities in the award of the contracts cannot be ruled out and
        warrants further investigation.




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                                Fifth Report of HLC – Organizing Committee

10 Chapter 10: Games Management System
               The contracting process for this critical and priority area was started very late and followed
               an unduly restrictive prequalification process to limit competition.            OC had to pay
               approximately five times the price for similar services offered in Melbourne Games by the
               same vendor. The senior management (Chairman, COO, Head Technology FA) are
               accountable for the delay and avoidable excess expenditure of approximately INR 17 crores
               over what was spent for similar work at CWG Melbourne 2006.




10.1     Background

10.1.1   The OC awarded the contract for provision of Games Management System at
         Commonwealth Games, 2010 to Gold Medal Systems (GMS) on 22 March 2010335. Games
         Management System is a software system required for the purpose of administration of
         games and managing various aspects related to the actual conduct of the games such as
         accreditation, games staffing, transport, scheduling of events, etc.

10.1.2   The contract to GMS was agreed at a contract value of INR 21 crore 336. The key aspects
         related to the award of the contract are provided in the table below.

         Table10. I: Overview of the contract

         Contract                                        Games Management System Services

         Contractor                                      M/s Gold Medal Systems

         Contract Date                                   22 March 2010

         Contract Value                                  $4,672,669 / INR 21,02,70,105

         Details of Work
                                                         Providing a software system with the following modules

                                                               Accreditation


         335
               Refer Extract from GMS Contract: Annexure 10.1

         336
               Refer Fees and Payments Schedule: Annexure 10.2


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                           Fifth Report of HLC – Organizing Committee

                                                    Workforce Management and Information Systems

                                                    Workforce Scheduling

                                                    Arrivals and Departures/Protocol

         Details of Bids Received
                                                    Gold Medal Systems, Inc. (Canada)

                                                    MSL Software (Spain)

                                                    ProtaTECH India Solutions Pvt. Ltd. (India)

                                                    View Point Technologies, Canada

         Details of Bidders Qualifying Pre- Only one bidder qualified in the pre-qualification, i.e. Gold
         qualification Round                     Medal Systems. Hence the technical and commercial bids of
                                                 only this vendor were opened.


10.1.3   The OC received 4 bids in response to the tender issued by them. A brief chronology of the
         key events in the contracting process are set out in the table below.

         Table 10.2: Chronology of tendering process for Games Management System

         Date                       Particulars

                                    Proposal sent to Finance Committee by Sujit               Panigrahi ADG (
         2 September 2009
                                    Technology) for Examination and Clearance

         9 October 2009             Publication of RFP

                                    Last Date for Bid Submission & Opening of Bids for pre-qualification
         4 November 2009
                                    evaluation

         16 November 2009           Technical Bid Evaluation

         24 November 2009           Queries on Technical Bid sent to Gold Medal Systems

         27 November 2009           Response to Technical Bid Queries received from Gold Medal Systems

         3 December 2009            Opening of Commercial Bid

         11 December 2009           Evaluation of Commercial Bid




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                                  Fifth Report of HLC – Organizing Committee

         18 December 2009                       Commercial Bid Clarifications from Bidder

                                                Email sent by Negotiation Committee for clarifications to Gold Medal
         30 December 2009
                                                Systems

         31 December 2009                       Response from Gold Medal Systems to Negotiation Committee

         2 January 2010                         Meeting of the Negotiation Committee

                                                17th Meeting of OC Finance Committee: where it was noted that Gold
         7 January 2010
                                                Medal Systems bid ‘not unreasonable’

         15 January 2010                        17th EB Meeting: Approval of Gold Medal Systems Offer

         18 January 2010                        Issue of Letter of Intent

         March 22, 2010                         Contract Signed for $4,672,669 / INR 21,02,70,105



10.2     Potentially restrictive bidding

10.2.1   It has been noted that although 4 vendors submitted their bids in three parts (pre-
         qualification, technical and financial), 3 of them were rejected in the pre-qualification stage
         itself337. Thus there was only 1 vendor whose bids were evaluated from a technical and
         pricing perspective. This vendor, GMS, was ultimately awarded the contract with no
         comparative technical or pricing evaluations.

10.2.2   One of the vendors, View Point Technologies, was disqualified for not submitting the soft
         copy of prequalification bid, processing fee, and EMD. The criteria that led to the
         disqualification of the other two vendors (MSL Software and ProtaTECH India Solutions) in
         the pre-qualification stage were related to lack of relevant previous experience as per the
         eligibility criteria.

10.2.3   According to the requirements of the RFP only vendors who had provided services at
         specific events were eligible338. On comparison of the potential vendors who would be
         eligible against the criteria, the following can be noted:

         337
               Refer Pre-qualification Evaluation: Annexure 10.3

         338
               Refer Eligibility Criteria in RFP: Annexure 10.4


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                                 Fifth Report of HLC – Organizing Committee
         Table 10.3: Relevant events per the prequalification criteria and the vendors that primary GMS
         supplier339


             Event                      Primary GMS Supplier           Participation in D2010 GMS Tender


             Asian Games, Doha SsangYong Information Did not bid
             2006                       and      Communications
                                        Corp. (SICC)340


             Olympics       Games, Atos Origin341                      Did not bid
             Beijing 2008


             Commonwealth               Gold     Medal     Systems All three vendors participated via single bid
             Games, Melbourne (GMS), GMT, Certain through GMS (with a MOU).                                      GMS
             2006                       Software             [Three submitted a tender for the entire scope of
                                        vendors were engaged work                that    actually    formed   separate
                                        to     provide     different contracts in Melbourne.
                                        components]342


10.2.4   From the above, the following key issues emerge.

               In reality, based on the OC’s restrictive criteria, there would be only three possible
                vendors343 who would have been eligible in the pre-qualification stage

               However, the OC still proceeded with an open tender with such criteria knowing fully
                well that the population of eligible vendors was restricted to the three vendors above.

               Two of the vendors who would have been eligible did not submit a bid, and hence, this
                resulted in a non-competitive situation for GMS.




         339
               Based on the secondary research performed on the information available in public domain

         340
               Refer News Article on Ssangyong: Annexure 10.5

         341
               Refer News Article on Atos Origin: Annexure 10.6

         342
               Refer Annexure 10.7

         343
               Refer Extract from Minutes of Negotiation Committee regarding GMS Providers: Annexure 10.8


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                                Fifth Report of HLC – Organizing Committee

               The three other vendors who actually submitted bids were rejected, one for non-
                submission of required documents, and the others on the basis on non-conformity with
                the prequalification criteria.

               It is not evident, if the OC made any attempts to contact or solicit bids from the other
                vendors to provide a level playing field or fair competition between vendors.


10.3     Same vendor paid approximately 5 times more than Melbourne

10.3.1   As noted above, GMS also provided similar services at the Melbourne 2006 games. It has
         been noted that as per the vendors own submissions in price negotiations, the costs for
         GMS for D2010 were 5 times greater than Melbourne as explained in the table below. In
         rupee terms, the differential amount aggregates to INR 17 crores.

         Table 10.4: Comparison of GMS cost for Commonwealth Games at Delhi to the cost at Melboune.
         Source: Evaluation of GMS Commercial Bid344

             Particulars                                                 USD               Conversion         INR

             Amount spent on GMS : CWG Melbourne 2006
             (approx)                                                    921,654           45                 41,474,430

             Amount Contracted for GMS : CWG Delhi 2010
             (USD 4797669 – Cash Discount USD 125000)                    4,672,669         45                 210,270,105

             Excess cost at D2010 over M2006                             3,751,015          45                168,795,675


10.3.2   Amongst others, GMS justified the reasons for such an astronomical increase in the costs as
         follows345.

               “Increased risk” of submitting a “fixed bid contract” and increased “reputation risk due to
                tight delivery timelines”.
               Requirement of “Rapid development” due to “less time”.




         344
               Refer Evaluation of commercial bid on 11 December 2009: Annexure 10.9

         345
               Please refer to the Letter from M/s Gold Medal Systems dated 13 January 2010: Annexure 10.10


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                                Fifth Report of HLC – Organizing Committee

10.3.3   From the reading of available documents, it is evident that the process for initiating this
         contract started only in September 2009 with just a year left for the games. The final
         contract was awarded in March 2010 with only 6 months left for the games. In contrast, the
         time available to the vendor in Melbourne was 18 months346. The Technology FA (of whom
         the Games Management System was a major component) was identified as critical and a
         priority area in the General Organizational Plan347 (GOP Ref: Page 102) of OC in 2007.
         Therefore, the late start of the contracting process for Games Management System was
         inexplicable. Such delay can be seen to directly result in monumental increase in costs
         claimed by the vendor.

10.3.4   Further, this situation undeniably gave the vendor an upper hand in the price negotiation,
         particularly since it was the only bidder left after pre-qualification stage. This is evident from
         the facts mentioned below.

               Mr. V.K. Verma (DG), in his note dated 24 December 2009, stated that “…For reasons,
                which now need to be documented, persistent delays and inadequacy in the Functional
                Area of Technology over the last two years has seriously handicapped the Management
                now with virtually no option…The Technology FA was in the charge of VK Gautam, the
                COO and the Executive Board of the OC as also the CGF have, on several occasions,
                expressed their concern and stricture for persistent under-delivery in this area till late-
                                                                                                               348
                October this year when the Functional Area was transferred from his control.                         ”

               In their letter to the Negotiation Committee dated 31 December 2009349, Gold Medal
                System gave the OC an ultimatum, saying“…With only nine months remaining many of
                the issues which were in ‘critical’ state at the time of making the offer are already in
                ‘crisis’ stage due to the ever advancing timelines. Issues in this stage require far more
                dedicated time and resources to resolve than the identical issues do when time is
                available. Again, M2006 had twice as much time to deal with arising issues, allowing for
                a much more effective deployment and support method…Any delay longer than this, and

         346
               Refer Brian Nourse’s Note dated 15 December 2009: Annexure 10.11

         347
               Refer Page 102 of GOP: Annexure 10.12

         348
               Refer Note by VK Verma dated 24 December 2009: Annexure 10.13

         349
               Refer Response from Gold Medal Systems to Negotiation Committee dated 31 December 2009: Annexure 10.14


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                                Fifth Report of HLC – Organizing Committee

                we have very grave concerns and may have to reluctantly decline the offer since the
                timelines at this stage will not permit any good and responsible GMS provider to deliver
                an excellent product…”

               The decision to accept the offer made by Gold Medal Systems was made during the 17 th
                Meeting of the Executive Board of the Organising Committee (held on 15 January 2010).
                Following is an extract from the minutes of this meeting, where the OCFC minutes
                pertaining to GMS were discussed350: ‘…The (OC Finance) Committee also noted that M/s
                Gold Medal Systems had given a clear ultimatum in their mail dated 31 December 2009,
                stating that in case the acceptance of their offer was not conveyed within 7 days, even
                they might not be able to undertake the work later. This left no option to the OC which
                was already at a critical stage as far as technology was concerned. As a matter of fact,
                the Committee also noted that one of the factors leading to the high costs was the short
                time of 9 months available for the installation of the system. In the circumstances,
                notwithstanding the fact that the present bid was relatively high, there was no option
                but to accept the same so that the OC was in a position to deliver the Games properly…’.

               Brian Nourse (Consultant ,Technology), in his evaluation note on GMS dated 15
                December 2009351, stated that “…The M2006 tender process was conducted early and
                was considered highly competitive, allowing a wide range of vendors to submit
                proposals…’; and indicated that these were some of the factors that proved
                disadvantageous to the OC of CWG 2010 in terms of pricing.


10.4     Role of Tristar Enterprises

10.4.1   During the commercial bid clarification meeting held on 18 December 2009, M/s Gold
         Medal Systems, nominated M/s Tristar Enterprises as their local India partner who assumed
         the role of permanent contact. The association of OC with M/s Tristar Enterprises and its
         key personnel is not beyond suspicion as can be noted in the chapter 9 and chapter 24 of
         the report.



         350                     th
               Refer Minutes of 17 Executive Board Meeting: Annexure 10.15

         351
               Refer Brian Nourse’s Evaluation Note on GMS: Annexure 10.16


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                          Fifth Report of HLC – Organizing Committee

10.5     Summary and conclusion

10.5.1   It is evident that restricted sourcing and significant delays resulted in a contract that was
         INR 17 crores more than (and 5 times over) the previous contract executed by the same
         vendors for predominantly the same scope of work at Melbourne Games 2006.

10.5.2   It is evident that the OC did not take adequate measures to contact the appropriate vendor
         population and went about wasting time by issuing an RFP under open tender, even while it
         set a highly restrictive criteria which would allow only three bidders to qualify. It is not
         surprising that the other vendors, who were ineligible ‘ab-initio’ were rejected at the pre-
         qualification stage itself.

10.5.3   The entire contracting process resulted in only one vendor being evaluated on technical and
         commercial aspects.       Decisions were taken at a crisis stage, when delivery was the
         predominant concern, resulting in no capacity of the OC to negotiate with the vendor.

10.5.4   The delay brought on huge, unwarranted financial expenditure, which could have been
         avoided, had there been adequate time to conduct proper negotiations. The responsibility
         for such delays is directly attributable to the Chairman and his team of senior management
         in Technology FA, and COO who failed to monitor the progress of critical areas identified in
         the GOP and failed to ensure that contracting process starts in a timely manner.




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                         Fifth Report of HLC – Organizing Committee

11 Chapter                       11:          Games                  Village               Master
         Caterer
           The contract for games village catering resulted in a complicated sequence of events
           wherein it took 1 year from the time the EOI was issued till the contract was awarded. At
           each stage, it was very apparent that as per the evaluations and assessments of the OC only
           one vendor appeared eligible for this contract. Due to significant time delays, the OC put
           itself in a situation where they were forced to accept apparently unidirectional terms and
           conditions imposed by the vendor that caused significant additional costs and delays. The
           adverse terms were approved by the Chairman OC under ‘emergency circumstances’ even
           though there was a view within the OC’s FSC that the RFP process was ‘vitiated’ and ‘scope
           obverted’. There were measurable increments in costs towards Part A of the RFP owing to
           the conduct of OC officials at every stage. Even the final tendered cost went up by INR 8.58
           crores during negotiations after the bid was received. The rationale of time delays was
           repeatedly used by various OC functionaries throughout the process as a justification for cost
           increases, which was attributable solely to their own actions.




11.1     Background

11.1.1   The Catering FA was responsible for providing catering services during CWG. The scope of
         work primarily included providing catering at the Commonwealth Games Village (‘CGV’), all
         competition and non- completion venues. All the venues including CGV were divided into
         11 packages, each package representing a venue or a group of venues. The Package 9
         represented CGV.

11.1.2   The package 9, games village catering (CGV) contract (which constituted the biggest catering
         contract by value), was processed by OC through a period of nearly 12 months with an
         avoidable extra cost of approximately INR 9 Crores and ‘fire fighting’ to meet the crisis
         caused by extreme delays. Initially the RFP contained two parts: Part A- for catering and
         Part B for the kitchen equipment and installation. As the first RFP was cancelled and the
         second RFP ran into trouble due to various reasons, OC had to procure the same services in
         four parts ( catering, purchase of equipments, airfreight of the same and installation and

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                         Fifth Report of HLC – Organizing Committee

         purchase of certain additional equipment) causing all-round increase in cost and additional
         work due to repeated tendering. This section of the report discusses the contracting process
         for package 9, the games village catering – CGV.

11.1.3   The timelines involved in this contract for Package 9 (CGV) are as follows:

         Table 11.1:

         Date                    Particulars

         June 2009               Release of EOI for all 11 packages including the games village

                                    25 vendors responded out of which 7 were disqualified
                                    10 out of remaining 18 vendors applied for this package.
                                    Only 4 were selected for issuance of RFP and others were disqualified.
                                     These four were:
                                        Global Infusion Group (Applied for all packages)
                                        Sodexo (Applied only for this package)
                                        Delaware North (DNC) in partnership with Taj Sats (Applied only
                                         for this package)
                                        ITDC Limited (Applied for packages other than 9)
         June 2009               Constitution of panel for advising and deciding on master catered for all
                                 tender packages.       The panel included COO, ADG (Finance), DDG
                                 (Procurement), Catering Consultant, Catering FA- 2Team members.

         October 2009            Issuance of RFPs

         November 2009           Review of RFPs. Only one vendor responded to RFP:

                                    DNC (no EMD provided as per the requirements of RFP)
         December 2009           Note from Chairman stating that in absence of EMD, bid of DNC should be
                                 cancelled and the retendering should be carried out.

         January 2010            Informal opening of Commercial bid of DNC.

         February 2010           Retendering of RFP without release of EOI.

         March 2010              Revaluation of technical bid submitted. Two bidders responded namely:

                                    M/s Delaware North (Partners: Taj Sats, PKL London, BMR – Chartered


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                                  Fifth Report of HLC – Organizing Committee

                                                 Accountants).
                                                M/s IRCTC (Partners : Xtreme Consulting PvLtd, PKL London, SGS)
                                                 (PKL) common partner in both the consortiums.

                                             935 marks awarded to DNC compared to 644 to IRCTC.

         26 March 2010                       Opening of commercial bid.

         30 March 2010 to 19                    DNC expressed its inability to provide the services since PKL
         May 2010                                (Consortium partner) does not intend to participate in the project.
                                                High level team sent from OC on 14 April 2010 to Melbourne to
                                                 negotiate with DNC.
                                                DNC informs OC that there should be a direct contract between PKL
                                                 and OC regarding purchase, shipping and installation of kitchen
                                                 equipment. OC agrees to the proposal.
                                                Chairman states that only five months are left for the games. No time
                                                 for a second retendering, therefore change scope of work in RFP.



         20 May 2010                            Approval by CEO/Chairman of the revised cost and intimation to DNC
                                                Final award of contract to DNC for catering for this package.


11.2     Flawed budgets and the conduct of OC officials

11.2.1   A summary of the revisions made in the budgets352 for catering for CWG 2010 is set out
         below.

         Table 11.2:

           Date        of    budget/ Amount                allocated Amount allocated Reasons/Justification               for
          revision                         towards Catering (In towards Package the revision
                                           INR Crores)353                9 CGV (In INR
                                                                         Crores)




         352
               Refer to the section on budgets for additional details.

         353
               This includes budget for entire catering at CGV and all venues (competition and non-competition venues).


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                            Fifth Report of HLC – Organizing Committee

          Date       of   budget/ Amount        allocated Amount allocated Reasons/Justification        for
          revision                  towards Catering (In towards Package the revision
                                    INR Crores)353        9 CGV (In INR
                                                          Crores)

          9 April 2007              67                    33.07                Not applicable

          November 2009             63.33                 33.07                Budgets as approved by
                                                                                Government of India



          24 June 2010              116.8                 75                   The    budget      amount
                                                                                includes                re-
          (Includes           Re-
                                                                                appropriation           of
          appropriation        of
                                                                                approximately          INR
          budget          towards
                                                                                53.50 Crores.
          catering)
                                                                               Increase due to huge
                                                                                cost   quoted     by   the
                                                                                vendor for services to
                                                                                be     provided      under
                                                                                package 9 (CGV).
                                                                               Substantial delays by OC
                                                                                in finalization of the
                                                                                vendor for catering at
                                                                                CGV               including
                                                                                retendering of RFP.




11.2.2   From the above, it is evident that huge increase of catering budget (INR 75 Crores from INR
         34 Crores) for the CGV in 18 months was mainly caused by reckless delays, as documented
         by OC, and failure to adhere to rules and OC Chairman’s order for cancelling the tender.
         Evidently, the revalidated budget appears to be a baseless exercise as seen from the
         subsequent increased budget. The increase in the final budget was based on rates quoted
         by the vendor in single bid situation, rather than on a well informed and properly validated


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                                Fifth Report of HLC – Organizing Committee

         estimate by OC management. The final budget figure was arrived as a compulsion due to
         the failure to control delays and pressure to deliver the mandatory catering at CGV at any
         cost. The Chairman appears to be mainly responsible for the escalating delay resulting in
         cost increase while the senior management in OC, the Catering FA was responsible for
         failure to adhere to rules in processing the tender and norms of prudence.


11.3     Inconsistencies at the EOI stage


         Not distinguishing between CGV and ‘other’ catering

11.3.1   The EOI released on 4 June 2009                     referred to packages 1 to 11 which included all
         competition, non- competition, training venues and CGV( ‘package 9’)354.

11.3.2   From a reading of the scope of work in the EOI, it is evident that the criticality and importance of the
         catering at CGV, which was most crucial for the conduct of games was not adequately highlighted as
         was warranted in such a situation. Given that the requirement was for ‘obligatory catering for
                                                                      355
         approximately 8000-10000 athletes on a 24/7 basis’                 and the expenditure was significant, the
         clubbing of the CGV with other venues at EOI stage without appropriate emphasis and detailed
         information was seemingly imprudent and appears to be a failure despite the association of highly
         reputed consultant who were to provide expert inputs to OC officials.


         Short listing resulted in a very small eligible vendor base

11.3.3   While the Catering FA invited responses to all packages in the EOI, ultimately they used
         these responses to issue the RFP for the CGV package only. This indicates total lack of
         clarity on the part of Catering FA which might have led to limited understanding of EOI
         participants on the full scope and extent of services requested.

11.3.4   In view of the above, it is very much possible, that had the scope of work on the CGV been
         explained in a detailed manner in the EOI, the eligible vendor base may have been broader.
         It is pertinent to note that the process from the start to the EOI till the issuance of the RFP
         lasted 6 months and resulted in the RFP being issued to only 4 vendors.


         354
               Refer Annexure 11.1.

         355
               Note written by Mr. Vijay Kumar Gautam (COO- OC).


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                                Fifth Report of HLC – Organizing Committee

11.3.5   The OC received 25 responses to the EOI for all packages. Of this, seven parties were
         disqualified on account on applying as sub contractors. Of the rest, 10 parties applied for the
         CGV package of which six were disqualified on non fulfillment of various eligibility criteria as
         laid under EOI. Consequently, there were only 4 respondents356 to whom the RFP was
         issued on the basis of the pre-qualification of the EOI.357

11.3.6   We noticed evidence of conflicting views within the senior OC officials regarding the issue of
         RFP for all packages. Mr. V.K. Verma, DG Catering was of the view that RFP for CGV be
         released first as CGV was ‘most critical’. However, Mr. Vijay Kumar Gautam (COO-OC) was
         of the view that RFP for all packages should be released immediately as timeframe for
         settling of one RFP is long. In the end, the RFP was issued for the CGV package only. 358


11.4     Delays and mismanagement at the first RFP stage


         Delays in forming appropriate committees

11.4.1   The RFP for package 9 (CGV) was finally issued on 3 October 2009 after a gap of 6 months.
         Further, the OC also prolonged the formation of the evaluation committee for opening of
         the commercial bid till December 2009359.


         Only a single bid received

11.4.2   Based on the RFP issued to four parties short listed under the EOI, only one vendor (DNC)
         responded to the RFP.                 This suggests that the processing of EOI and the RFP was
         mismanaged and resulted in restrictive response to the RFP rather than ensuring a healthy
         competition to bring down cost while providing best quality360.




         356
               The four respondents to whom the RFP was issues were DNC, Sodexo, Global Infusion Group and ITDC Limited.

         357
               Refer Annexure 11.2.

         358
               Refer Annexure 11.3.

         359
               Refer Annexure 11.4.

         360
               Refer Annexure 11.4.


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         Violation of RFP terms

11.4.3   DNC did not provide EMD of INR 30 Lakhs along with their bid submission which was a
         prerequisite according to Clause 3 of Section II- Instructions to bidders of the RFP. A
         technical evaluation of DNC’s bid was carried out on 10 December 2009 and the vendor was
         awarded 939 marks out of 1000 on the assumption that EMD might have been submitted as
         part of the commercial bid.

11.4.4   The evaluation committee361 recommended that commercial bid of DNC be opened duly
         condoning the non-submission of EMD362. However, the guidelines of the RFP clearly stated
         that if the vendor was technically disqualified, commercial bids should not have been
         opened.

11.4.5   The commercial bid of DNC363 was opened on 11 December 2009 by the technical
         evaluation committee on verbal instructions of Chairman, Suresh Kalmadi as per
         explanation provided to us by the OC. Further, clause 29 of RFP stated that the bidders
         whose technical bids do not meet the minimum qualifying marks or whose technical bids
         were considered non-responsive to the RFP requirement, their commercial bids will be
         returned unopened. In this case, due to the failure to submit EMD, the offer of DNC was
         technically invalid and the commercial bid of DNC should not have been opened364.

11.4.6   The Chairman, Suresh Kalmadi, issued an order dated 12 January 2010 wherein he stated
         that in absence of EMD, he was left with no option but to disqualify the bid received from
         DNC and that the OC should carry out a re-tendering exercise for catering at CGV. It should
         be noted that this order released a little over one month after the result of technical
         evaluation critically delayed the retendering even further365. From the records provided,
         reasons for delay by the Chairman could not be ascertained.


         361
            The committee consisted of Jiji Thompson (OSD), M Jeychandran (JDG-F&A), Ajay Grover (consultant), Surjit Lal (DDG-
         procurement) and Ram Mohan (DDG- Legal).

         362
               Refer Annexure 11.4.

         363
            It is pertinent to note that the rates quoted by DNC in their commercial bid were found by the OC to be approximately
         2.5 times higher than the budget available for catering at CGV.

         364
               Refer Annexure 11.5.

         365
               Refer Annexure 11.5.


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11.4.7   It is pertinent to note that on one hand, Chairman instructed and approved the opening of
         the commercial bid and on the other hand issued an order for re-tendering of the contract.
         Further, the non submission of EMD could have been treated as a remediable defect in view
         of single bid received for this contract and the OC could have further negotiated with DNC
         to avoid delays. It is also worthwhile to mention, that at that stage itself, the cost quoted by
         DNC was approximately 2.5 times more than the cost budgeted by the FA366.


         Basing decisions on’ in-house’ legal opinions

11.4.8   A review of notes by Jiji Thompson (OSD-Catering) on 6th and 13th January 2010 suggests
         that the OC was made aware that that a decision towards re-tendering (including issuance
         of EOI and RFP) in January 2010 would lead to further delays in finalization of a vendor for
         this FA as the vendor might take approximately 3-4 months to complete installation of
         equipments at the CGV367.

11.4.9   The note also stated that it took approximately six months to arrive at the evaluation of RFP and
         further delays might have ‘disastrous consequences’. Further, the OSD (Catering) suggested that the
         matter be referred to OC Finance Committee, Finance Sub- Committee and EB since the commercial
         bid has been opened upon verbal directions of the Chairman368.

11.4.10 The Finance FA, in this regard, stated that referring this matter to the committees is not
         called for and that a legal opinion be obtained and this matter should be decided internally
         within OC369.

11.4.11 A ‘legal opinion’ was provided by Mr. Ram Mohan, DDG (Legal) that stated that the OC was
         within its rights to call for a re-tender. It may be noted that Mr. Ram Mohan does not have
         a law degree and hence his opinion cannot be strictly termed a legal opinion. In this regard,
         there is no evidence that consultations were made with any of the numerous legal
         consultants and firms retained by the OC370.

         366
               Refer Annexure 11.5.

         367
               Refer Annexure 11.5.

         368
               Refer Annexure 11.5.

         369
               Refer Annexure 11.5.

         370
               Refer Annexure 11.6.


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         Additional delays caused by OC’s conduct

11.4.12 The evaluation committee approved the decision for re-tendering on 28 January 2010. It
         was decided that an EOI will not be issued for the purposes of re-tendering and the RFP
         would be released in its current form without any changes as already approved by Finance
         sub - committee371.

11.4.13 A final decision was taken around 1 February 2010 for an open tender apart from informing
         the 4 companies short listed earlier. By now approximately 2.5 months had elapsed since
         last RFP submitted was rejected372.


         Summary

11.4.14 In summary, the OC lost 8 months from the first time the EOI was issued till the re-tender in
         February. These delays are attributable to factors that arise from:

               The clear inability of the OC to determine and communicate detailed scope of the work;
                and

               The potential overrides of OC Rules and procedures in the tendering process.

11.4.15 Why the commercial bids of the vendor were opened on the verbal orders of the Chairman
         even when one of the technical criteria under RFP was not met, is not determinate. In the
         absence of any documented reasons, it is possible that this was done to provide legitimacy
         to an enhanced budget requirement as the vendor had quoted approximately 250% more
         than the current budget at that time. Further, the difference between the cost as quoted by
         DNC in their second bid was higher by approximately INR 7 Crores compared to the first bid.
         This can be clearly attributed to delays caused by OC due to retendering.

11.4.16 The entire process of pre-qualifying vendors on the basis of EOI criteria was useless as it
         resulted in an issue of the RFP to 4 vendors and ultimately the response from a single
         bidder. The very fact that a sole bid was received itself indicates the failure of the process.

11.4.17 Further, the vendor (DNC) who submitted the bid violated one of the requirements of the
         RFP (submission of EMD) and should have been rejected outright. However, it took the OC
         371
               Refer Annexure 11.7.

         372
               Refer Annexure 11.7.


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                                 Fifth Report of HLC – Organizing Committee

         and its various functionaries almost 2.5 months to take a view on the ineligibility of the
         vendor (which was apparent on the day the technical bid was opened) and reach the
         decision to re-tender.


11.5     Inconsistencies in the selection of DNC as the final vendor

11.5.1   After the issue of the second RFP, DNC were selected as the final vendor for provision of
         catering services at the CGV on 20 May 2010.                             The contract value was finalized at
         approximately INR 67 Crores373.


         Inconsistencies in vendor evaluation

11.5.2   In response to the re-tendering, DNC and IRCTC were the only vendors who had submitted
         their bids as separate consortiums. IRCTC was however disqualified by the OC374.

11.5.3   In determining the evaluation conducted by the OC, it was noted that IRCTC had also
         responded to the initial EOI and was disqualified even at that stage for not meeting the
         eligibility criteria as stated in the EOI. It was further noted that some of the criteria
         expressed by the OC in disqualifying IRCTC the second time were not tenable in the light of
         information available. Consequently the decision of OC evaluation committee to disqualify
         IRCTC on such inconsistent grounds seems to be flawed. These inconsistencies are as
         follows.

               The evaluation committee expressed that IRCTC and any of its consortium partners do
                not have the core competence in terms of catering services and neither of its partners
                had experience of being a master caterer.                       In this regard, it was noted that the
                consortium partner of IRCTC was PKL who were also the consortium partners of DNC.
                Thus the lack of experience of consortium partners which was expressed as one of the




         373
            This was an increase of approximately 2 times of the budget initially estimated for this package within the functional
         area.

         374
               Refer Annexure 11.8 for details on rejection of the IRCTC bid.


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                                Fifth Report of HLC – Organizing Committee

                reasons to disqualify IRCTC was acceptable for DNC even though one of the consortium
                partner in both cases was PKL375.

               The evaluation committee contended that the entire kitchen design and construction
                plan submitted by DNC and IRCTC were similar. They contended that as DNC had
                submitted similar plans in the earlier bids, they should be given the “benefit of doubt”.
                In this regard, it was noted that PKL were involved with both IRCTC and DNC consortiums
                which would have resulted in the similar plans submitted but this was considered
                detrimental to the qualification of IRCTC.


         Lack of engagement with IRCTC

11.5.4   In March 2010, DNC informed the OC that PKL who was their consortium partner had opted
         out of the project. They expressed that under these circumstances it would not be possible
         for them to provide services. They also expressed that in this case, OC should start
         negotiating with the next bidder. However, there is no evidence that the OC engaged with
         IRCTC or made determination on the impact on costs if PKL were to pull out of both DNC
         and IRCTC (and kitchen equipment contracted separately). It may be mentioned that the
         IRCTC were rejected at the technical stage itself and their commercial bid was never
         opened376.


         Significantly increased costs and led to additional tendering work

11.5.5   Even after OC received intimation from DNC that would not be able to provide services, they
         continued to engage in discussions and negotiations with DNC. In this regard, in April 2010,
         they sent a ‘high level team’ comprising of Jiji Thompson (OSD-catering), Ajay Grover
         (Catering -Consultant), Sharayu Almelkar (Director Catering), to Melbourne, Australia to
         ‘sort out issues’ with DNC along with David Payne, consultant (Catering).




         375
            It is pertinent to note that, at a later date, DNC wrote to OC stating that since PKL does not intend to participate in the
         project, OC should open negotiations with other bidder. This clearly suggests that even DNC was heavily dependent on PKL
         for eventual delivery of catering services at CGV.

         376
               Refer Annexure 11.9.


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                                Fifth Report of HLC – Organizing Committee

11.5.6   During the negotiations and meeting in Australia, the following were the key conditions
         agreed by OC on the basis of DNC’s representations377.

               Fixed components of the project cost were agreed to be made variable due to
                uncertainty in finalization of the contract by OC and limited time constraints. These
                components were labour, operating expenses, project reserves. Consequently, the OC,
                in effect, brought in an element of variability in costs in discussions with the vendor as
                against to the fixed price contemplated under the RFP for these services.

               OC would deal directly with PKL to purchase kitchen equipment. OC thus, in effect,
                agreed that PKL would be the only provider for kitchen equipment. The decision was
                also taken that OC would buy the equipment as compared to hire earlier as PKL had
                expressed their inability to provide these on hire. It may be mentioned that this led to
                PKL being appointed as the supplier for kitchen equipment on a single tender basis
                possibly on the influence exerted by DNC at that stage.

               The design and construction of the kitchen including the installation and commissioning
                would now be the responsibility of the OC. The OC will execute these through local
                vendors. The OC thus now took on responsibilities much more than that envisaged
                earlier and committed resulting in further costs being incurred in relation to engaging
                local vendors.


         Red flags raised by OC committees

11.5.7   The FSC in their meeting dated 19 April 2010 questioned the decision of OC to purchase the
         equipment from PKL rather than procure it on rental basis with DNC. The finance sub-
         committee stated that this development occurred after the bid was received and ‘vitiates’
         the entire process. The OC explained to the finance sub-committee that CGV was one of the
         most critical elements for a successful CWG and that with six months left before the games,
         the project would be at a risk if the process of contracting with a vendor for catering at CGV
         is not set in motion378.



         377
               Refer Annexure 10.

         378
               Refer Annexure 11.11


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                                Fifth Report of HLC – Organizing Committee

11.5.8   The members of Finance Sub-Committee pointed out that a great deal of time was lost since
         the first tender was floated and that there were multiple gaps and inconsistencies such as
         adoption of multiple elimination process, lack of clarity during technical evaluation and
         contents of proposal thereby making the present proposal of the OC to appoint DNC not
         supportable379.


         Additional cost burdened on the OC

11.5.9   The matter for engaging DNC was put up for approval of Finance sub –committee again on
         22 April 2010 and the sub-committee stated that after reviewing the reports and status of
         the proposal, the proposal to buy kitchen equipment from PKL and agreement with DNC
         only for catering was not tenable as it ‘obverts the scope of RFP and vitiates the process’.
         However, Jarnail Singh, CEO and other OC officials380 informed FSC that keeping in mind the
         timelines, scouting for alternate vendor was not possible and using provision of clause 31 of
         the RFP, OC decided to vary scope and award part A of the RFP (catering services) to DNC381.

11.5.10 The approval to contract with DNC was issued by the Chairman, Mr. Suresh Kalmadi, under
         Clause (3) of the Financial and Administrative Guidelines of OC keeping in view ‘the
         criticality and urgency of the matter382’.

11.5.11 The direct impact of the above decision was that the cost quoted by DNC (for catering only)
         in the re-tender increased by approximately INR 8.58 crores383 as explained in the table
         below.




         379
               Refer Annexure 11.11.

         380
               These OC officials included V.K Verma (DG -OC), Sudhir Mittal (SDG -OC), (OSD -F&A) and KUK Reddy (ADG -F&A).

         381
               Refer Annexure 11.11.

         382
            Clause (3) under the Financial and Administrative guidelines of the OC can be invoked under emergency circumstances.
         Refer Annexure 11.12.

         383
           It is pertinent to note that the increase in cost of INR 9 Crores was after removal of Part B from the scope of work of
         DNC.


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                                  Fifth Report of HLC – Organizing Committee

         Table 11.3

             Particulars                        Amount (In Remarks
                                                INR Crores)

             Amount quoted by DNC upon                            Amount quoted by DNC for catering
             re-tendering:                                         and for kitchen design and equipment
                                                                   in the re-tender
                  Part A (catering)
                                                58

             Amount finally contracted with                       Final cost approved for catering based
             DNC384                                                on negotiations with DNC (refer para
                                                66.58
                                                                   11.5.6 above)
             (Only for Part A)


             Increase in costs                  8.58



11.6     Summary and conclusions

11.6.1   The argument of time delays resulted in a convoluted sequence of contracting wherein it
         took 1 year from the time the EOI was issued till the contract was awarded. To summarize,
         the following were the key points in the contracting process.

                 The EOI process resulted in only 4 parties qualifying for the issuance of the RFP.

                 In response to the RFP only 1 party, DNC, submitted a bid

                 The technical bid of DNC was non-compliant with the RFP conditions on absence of EMD.
                  However, on the verbal orders of the chairman, their commercial bid was still opened, in
                  violation of rules.

                 It took the OC 2.5 months to reject the bid of DNC (which they knew was deficient on the
                  day the technical bid was opened) and issue a re-tender.

                 The re-tender also resulted in only 2 parties (IRTC and DNC) submitting a bid.

                 IRCTC’s bid was rejected on various technical grounds, some of which as explained in the
                  section above, may not be tenable.
         384
                 Refer Annexure 11.13.


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                               Fifth Report of HLC – Organizing Committee

              DNC was thus awarded the contract at a higher price compared to the bid for previous
               RFP based on IRCTC’s rejection and was the sole vendor whose commercial bid was
               opened.

              DNC then informed the OC that they would like to withdraw from the contract. This
               caused OC to commence intense discussions with DNC including flying a team of officials
               to Australia.

              Based on negotiations with DNC, OC took various decisions that caused increased
               financial implications (such as variable costs for certain components in the DNC contract,
               purchase versus hire in relation to equipments from PKL etc)

              The terms were approved by the Chairman OC under ‘emergency circumstances’ even
               though there was a view within the OC’s finance sub-committee that the RFP process
               was vitiated and scope obverted.

11.6.2   Thus, apart from the fact that the budgets prepared and presented by the OC were incorrect
         right from inception, there were measurable increments in costs owing to the conduct of OC
         officials at every stage. For example, even the final tendered cost in the re-tender by DNC
         went up by INR 8.58 crores during negotiations after the bid was received. The rationale of
         time delays was repeatedly used by the Catering FA and the Chairman throughout the
         process as a justification for cost increase, which actually, was attributable solely to their
         actions.




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                               Fifth Report of HLC – Organizing Committee

12 Chapter 12: Games Village Catering -
         Kitchen Equipment
               As in the case of the games village catering contract, the argument of time delays was used
               by the OC to justify a contract at a higher cost with detrimental terms and conditions. The
               extreme dysfunction was obvious as the various committees seemed to provide ‘rubber
               stamp’ approvals. The failure of OC to identify and contract in time led to a situation where
               the vendors potentially dictated terms to the OC resulting in many one sided contract
               conditions detrimental to the OC’s interests. OC suffered avoidable additional cost of INR
               3.7 crores for procuring equipment as against hiring (as was contemplated initially) apart
               from additional costs of INR 9.5 crores on installation and procurement of local equipment
               as discussed separately.



12.1     Background

12.1.1   The supply of kitchen equipment was originally included in the games village catering
         contract385. At the time when the RFP and tendering processes of the games village catering
         contract commenced in June 2009 there was no intention on the part of the OC to split the
         games village catering contract in parts and all procedures were concentrated towards
         identifying a vendor who would act as a master caterer and be responsible for both catering
         and equipment.

12.1.2   The OC finally ended up splitting the Games Village Catering contract in two parts which led
         to the genesis of a separate contract for kitchen equipment. The Catering contract was
         awarded to DNC and the kitchen equipment supply contract was awarded to PKL (as
         discussed in this section). Consequently, the tendering process, background, chronology
         and sequence of events for the kitchen equipment contract mirrors that of the Games
         Village catering contract as discussed in the section above.

12.1.3   The following key issues are pertinent from a background perspective.


         385
            The original games village catering contract was in two parts; Part A that was for catering and Part B that was for
         Kitchen equipment supply and installation.


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                                 Fifth Report of HLC – Organizing Committee

               PKL was the consortium partners of both DNC (who were awarded the catering contract)
                and IRCTC (whose bid was rejected on technical grounds).

               In March 2010, when DNC were notified by the OC that they were selected for the
                catering contract, they expressed that PKL has decided not to participate in the contract
                due to various concerns (that are discussed in the ensuing paragraphs of this section).

               DNC informed the OC that they would take up only the catering portion of the contract
                and that the OC should negotiate with PKL directly for the kitchen equipment part.

               OC executed a separate contract with PKL with many principle changes from the initial
                RFP386 that included “buy” versus “hire”, air lifting equipments, only “supply” versus
                “supply and installation” decisions, etc.

               Consequently, the contract was split between DNC and PKL and the OC negotiated with
                PKL directly for awarding the contract towards purchase of equipments.


12.2     Situation of a “single tender” sourcing

12.2.1   The convoluted process followed for the tender related to the games village catering
         contract resulted in a situation where PKL were the only vendor left with whom the OC
         could engage for the supply of kitchen equipment.

12.2.2   Further, there is evidence that there was enormous pressure exerted by DNC to appoint PKL
         for the supply of equipment citing various reasons which included among others the
         following387.

               PKL was the only consolidated source of kitchen equipment supply in the world that has
                the inventory to cater for such large and prestigious events.

               DNC was not comfortable working with equipment supplied by any vendor other than
                PKL as all resources, staff and menus were planned in accordance with information
                (designs and working patterns) supplied by PKL to DNC.




         386
               Revision was in accordance with Section 31 of RFP.

         387
               Refer Annexure 12.1.


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                           Fifth Report of HLC – Organizing Committee

              PKL had equipped the kitchen to cater to 2500 meals per hour keeping in mind the
               international cuisines, temperature control, food safety and nutrition requirements.

              PKL has been involved in setting up and supplying of kitchen equipments to major
               international sporting events. Further, they have the equipment variety and volume and
               are a consolidated source of kitchen equipment to cater to such a large event.

12.2.3   Given that there was no time left to issue another RFP or engage with other vendors for
         either the catering contract or kitchen equipment, the OC succumbed to demands of both
         DNC and PKL and spilt the contract between catering and kitchen equipment. Thus in
         respect of kitchen equipment contract, there were no evaluations or negotiations
         conducted separately with any other vendor.

12.2.4   The OC was thus reduced to a stage where sourcing had to be conducted from PKL
         exclusively that in many ways led to the award of this contract on a single tender basis. Had
         the OC originally conducted this as a separate contract, it is possible that it may have been
         able to obtain a broader base of suppliers and conduct appropriate negotiations in this
         regard.


12.3     Role of various OC committees

12.3.1   The proposal to award the kitchen equipment contract to PKL was approved by various
         committees of the OC. The decisions taken by these committees that led towards awarding
         of the contract suggests an apparent acceptance of the ‘helpless’ situation the OC was put in
         by its senior functionaries.


         EMC

12.3.2   The EMC noted that keeping in mind “the absence of recommendations by the FSC, criticality
         of the situation, extensive delays and for successful conduct of the games”, the OC should
         purchase the equipment from PKL.

12.3.3   The EMC also approved in-principle the proposal for appointment of local/international
         consultant and an agency for installation and demobilization of the equipment on turnkey
         basis and procurement of some equipment locally within India.



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                                 Fifth Report of HLC – Organizing Committee

12.3.4   EMC advised to engage a qualified engineering expert388 to inspect the equipment in
         London and that a high level team may go to London to finalize the modalities of the
         purchase.

12.3.5   Lastly, EMC observed that EB should be informed on re-appropriation of budget and
         Ministry of Youth Affairs and Sports should be approached for approval of revised budget389.


         EB

12.3.6   The EB authorized the EMC to take a final decision on purchase of equipments from PKL at a
         cost of GBP 1,270,378 as per the conditions in the purchase order dated 30 April 2010 390.


         FSC

12.3.7   It is pertinent to note that no recommendation was made by the FSC with respect to
         purchase of equipment from PKL. It is highly surprising that a committee that had key
         financial oversight did not provide any recommendations given the peculiar circumstances
         under which the contract was awarded.


12.4     Substantial increase in costs through a fundamental change in conditions (purchase
         vs. hire)

12.4.1   The original tender requirement was that the OC would require the equipment to be hired
         from the vendor. However, the contract finally executed with PKL was on terms that the OC
         purchased the equipment from PKL instead of the provision to hire equipment that was
         contemplated earlier.

12.4.2   Such purchase versus hire cost the OC an additional expenditure of approximately INR 3.7
         crores391.



         388
           Mr. Ajay Grover (a non engineer catering consultant) was sent to London for inspection of equipments purchased from
         PKL.

         389
               The revised budget (re-appropriation towards catering FA) was approved by the Ministry of Youth Affairs and Sports.

         390
               Refer Annexure 12.1.

         391
               Refer Annexure 12.1.


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                                Fifth Report of HLC – Organizing Committee

               The cost quoted in the commercial bid towards Part B: Kitchen Equipments and
                Installation by DNC was INR 21 Crores.

               This included INR 5 Crores towards cost of hiring equipments from PKL.

               However, the cost towards outright purchase of the equipment was identified as INR 10
                crores and was finally agreed with PKL at INR 8.7 crores (GBP 1,270,378).

               Thus, the increase in costs due to the purchase versus buy decision was INR 3.7 crores.

12.4.3   While it was stated by the OC that the extra cost would be recovered through the sale of
         equipment after the games, it is pertinent to note that till the date of this report, (Mid
         March 2011) the equipment has neither been bought back by PKL nor otherwise disposed
         off by the OC.


12.5     Agreement to terms potentially detrimental to interests of the OC

12.5.1   The OC did not enter into an agreement with PKL for purchase of equipments. Further, the
         OC had issued a Purchase order dated 30 April 2010 amounting to GBP 1,270,378 which was
         accepted by PKL on 3 May 2010 which defined terms and conditions of the sale and other
         information392.

12.5.2   It was noted that a number of terms were potentially detrimental to the interests of the OC
         and appeared, prima facie, to be dictated by the vendor given the ‘emergency situation’
         created by the OC. Some of these are as follows.


         Full advance payment with no retention

12.5.3   The OC agreed towards complete payment to the vendor before delivery of kitchen
         equipment at the CGV premises. It is surprising that the OC paid the amount in full before
         delivery as against requesting for a credit period from PKL. Additionally, OC did not hold
         back any part of the payment as retention money.

12.5.4   Consequently, the OC appeared to agree on one-sided payment terms with the full payment
         remitted to the vendor in advance. Further, coupled with the fact that the OC did not hold



         392
               Refer Annexure 12.2.


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                                 Fifth Report of HLC – Organizing Committee

         any retention money, the OC lost all safeguards in case of any delivery defaults by the
         vendor393.


         Warranty/guarantee

12.5.5   There were two kinds of equipment that PKL were to supply under the contract, new and
         previously used. PKL refused to provide any warranties/guarantees for any previously used
         equipment. This proposal was accepted by the OC. Consequently, the OC knowingly took
         on a risk for the non-performance on any pre-used equipment supplied by PKL without any
         mitigation or recourse to the vendor.


         Buy Back of Equipment

12.5.6   The OC was to give first offer for buy-back of the equipment to PKL. Further, any such buy-
         back would be subject to an onsite inspection by PKL. It is pertinent to note that no steps
         have been taken on the buyback of the equipment till the date of this report.


         Training of technical staff in Singapore

12.5.7   OC agreed to training of its technical staff for design and construction of kitchen equipments
         in Singapore where PKL was carrying out installations for another customer rather than to
         make PKL agree for conducting trainings at CGV which might have been more beneficial for
         technical staff to resolve issues apart from serving legacy considerations394.


12.6     Additional cost through local sourcing



12.6.1   Given that PKL were engaged only for the supply of kitchen equipment, the OC had to take
         considerable steps to identify and execute contracts with vendors for packing, mobilization,
         installation, commissioning, maintenance, demobilization and procurement of support
         equipments that was not covered by PKL.

         393
            PKL provided a bank guarantee equivalent to the amount as per the first payment milestone (15%). In a response to a
         query by HLC, the OC has stated that “most imports are against 100% advance or irrevocable LC thus guaranteeing the
         vendor realization of his full payment”.

         394
               It is pertinent to note that no one from OC eventually went for the technical training in Singapore.


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                                Fifth Report of HLC – Organizing Committee

12.6.2   The OC had to budget an additional increase in the cost due to the additional scope of work
         that came out of PKL’s refusal to participate in installation activities as contemplated under
         the original tender.


12.7     Additional travel expense incurred towards conducting negotiations with PKL



12.7.1   The OC incurred an additional expense amounting to approximately INR 7.70 Lakhs towards
         travel of three officials to London to finalise the deal with PKL in the month of April 2010.
         This expense would have been entirely avoidable had contracting been appropriate and
         timely395.

12.7.2   Further, review of an email communication between John Lade (Consultant) and various
         officials of OC suggest that two396 out of the three individuals who were sent for discussions,
         Mr. Ajay Grover (catering consultant) and Mr. Jiji Thompson (Special DG) ) did not possess
         the requisite knowledge on catering (design and construction of main dining). Therefore
         their travel appears to be unjustified397.


12.8     Material overrides of the approval process


         Issuance of Purchase order and transfer of funds to PKL before approval by EMC

12.8.1   The OC issued the purchase order to PKL on 30 April 2010 after obtaining the Chairman’s
         approval. This was accepted by PKL on 3 May 2010. Further, the OC issued instructions to
         the bank to transfer approximately 50% of the total contract value to PKL on 17 May
         2010398. This matter of issue of purchase order and approval to transfer funds to PKL was
         disclosed to the EB, when its approval was sought for the purchase. The apparent disdain
         with which the purchase order was issued to the vendor much before approval from


         395
               Refer Annexure 12.3.

         396
           It is pertinent to note that one of these two individuals was Mr. Ajay Grover (Catering Consultant and then moved in a
         new role as OSD - Catering).

         397
               Refer Annexure 12.4.

         398
               Refer Annexure 12.5.


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         EMC/EB indicates that OC management was desperate to seal the deal without waiting for
         approval of the competent authority. However, EB, unaware of the fact that purchase order
         was already issued authorized EMC in their meeting on 11 May 2010 to take a decision on
         purchase of kitchen equipment from PKL. Further, EMC in their meeting held on 14 May
         2010 approved the same which was ratified by EB in their meeting dated 18 May 2010 399.

12.8.2   Thus, it appears that the OC management considered obtaining approvals from its
         governing body the EB, a mere formality and that there was no question for appointing a
         vendor other than PKL for this procurement. The issuance of a purchase order much before
         approvals shows the clear disregard of the OC officials towards their own procedures and
         authority matrix even in full view of the disparate and exceptional nature of this transaction.


         Non involvement of Finance sub- committee

12.8.3   In the EB meeting dated 18 May 2010, Mr. Girish Chaturvedi (SDG- Finance) and Mr. Jiji
         Thompson (SDG) stated that the right procedure would be to take PKL proposal to the FSC
         for its consideration and then bring it to EB for approval. However, Mr. Jarnail Singh (CEO-
         OC) pointed out that since the EB in its last meeting dated 11 May 2010 authorized EMC to
         take a decision in this matter and then obtain Chairman’s approval under powers vested to
         him as per Clause 3 (C) of Financial and Administrative Guidelines of the OC and then refer
         to EB for ratification, there was no need for taking this matter to FSC. The matter was
         further deliberated upon with EB commenting that “in this frightening scenario, the EB has
         no other option but to ratify decision taken by Chairman”. Further, the decision to buy
         equipments from PKL was approved keeping in mind the criticality of the entire
         operations400.


12.9     Summary and conclusions

12.9.1   The total failure of OC to make timely purchase of games village catering services was the
         sole reason for the additional costs incurred by OC in the kitchen equipment contract as
         explained above. These arose primarily out of the following.

         399
               Refer Annexure 12.6.

         400
               Refer Annexure 12.7


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              The failure of OC to identify and contract with a vendor other than PKL led to a situation
               where the PKL (and the catering vendor DNC) were to potentially dictate terms to the
               OC.

              The self inflicted helplessness of the OC that resulted in accepting many one sided
               contract conditions that appear to be detrimental to its interests such as absence of
               warranties on some of the equipment and full advance payment.

              OC suffered avoidable additional cost of INR 3.7 crores for procuring equipment versus
               hiring (as was contemplated initially). The OC may be able to recover some of this if the
               equipment is resold. However the prospect of such resale is remote at this point of
               time.

              The consequence of outright purchase as against the hiring as was earlier contemplated ,
               imposed further burden for commissioning and installation of the equipments. Further,
               these equipments have not found a buyer till the date of this report and it appears that
               it will eventually be written off as junk equipments.

12.9.2   As in the case of the games village catering contract, the argument of time delays was used
         by the OC to justify a contract at higher cost with extremely detrimental terms and
         conditions to the OC. The way the contract was approved and justified within the OC is also
         indicative of the extreme dysfunction within the OC as most of its committee seemed to
         provide ‘rubber stamp’ approvals as against exercising proper judgment and diligence.




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13 Chapter 13: Games Village - Kitchen
         Equipment Installation
          The review conducted has indicated significant and material departure from policies and
          procedures of contracting and potential misconduct in awarding of the contract to
          Constellation Projects. Further, certain important ‘eligibility criteria’ under the RFP were
          overlooked to favour the vendor during the technical evaluation. The OC acted in a manner
          contrary to proper governance norms and took decisions assuming that the consent of the
          approving authorities could be taken for granted. The selection of vendor was vitiated due to
          an apparent conflict of interest as the consultant in this area had a direct financial interest in
          the selected vendor.



13.1     Background

13.1.1   Following the conditions imposed by DNC and PKL in relation to Games Village Catering as
         mentioned in chapter 11 and 12, the OC engaged Constellation Projects, a vendor based in
         Delhi for the installation of kitchen equipment supplied by PKL, project management and
         procurement of certain additional equipments. Due to the delays in finalizing vendors (DNC
         and PKL) for catering and supply of equipment, the need for engaging a vendor for these
         services was recognized at a very late stage and consequently the process for initiating a
         tender commenced only towards end of April 2010, while the kitchen was to be made
         operational by August 2010 and the equipments from PKL were to be delivered by July
         2010.

13.1.2   A brief chronology of the events related to the award of the contract to Constellation
         Projects is as follows.




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         Table 13.1: Chronology of events:

         Date                            Particulars




         April 2010                         Approval for release of RFP for appointment of kitchen equipment
                                             installer and project management for CGV.
                                            10 days time provided for prospective bidders to reply
                                            Lowest bidder to be considered



         May 2010                           Release of RFP

         June 2010                       Proposal received from the following bidders:

                                            Continental India Private Limited
                                            Inox Barq Private Limited
                                            Constellation Projects
         June 2010                       Evaluation of technical bids. The following parties were found to be
                                         responsive bidders:

                                            Inox Barq Private Limited
                                            Constellation Projects
         June 2010                          Opening of commercial bid.
                                            Constellation found to be lowest bidder.
         June 2010                       Negotiations with Constellation Projects carried out and two LOIs
                                         awarded.

         July 2010                       Contract signed between OC and Constellation.


13.1.3   The contract was awarded to Constellation Projects at a final value of INR 9.50 crores which
         included approximately INR 5.7401 crores towards installation and project management
         charges and balance INR 3.8 crores towards supply of additional equipment402.



         401
             The OC has informed us that the breakup of INR 5.7 Crores into installation charges and project management was not
         required to be submitted by the vendor under the terms and conditions of RFP as this was a turnkey operation. Further, it
         is pertinent to note that this amount is approximately 65% of the cost of equipments purchased from PKL, London.


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13.2     Additional delays on the issue of the RFP

13.2.1   Due to the paucity of time, the OC decided not to release an EOI for this procurement.
         Further, the approval for release of RFP was given on 24 April 2010 and a time period of 10
         days was provided to the prospective bidders to submit their responses to the RFP403.

13.2.2   However, the RFP was finally released approximately one month later on 31 May 2010. It is
         inexplicable that on one hand the OC was justifying a limited time of 10 days for a response
         to the RFP and on the other hand they wasted more than a month in issuing the RFP
         document. As explained in the ensuing sections only 3 vendors submitted responses to the
         RFP. It is quite possible that such significantly reduced timelines have resulted in a limited
         response to a tender of such a nature404.


13.3     Biased evaluation ostensibly to favor a preferred vendor

13.3.1   In response to the RFP, the OC received only three responses from the vendors namely:

               Continental India Private Limited

               Inox Barq Private Limited

               Constellation Projects (Aster Technologies Private Limited as consortium partner)

13.3.2   The technical bids were opened by the OC on 10 June 2010 in the presence of
         representatives of all three parties by a ‘committee’405 constituted for this purpose. The
         committee rejected the bid of Continental on the basis of its technical evaluation. The
         committee further recommended that the commercial bids of Inox and Constellation
         Projects should be opened as they had cleared the technical qualification stage 406.




         402
            It is worth mentioning that Constellation Projects reluctantly agreed to this price and wanted an assurance that the
         agreed payment schedules will be honored.

         403
               Refer Annexure 13.1.

         404
               Refer Annexure 13.1.

         405
            The members of the technical evaluation committee were Jiji Thompson (SDG- Catering), Sanjiv Mittal (JDG-
         Procurement), Ajay Grover (Consultant and Head- Catering) and KUK Reddy (ADG- F&A).

         406
               Refer Annexure 13.2 and 13.4.


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13.3.3   While the committee rejected the bid of Continental on the basis of non-fulfillment of
         certain technical criteria, it appears that in a number of items the committee overlooked
         non-fulfillment of criteria in the case of selected vendor namely; Constellation Projects.
         Consequently, there appears to be an apparent bias by the committee and its members
         towards Constellation Projects. A summary of the key issued noted are as follows.

         Table 13.2

          Form Number (RFP)                 Remarks407




          Form I (Bidder Profile)              Requirement: Certification of incorporation.
                                               This certificate was not provided either by Constellation
                                                Projects or its consortium partner Aster Technologies Private
                                                Limited.
          Form         III   (Employees        Requirement: Certificate by Company Secretary or Statutory
          Strength)                             Auditors certifying number of employees on permanent payroll
                                                in India as at 31 July 2009.
                                               Requirement: Existing HR organizational structure and
                                                management levels followed by the company.
                                               These were not provided by Constellation Projects; however,
                                                the committee awarded them marks against fulfillment of the
                                                criteria.
          Form V (Experience –                 Requirement-     Minimum       five   years   relevant   corporate
          Kitchen                Design,        experience in the business of sale and services of imported
          construction and project              kitchen equipment, installation and commissioning and project
          management)                           management.
                                               The four experiences as detailed by Constellation Projects
                                                relate to the period 2007 to 2010 which constitute only 3
                                                years and not 5 as the criteria required. Also, the information
                                                provided by Constellation Projects was not in the format
                                                required by OC under the RFP.



         407
               Refer Annexure 13.3 & 13.4


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Form Number (RFP)         Remarks407




Form VII                     Requirement: Full company name, List of directors, principal
                              shareholders, issued share capital, paid up capital, directors
                              and officers liability insurance, group corporate structure
                             Constellation Projects was not a company. While they self
                              disclosed their structure as a partnership, they did not furnish
                              any evidence of the same. Further, a list of partners, capital
                              contribution, and insurance details was also not provided by
                              Constellation Projects.
Form   VIII   (Executive     Requirements: Relevant Experience
Summary)                     Constellation projects did not summarize the names of
                              projects/clients they worked on.
                             Requirement: Demonstration of project financial control and
                              management
                             Constellation projects did not provide any information
                              pertaining to the above.
                             Requirement: Demonstration of technical quality and expertise
                             Constellation projects stated that they have carried out very
                              ‘high quality jobs’ as ‘can be seen from pictures attached’. On
                              a perusal of these pictures, it can be seen that these merely
                              represent equipments and not of any installation work carried
                              out by them.
                             Requirement- Innovative Industry solution that will enhance
                              the standard of the service delivery
                             Constellation Projects stated that ‘it will have an eye on the
                              delivery dates and will offer optimum details’.
                             It is unclear why marks were still awarded to the bidder in
                              spite of such an ambiguous statement made by them which
                              was accepted by the committee.
Form IX (Management          Requirement: The respondent must provide timeline chart
experience          and       showing the start dates of all the project team based in Delhi
                              throughout the planning period.


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Form Number (RFP)           Remarks407




Technical competency)          Timeline was not provided by Constellation Projects.
                               Requirement: The bidder must be able to provide details that
                                the project team leader has strong background in managing
                                large projects equivalent in size and scale to the catering
                                services required at CGV.
                               The details of the projects conducted by Constellation Projects
                                were all related to hotel/restaurant projects which do not
                                seem to be equivalent to the size and scale of catering at CGV
Form    X     (Contracting     Details regarding sub contractors, sub consultants, contractors
Third       Parties   and       to be provided.
Suppliers)                     Constellation Projects stated that “Due to paucity of time, we
                                have not been able to select our partners as yet. The Process
                                will take another week”.
                               However, it is unclear how the Evaluation report furnished by
                                the committee states that details have been submitted and
                                subsequently marks awarded even though the vendor asserts
                                that they have not provided the details.
Form XI (Project Plans         Details of various project plans including kitchen design and
and Appendices)                 construction plan and scope of work.
                               Constellation Projects did not provide information pertaining
                                to the following mandatory information as per the RFP:
                                   Preliminary concept designs with legends
                                   Work schedule
                                   Appendix 1
                                   Appendix 5
                               However marks were awarded to the vendor.
Form XIV                       Bidder should provide certificate from statutory auditors
                                stating its turnover for the last financial year which should be a
                                minimum of INR 15 Crores.
                               Constellation Projects along with their consortium partner
                                reported a sales turnover of INR 22.34 Crores during 2009-10.


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          Form Number (RFP)                    Remarks407




                                                    However, this was not certified by statutory auditor of the
                                                    bidder or the statutory auditor of its consortium partner.
                                                   Further, Constellation Projects and its consortium partner have
                                                    their sales register showing total sales made during 2009-10.
                                                    However, it is pertinent to note that the sales register shows a
                                                    ‘debit’ balance instead of a ‘credit’ balance408. Consequently,
                                                    it appears that false documentation may have been provided
                                                    by the vendor to meet the turnover criteria409.



13.3.4   The OC provided responses to the remarks as stated in the table above. The responses
         clearly suggest that due to paucity of time, the focus of the OC was to get some reputed
         company to carry out the installation work and owing to such a situation, it appears that
         certain critical requirements of RFP were overlooked410.

13.3.5   It is evident from the table above that Constellation Projects did not conform to certain
         important criteria mentioned in the RFP; however they were still qualified in the technical
         round. It is also extraordinary to note that the evaluation committee documented and
         rated information provided by the vendors (as in the case of certain requirements under
         Form X and Form XI of the RFP as above) when the vendor had submitted in response to the
         RFP that they were unable to submit these. It appears that the technical evaluation was not
         carried out as per the ‘eligibility criteria’ mentioned in the RFP.

13.3.6   An analysis of the commercial bid of the rejected vendor Continental indicates overpricing in
         the bid submitted by Constellation and thus may provide the rationale for the potential
         collusion between the OC management and the selected vendor. Further, there were no



         408
               Refer to Annexure 13.4 for an extract of the sales register.

         409
            Definition of a debit balance: The amount that a business or an individual owes a lender, seller or factor. (Source:
         Investorwords.com. Further, a debit balance in the sales register indicates a debit balance.

         410
               Refer Annexure 13.5 for details of the responses by OC.


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         benchmarks available with the OC to assess the reasonableness of rates quoted by the
         vendor.


13.4     Issue of LOI before approval from competent authorities 411

13.4.1   The Letter of Intent was issued to the vendor on 18 June 2010. However, the approval of
         appointment of Constellation Projects was obtained from the OCFC and by the FSC only on
         22 and 23 June 2010 respectively. Further, issuance of LOI before such approvals was not
         brought to the notice of OCFC and FSC in these meetings412.

13.4.2   Further, the FSC while approving the appointment of the vendor noted the following:

               Upon informing the committee that a representative of Constellation has already been
                sent to PKL to save time, the committee stated “this amounted to tacit approval to M/s
                Constellation’s bid by OC”.

               It also noted that “Repeated instances had come to notice wherein executive action had
                preceded approvals of the appropriate committee on the plea that time was short. Such
                action in anticipation of approval is irregular; moreover, it presumes that approvals are
                proforma and routine. Such is not the case”.

13.4.3   The above clearly suggests that the OC management considered obtaining approvals from
         appropriate committees and sub-committees as a mere formality and indulged in flagrant
         violation of the established procedures and protocols and disregard of authority.


13.5     Conflict of interest between the ‘consultant’ and the vendor ‘Constellation
         Projects’

13.5.1   The EMC vide its meeting dated 24 April 2010 decided to appoint a consultant for
         installation of kitchen equipment. In this regard, a search committee413 was appointed



         411
               Refer Annexure 13.6.

         412
            The OC has informed us that since the LOI was issued with the approval of CEO and Chairman, its issuance was not
         informed to OCFC and FSC in the respective meeting.

         413
            The members of Search Committee were: Jiji Thompson (SDG), NP Singh (JDG-Administration) and Ajay Grover
         (Consultant).


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                                Fifth Report of HLC – Organizing Committee

         which in its meeting dated 7 May 2010 interviewed four potential candidates for the post of
         consultant and appointed Mr. Sunil Khanna as the consultant414.

13.5.2   Mr. Sunil Khanna started his services with OC on 24 May 2010 and resigned on 13 June 2010
         and was thus engaged by the OC for less than one month. His reason for resignation, as
         mentioned in the note for legal advice was his and his family’s ‘shareholding’ in
         Constellation Projects415.

13.5.3   It may be mentioned that the RFP was notified by the OC on 31 May 2010 and technical
         evaluation was conducted on 10 June 2010, which coincides with the period Mr. Sunil
         Khanna was engaged as a consultant for this scope of work. It has been assumed that as a
         consultant he was required to be actively involved in preparation of RFP and technical
         evaluation.

13.5.4   A legal opinion was sought by Jiji Thompson, Special DG Catering, on whether Mr. Sunil
         Khanna‘s role constituted a conflict of interest and if it “vitiates the tendering process”. The
         legal opinion was provided by Mr. Ram Mohan, DDG (Legal) which stated that as “Mr. Sunil
         Khanna’ s role was limited to only as a Technical Consultant, and since he was not associated
         or involved in the evaluation process of the bids, the tender process does not, in any manner,
         get vitiated”. It is pertinent to note that Mr. Ram Mohan, DDG Legal, does not hold a law
         degree and as such his opinion cannot be considered a legal opinion.

13.5.5   One of the responsibilities/role of the consultant as per his personal file was “24*7 very
         close coordination between Head of Catering OC, PKL UK, DNC Australia, DDA and GL Events
         the project management vendor/s for the project implementation”416. In view of this
         responsibility, the noting and legal opinion made above appears erroneous and misleading.

13.5.6   Given the above, the engagement of a consultant who had a direct financial interest in the
         selected bidder constitutes a clear conflict of interest. One can only perceive the vitiation
         and total compromise of the contracting process that was achieved by the OC through the
         following.

         414
            The OC has informed us that Mr. Sunil Khanna did not disclose his relationship with Constellation Projects at the time of
         his appointment with OC as it was not required under his terms of appointment.

         415
               Refer Annexure 13.7.

         416
               Refer Annexure 13.7.


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              Awarding the contract to an entity in which the consultant had a financial interest;

              Simultaneously engaging a consultant who might have complete and absolute insight
               into information critical for the selection of the vendor.

              Engaging the conflicted consultant at the exact time the RFP was issued and till such
               time the technical evaluation was completed.

              Obtaining erroneous and misleading legal opinion to justify such flawed decisions.


13.6     Terms and conditions detrimental to interests of the OC

13.6.1   Acceptance of certain terms and conditions as a part of the supply agreement between the
         OC and Constellation/Aster Technologies which were potentially prejudicial to the interests
         of the OC were observed. These are as follows.

              Specific Warranty or guarantee clause: Constellation did not provide and the OC did not
               request for warranties/guarantees as part of the contract. Consequently, the OC
               knowingly took on a risk for the non-performance without any mitigation or recourse to
               the vendor.

              Buy Back of Equipment: The OC should have tried to negotiate a buy back clause for
               these equipments (cold rooms, gas accessories, fire suppression systems, ducting, fans
               and other accessories). This was not done and consequently these equipments sourced
               locally continue to remain in the possession of the OC.

13.6.2   Acceptance of such conditions, prima facie, demonstrates the inability of the OC to conduct
         sourcing in an appropriate manner.


13.7     Summary and conclusions

13.7.1   Quite similar to the defects in the games village catering and supply of kitchen equipment
         contracts, significant and material departures from procedures and apparent misconduct in
         the award of the games village installation of kitchen equipment contract was observed. In
         the case of the contract awarded to Constellation Projects, it is pertinent to note the
         following.




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     The evaluation committee assisted by Ajay Grover (Consultant and Head- Catering)
      overlooked missing information and other inconsistencies in the bid documents of
      Constellation Projects and thereafter chose to clear the vendor from a technical
      perspective. In this regard, the committee proceeded to award marks to the vendor
      even on criteria where the vendor had expressly stated that information cannot be made
      available. The evaluation conducted by the OC had a very strong bias to the vendor.

     It appears that the decision to select the vendor was taken at an operational level and
      the FA and other functionaries considered approval of the OCFC and FSC as a formality.
      From the fact that LOI was issued to the vendor before the approvals were sought, it is
      difficult to avoid a conclusion that governing bodies like OCFC and FSC’s approval was
      taken for granted.

     There is clear evidence of a conflict of interest along with a high probability that it was
      misused to award the contract to a preferred vendor. A consultant who had a financial
      interest in the bidding company was engaged a week before the RFP was notified and
      resigned a week after the technical evaluation was conducted. An in-house “legal
      opinion” was sought by the Catering FA from a person who was not technically qualified
      to provide a legal opinion. The opinion obtained in this fashion, that there was no
      conflict of interest in fact, vitiates the entire contracting process.




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14 Chapter 14: Venue Catering I

          The review conducted has indicated significant and material departure from policies and
          procedures of contracting and potential misconduct in awarding of the contract to M/s
          AFP Manufacturing Co (P) Ltd. Certain important ‘eligibility criteria’ under the RFP and
          Procurement Manual were overlooked to select the vendor during the technical
          evaluation. The OC acted in a manner contrary to proper governance norms and took
          decisions at the last minute resulting in additional cost, delays and serious delivery issues.



14.1     Background

14.1.1   The catering FA was responsible for providing catering services during CWG. The scope of
         work primarily included providing catering at the Commonwealth Games Village (‘CGV’), all
         competition and non- completion venues. All the venues including CGV were divided into
         11 packages, each package representing a venue or a group of venues. The Package 9 was
         for CGV.

14.1.2   The EOI was issued in June 2009 for all 11 Packages including Package 9 (CGV) which was
         finally awarded to DNC. The RFP for the remaining packages which included training and
         competition venues was issued in December 2009. This section of the report pertains to
         awarding of contract for supply and distribution of food packets to workforce and security
         personnel at various venues excluding CGV.

14.1.3   A brief chronology of the events related to the award of this contract is as under.

         Table 14.1: Chronology of events

         Month                     Particulars




         June 2009                    Release of EOI for all packages (1 to 11) including CGV
                                      25 vendors responded out of which 7 were disqualified
         December 2009                Release of RFP




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         Month                        Particulars




         July 2010                       Release of second RFP for Supply and distribution of food Packets for
                                          work force and security personnel
                                         7 days time provided for prospective bidders to reply
                                         Lowest bidder to be considered for negotiations
         Aug 2010                     Responses received from the following bidders:

                                         M/s Graviss Hospitality
                                         M/s Bikaner wala
                                         M/s AFP Manufacturing Co (P) Ltd
                                         M/s Gazal Catering
                                         M/s Gateway Hospitality.
                                         M/s Fast Trax.
                                         M/s The Crystals
         Aug 2010                     Evaluation of technical bids. The following parties were found to be
                                      responsive bidders:

                                         M/s Graviss Hospitality
                                         M/s Bikaner wala
                                         M/s AFP Manufacturing Co (P) Ltd
                                         M/s Gazal Catering
                                         M/s The Crystals
         Aug 2010                        Opening of commercial bid.
                                         M/s AFP Manufacturing Co (P) Ltd found to be lowest bidder.
         Aug 2010                     LOIs was awarded to M/s AFP Manufacturing Co (P) Ltd


14.1.4   The Letter of intent417 (LOI) was finally issued to M/s AFP Manufacturing Co Private Limited
         (‘AFP’) on 18 August 2010 for a value of INR 8.75 cores towards the supply and distribution
         of food packets to work force and security personnel deployed at different venues which
         included competition and training venues.



         417
               Refer Annexure 14.1.


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14.2     Inconsistencies in EOI and first RFP stage

14.2.1   The EOI was issued in June 2009 for all the packages (1 to 11). Around 25 vendors
         responded to the EOI out of which 7 vendors were disqualified at the EOI stage itself.

14.2.2   The OC Vent ahead with the RFP for package 9 (CGV) in the month of October 2009 and the
         remaining packages were put on hold considering the criticality of package 9. The RFP for
         the remaining packages was finally released in December 2009 approximately after a gap of
         five months from the date of issue of EOI. Further, vendors submitted quotations in the
         range of INR 70-80 Crores.


         Delays and mismanagement at the first and second RFP stage

14.2.3   A review of the RFP issued for remaining packages reveals that the service levels required
         for various package was not explained clearly in the scope of work section. The scope of
         work was defined in relation to area (in sq. meters) under each venue rather than the
         approximate number of persons that would be consuming food under each venue. Further,
         tender package 5 (Thyagraj Stadium) was used as the base model rather than plans for each
         venue being used for defining the scope of work418. This clearly displays lack of detailed
         planning on the part of catering FA towards venue packages. The defective RFP possibly
         contributed to the excessive cost quoted by the vendors.

14.2.4   The OCFC in its meeting dated 1 June 2010 noted that “there was a mismatch in the number
         of persons to be served vis-à-vis the expenditure on the food items to be served per head in
         different tender packages.       Further, there were considerable differences between the
         number of person based on which RFP was floated and the number of persons as were now
         confirmed by sports functional area. The committee also recommended that CEO and DG
         should hold a meeting with head of all functional areas for obtaining actual number of
         persons for the purpose of computation of expenditure for this purpose. The selected
         catering contractors should also be invited in the meeting to explore the possibility of
         reduction in expenditure for catering arrangements in various venues in view of considerable




         418
               Refer Annexure 14.2.


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         reduction in scope of work”. This clearly shows flawed planning and budgeting on part of OC
         towards this functional area even when just 4 months were left for the games419.

14.2.5   Further, a note from Jiji Thompson (SDG- Catering) dated 26 June 2010420 stated that the
         Chairman convened a meeting on 22 June 2010 with the senior management of OC to
         discuss the catering arrangements for venue packages 1 to 8421 due to paucity of funds
         available with catering FA and to review the service levels and number of people to be
         served. This position of Chairman seems to be surprising considering OC was not clear of
         the number of exact requirements under catering funtional area and thus it appears that
         shortage of funds was a result of flawed planning and budgeting. This coupled with release
         of RFP in December 2009 when the exact service level requirements were not determined
         by OC resulted in vendors submitting quotations amounting to INR 78 Crores422 against the
         available budget of INR 26 Crores423 for this scope of work.

14.2.6   On 25th June 2010424, a meeting of senior management was called by CEO and a decision
         was taken to cancel the entire tender process and to appoint IRCTC on a nomination basis.
         The EB in its meeting dated 27 June 2010425 approved the cancellation of the entire RFP
         process and directed OC to enter into negotiations with IRCTC to provide catering services
         for all venues packages except package 9 on a turnkey basis. Further, the EB directed OC to
         resubmit the detailed proposal with justification for appointment of IRCTC to EB through
         OCFC and FSC.

14.2.7   A review of the “consolidated note on Tender Packages 1 to 11 except 9” 426 signed by Jiji
         Thompson (SDG- Catering) reveals that IRCTC was approached to provide quotes for
         providing catering services for all venue packages. Further, IRCTC quoted approximately INR

         419
               Refer Annexure 14.3.

         420
               Refer Annexure 14.4.

         421
               Package 10 & 11 were merged with packages 1 to 8.

         422
               Refer Annexure 14.4 (Page 8).

         423
               Budget as left for venue packages 1 to 8 after reducing amount budgeted for CGV.

         424
               Refer Annexure 14.4.

         425
               Refer Annexure 14.4.

         426
               Refer Annexure 14.4 for the contents of this note.


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                                 Fifth Report of HLC – Organizing Committee

         24.20 Crores for all venue packages except 1 and 4. It also states that the quote of IRCTC is
         very reasonable compared to the earlier cost quoted by vendors which amounted to INR 78
         Crores. This note also requested Chairman’s decision on awarding the contract to IRCTC
         based on the quote submitted by them. Further, the Chairman conducted a meeting with
         representatives of IRCTC on 15 July 2010427 to negotiate the rates offered by IRCTC and it
         was agreed that a letter with revised service levels will be issued to IRCTC. This resulted in
         IRCTC providing a fresh quote of INR 43.83 Crores for all venue packages. Mr. Jiji Thompson
         (SDG-Catering) suggested that an LOA should be issued to IRCTC due to the paucity of time
         with the OC and placed it for approval. However, the Chairman through an order conveyed
         and signed by Jarnail Singh (CEO-OC) on 22 July 2010 annulled the decision of EB by
         cancelling the entire tendering process, stating that the offer of IRCTC was not acceptable
         and ordered for floating a new RFP (retendering) separately for workforce, volunteers and
         other categories428. This decision of Chairman created a disparate situation for OC and
         short-circuiting of procedures ultimately leading to selection of an incompetent vendor.

14.2.8   The revised RFP was floated on 24th July 2010 and a period of 7 days was provided to
         prospective bidders to respond to RFP. The RFP was issued in seven cities in India and on
         the OC’s official website. Due to the paucity of time, the OC was not able to follow clause
         4.1 of the procurement manual issued in April 2010 which states that an open tender should
         be floated allowing 4 weeks for prospective bidders to respond and if required, a global
         tender to attract foreign vendors to respond429.

14.2.9   It appears that the limited release of tender coupled with only one week time period
         provided to the vendors resulted in a very small number of eligible vendors. The OC
         received responses from 7 bidders namely Graviss Hospitality, Bikanerwala, AFP
         Manufacturing Co (P) Limited, Gazal Catering, Gateway Hospitality, Fast Trax and The
         Crystals.




         427
               Refer Annexure 14.4.

         428
               It cannot be commented if this order was actually given by Chairman as the signatures were not found on the order.

         429
               Refer Annexure 14.5.


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                                 Fifth Report of HLC – Organizing Committee

14.3     Inconsistencies in selection of AFP as the final vendor

14.3.1   The technical evaluation committee430 in its meeting dated 2 August 2010 evaluated the
         bids received from all seven vendors. The bids received from two vendors namely; Gateway
         Hospitality and Fast Trax were rejected on certain technical grounds and the technical
         evaluation committee recommended opening of commercial bid of the remaining five
         vendors431.           The bid of AFP was found to be lowest (L1) and the vendor was finally
         shortlisted for providing this service432.

14.3.2   In determining the evaluation conducted by the technical evaluation committee, is appears
         that AFP Manufacturing did not fulfill certain important technical criteria.                                     The
         inconsistencies in the bid433 submitted by AFP are as under:

               AFP only provided an abstract of its audited profit and loss account rather than the
                complete audited financial statements as per the requirements of RFP. Further, the
                financial statements of its consortium partner; M/s Coordinators was also not provided
                by AFP while submitting its financial information434.

               As a proof of credentials, the vendor provided work orders in the name Ekta Shakti
                Foundation (one of the group companies of AFP Manufacturing Co Pvt Ltd 435) for supply
                of mid day meals to various MCD schools. It appears that this was the only relevant
                credential supplied by AFP towards fulfilling the criteria of having relevant experience of
                providing catering services.

               AFP provided Hazard Analysis and Critical Control Point certificate (‘HACCP’ certificate)
                as required under the RFP. However, scrutiny of the certificate reveals that it was issued
                to AFP towards manufacturing of namkeen, snacks and bakery products. Further, the
         430
           The members of the technical evaluation committee were Sanjiv Mittal (JDG- Catering), V.K. Saxena (ADG- Revenue),
         KUK Reddy (ADG- F&A) and Sharayu Alemelkar (Director- Catering).

         431
               Refer Annexure 14.6.

         432
               Refer Annexure 14.7.

         433
               Refer Annexure 14.8 for technical bid of AFP.

         434
            The submission of audited financial statements of the consortium partner does not appear to be a mandatory
         requirement under the RFP.

         435
           AFP did not provide any documentary evidence regarding Ekta Shakti Foundation being one of the group companies of
         AFP.


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                                 Fifth Report of HLC – Organizing Committee

                vendor provided another HACCP certificate towards catering services upon site visit by
                commercial evaluation committee to AFP’s site office on 8 August 2010436. It is pertinent
                to note that the HACCP certificate relevant to the scope of services was provided post
                evaluation of technical bid of the vendor by the OC.

               Further, AFP did not provide certain information as required by the “Notes” in the RFP.
                However, the same was not explicitly requested by OC at any stage of the evaluation.

14.3.3   It is evident from the above mentioned points that AFP did not conform to certain criterion
         mentioned in the RFP; however they were still qualified in the technical round.


14.4     Agreement to terms potentially detrimental to interests of the OC

14.4.1   The OC issued letter of intent (LOI) to AFP for supply of food packets on 18 August 2010
         amounting to INR 8.75 Crores. AFP accepted the LOI on 24 August 2010 which defined
         terms and conditions of sale and other relevant information. This was issued pursuant to
         approval by FTC, Chairman and EB437. It is pertinent to note that hardly six weeks were left
         by then for the start of the games.

14.4.2   It was noted certain terms and conditions in the LOI438 were potentially detrimental to
         interest of the OC and appeared, prima facie, to be a lapse on part of the OC. These are as
         under:

               The OC did not enter into a formal contract with AFP thereby exposing itself to risks
                normally associated with procurement on the basis of LOI.         This appears to be in
                violation of clause 14 of RFP which clearly states that “the contract will be signed with
                the eligible bidder within 7 days of issue of letter of acceptance beyond which period
                non-execution would form sufficient grounds for cancellation of the offer and forfeiture
                of EMD”. Further, it was also a violation of the Financial and Administrative Guidelines




         436
               Refer Annexure 14.9.

         437
               Refer Annexure 14.10.

         438
               Refer Annexure 14.1 for LOI.


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                                Fifth Report of HLC – Organizing Committee

                which state that any contract of a value of more than INR 10 Lakhs has to be signed as a
                contract439.

               An advance of 30% of the contract value was provided to the vendor against which the
                vendor provided a bank guarantee of 10% of contract value. A provision of 10% of the
                contract value appears to be in violation of part (a) of clause 8 of RFP which states that
                “Advance payment of not more than 15% of the contract value would be given by the OC
                on submission of bank guarantee of equivalent value”. This led to approximately 20% of
                the contract value or approximately INR 1.75 Crores being paid to vendor as unsecured
                advance.


14.5     Delivery of poor quality food leading to additional costs

14.5.1   On review of certain selected emails440 as provided by catering FA, it appears that AFP was
         not able to provide food packages in accordance with the standards as expected by OC.
         Further, there were various delivery issues in terms of quality, hygiene standards of the food
         supplied. A letter officially sent by Special Commissioner of Police (Administration), Delhi
         Police to Jarnail Singh (CEO-OC) needs special mention as it, among other things, states “A
         kitchen of AFP lacks proper hygiene and cleanliness, where no sampling and checking of food
         is done by the representatives of PFA. The quality of food provided to various venues is not
         up to the mark and regular complaints are being received from various venues regarding
         delivery of stale food”. Evidently, OC was stuck with a caterer, who failed to deliver quality
         food while the games had started.

14.5.2   The failure of AFP to provide quality food packages to various venues led to a catastrophic
         situation within the OC and a decision to procure food packages from 19 local vendors and
         certain other small vendors was taken on 13 October 2010 by the Fast Track Committee441
         and was further approved by the Chairman442.                           This led to an additional cost of


         439
               Refer Annexure 14.1.

         440
               Refer Annexure 14.11.

         441
            The members of the fast track committee were Jarnail Singh (CEO-OC), G.C. Chaturvedi (SDG-F&A), Sanjeev Mital (SDG-
         Catering) and KUK Reddy (ADG-F&A).

         442
               Refer Annexure 14.12.


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                                Fifth Report of HLC – Organizing Committee

         approximately INR 6.71 Crores towards procurements of food packages from these
         vendors443.

14.5.3   Further, AFP has been paid INR 1.69 Crores towards its full and final settlement444. This was
         approved by the payment review committee on 23 December 2010. However, the OC could
         have further reduced the amount on account of the following; Clause 4.35 of procurement
         manual which states “Where deficiencies in delivery of contracted goods / services have
         potential of impacting severally the smooth conduct of games, a penalty up to 10 % of the
         contracted value shall be imposed. Such penalty charges shall be deducted from the
         payments due to suppliers”. Considering that the services provided by AFP were found to be
         deficient in nature, the OC could have deducted INR 87.50 Lakhs (10% of contracted value)
         as penalty charges and should have only paid INR 81.50 Lakhs to AFP. Thus, an opportunity
         to save further costs on this contract was lost by OC.


14.6     Summary and conclusions

               The technical evaluation committee qualified AFP by overlooking critical information
                that was not provided by AFP and other inconsistencies in the bid documents submitted
                by AFP. Further, there appears to be a clear negligence on part of OC officials who
                carried out the site visit at the premises of AFP as they failed to identify quality and
                hygiene issues at the facility as can be evidenced from various emails reviewed later. In
                this regards, it appears that the committee proceeded to qualify a vendor who had not
                provided certain information and had serious delivery issues.

               The decision by the OC with the apparent consent of the Chairman and CEO to cancel
                the offer of IRCTC barely two months prior to start of the games pushed OC to an
                emergency situation curtailing its options. Further, the selection of an incompetent
                vendor, evidently under pressure of time cost OC heavily in terms of reputation in a
                critical area and increased financial burden.




         443
            Refer Annexure 14.13. This payment excludes advance of INR 1.79 Crores which was paid to the vendor at the start of
         the contract.

         444
               Refer Annexure 14.14.


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                  Fifth Report of HLC – Organizing Committee

     This coupled by flawed planning and budgeting led to severe shortcomings in meeting
      delivery requirements related to a critical area and additional cost amounting to
      approximately INR 6.71 Crores incurred by OC.




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                          Fifth Report of HLC – Organizing Committee

15 Chapter 15: Venue Catering II
          The review conducted has indicated that OC was not able to muster a good response to
          the RFP due to paucity if time. Further, the technical evaluation conducted appears to be
          biased towards certain vendors as non- submission of important information and
          potential incorrect disclosures by a vendor was overlooked. This is clearly a significant
          and material departure from policies and procedures of contracting and potential
          misconduct in awarding of the contract to M/s Graviss Hospitality, M/s Seven seas
          Hospitality and M/s IRCTC. Further, high rates quoted by the vendor who was common in
          CWG 2010 and Pune games was ignored for negotiation thereby lending doubt to the
          integrity of contracting process.



15.1     Background

15.1.1   The catering FA was responsible for providing catering services during CWG. The scope of
         work primarily included providing catering at the Commonwealth Games Village (‘CGV’), all
         competition and non- competition venues. All the venues including CGV were divided into
         11 packages, each package representing a venue or a group of venues.

15.1.2   The EOI was issued in June 2009 for all 11 Packages including Package 9 (CGV) which was
         finally awarded to DNC. The RFP for the remaining packages which included training and
         competition venues was issued in December 2009. This section of the report pertains to
         awarding of contracts for catering services at all lounges in competition and training venues.

15.1.3   A brief chronology of the events related to the awards of the contracts is as under.

         Table 15.1: Chronology of events

         Date                     Particulars




         June 2009                   Release of EOI for all packages (1 to 11) including CGV
                                     25 vendors responded out of which 7 were disqualified
         December 2009               Release of RFP




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         Date                        Particulars




         July 2010                      Release of Second RFP for caterer for catering services at all lounges
                                         in all competition and training venues.
         Aug 2010                    Responses received from the following bidders:

                                        M/s Fast Trax. ( For cluster 1)
                                        M/s IRCTC (For cluster 2,3,7,8)
                                        M/s Graviss Hospitality (P) Ltd. (For cluster 1)
                                        M/s Seven Seas Hospitality (For cluster 1,2,4)
                                        M/s Kwality caterers (For cluster 1 & 8)
         Aug 2010                    Evaluation of technical bids. The following parties were found to be
                                     responsive bidders:

                                        M/s IRCTC.
                                        M/s Graviss Hospitality
                                        M/s Seven Seas Hospitality
         Aug 2010                       Opening of commercial bid and rounds of negotiation with
                                        M/s Graviss Hospitality for cluster 1 & 6
                                        M/s Seven Seas Hospitality for cluster 3,4,5,7 and 8
                                        M/s IRCTC for Cluster 2.
         Aug 2010                    LOIs was awarded to M/s Graviss Hospitality, M/s Seven Seas Hospitality
                                     and M/s IRCTC.


15.1.4   The Letter of intent445 (LOI) was issued on 20/08/2010 to Graviss Hospitality (P) Ltd at a final
         value of INR 5.94 cores, for cluster 1 and 6, Seven Seas Hospitality at a final value of INR 6.29
         Crores (clusters 3, 4, 5, 7 &8) and IRCTC at a final value of INR 1.70 Crores (cluster 2)
         towards the catering services for lounges at different venues for both competition and
         training venues.




         445
               Refer Annexure 15.1


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                                Fifth Report of HLC – Organizing Committee

15.2     Inconsistencies in EOI and First RFP stage

15.2.1   The developments leading to the cancellation of the first RFP has been discussed in chapter
         14 of this report. This report discusses the developments post the issue of revised RFP in
         July 2010 for catering services at venue lounges both for competition and training venues.

15.2.2   The revised RFP was floated on 24th July 2010 and a period of 7 days was provided to
         prospective bidders to respond to RFP for lounges to be served under each venue446 (for
         both competition and training). The RFP divided all venues into eight clusters for both
         competition and training venues.

15.2.3   The RFP was issued in seven cities in India and on the OC official website. It appears that
         due to the paucity of time, the OC was not able to follow clause 4.1 of the procurement
         manual issued in April 2010 which states that an open tender should be floated allowing 4
         weeks for prospective bidders to respond and if required, a global tender to attract foreign
         vendors to respond447.

15.2.4   It appears that the limited release of tender coupled with one week time period provided to
         the vendors resulted in a very small eligible vendor base. The OC received responses from 5
         bidders namely Fast Trax, Graviss Hospitality, IRCTC, Seven Seas, and Kwality Caterers.


15.3     Inconsistencies in technical evaluation of two vendors namely; Graviss and Seven
         Seas

15.3.1   The technical evaluation committee448 in its meeting dated 4 August 2010 evaluated the
         bids and rejected the bids of M/s Fast Trax and M/s Kwality Caterers on the basis of the
         technical evaluation.          The committee449 recommended that the commercial bids of
         remaining three bids should be opened.




         446
               Refer Annexure 15.2

         447
               Refer Annexure 15.3

         448
               Refer Annexure 15.4

         449
           The members of the technical evaluation committee were Sanjiv Mittal (JDG – Catering), V.K Saxena (ADG- Revenue),
         KUK Reddy ( ADG F & A) and Sharayu Alemelkar ( Director Catering).


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                                      Fifth Report of HLC – Organizing Committee

15.3.2       In determining the evaluation conducted by the technical evaluation committee, is appears
             that Graviss Hospitality and Seven Seas Hospitality did not fulfill certain important
             technicalcriteria. The inconsistencies in the bid submitted by Graviss Hospitality450 and
             Seven Seas Hospitality451 included the following:

             M/s Graviss Hospitality (P) Ltd

                   HACCP certificate was provided in name of its consortium partner (Seasons catering
                    Services Private Limited. Further, the company failed to provide a PFA certificate.

                   The company also failed to furnish details evidencing that it staff/employees are
                    certified by appropriate authority on being healthy and free from any contagious
                    disease.

             M/s Seven Seas Hospitality (P) Ltd

                  HACCP certificate was provided in name of its consortium partner (Goel Foods). Further,
                   the company failed to provide a PFA certificate.

                  The company also failed to furnish details evidencing that it staff/employees are certified
                   by appropriate authority on being healthy and free from any contagious disease.

                  The company failed to furnish the documentary evidence to support its claim for having
                   experience of supplied snacks for about 5,000 meals in a day continuously for at least 7
                   days to any organization government or private. The bidder in response provided 7
                   catering contracts entered into with various parties and each covering guests exceeding
                   5000 people.           A phone call made to one of the customers452 of Seven seas to
                   verify/enquire the number of guests serviced by the vendor revealed that the number of
                   guests serviced by seven seas towards this customer were approximately 300 against
                   5,500 as mentioned in the contract between the vendor and the customer. This suggests
                   that the vendor did not have any prior experience of servicing 5,000 meals and possibly
                   fabricated the documentation required to be submitted towards this criteria.



             450
                   Refer Annexure 15.5 for relevant extract of technical bid of Graviss.

             451
                   Refer Annexure 15.6 for relevant extract of technical bid of Seven Seas.

             452
                   Refer Annexure 15.6 for the contract between Seven Seas and the customer as provided to us.


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                                Fifth Report of HLC – Organizing Committee

15.3.3   The above clearly suggests that the technical evaluation committee overlooked information
         not provided/inconsistent with the requirements of the RFP and qualified two vendors who
         possibly should have been disqualified on non-submission/fabrication of documentation to
         meet eligibility criteria.


15.4     Commercial evaluations ostensibly to favor Graviss Hospitality

15.4.1   On opening of commercial Bids for all 8 clusters, it was noted that none of the technically
         qualified vendors applied for Cluster 5 and cluster 6 and only one bid was received for
         cluster 3, 4 &7. Further, cluster 1 & 2 was bid for by only two bidders each. The committee
         noted that in situation of a single bid, RFP needs to be re-tendered. However, keeping in
         mind the criticality of this area and the paucity of time, negotiations should be conducted
         with the respective parties. Subsequently, negotiations were conducted with these three
         parties and contracts for Cluster 1, 2 & 4 were awarded to Graviss, IRCTCT and Seven Seas
         respectively. Further, the committee requested the three vendors to resubmit their revised
         bids for remaining cluster as the cost quoted was high. The committee eventually cancelled
         the bids of these vendors for remaining clusters in view of high cost quoted and requested
         for a snap bid from these three vendors within 24 hours. Based upon L1 received in snap
         bids, contracts for the remaining clusters were finally awarded to the three technically
         qualified vendors453. It was noted that Graviss to whom the contract for cluster 1 & 6 was
         awarded was also the vendor for providing catering services at the opening and closing
         ceremonies and workforce at the Pune Youth Commonwealth Games 2008. Further, two
         members of the commercial evaluation team454; KUK Reddy (ADG-F&A) and Sharayu
         Almelkar (Director-Catering) were also part of the technical and commercial evaluation
         committee455 for catering FA at the Pune Games where the contract to Graviss was
         awarded.



         453
               Refer Annexure 15.7

         454
           The members of the commercial evaluation committee were Sanjiv Mittal (JDG – Catering), V.K Saxena (ADG- Revenue),
         KUK Reddy ( ADG F & A) and Sharayu Alemelkar ( Director Catering).

         455
            The members of Technical and Commercial evaluation committee in Pune Youth Common wealth Games 2008 were
         Mrs Vrinda Gangolli (Ex Principal MSIHMCT, Mrs Kumud Gulati (Ex Officer Food & Accom. TMTC , KUK Reddy ( DDG
         Finance), Ms Sharayu Almelkar (Project officer Catering).


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                                Fifth Report of HLC – Organizing Committee

15.4.2   The menu and the level of constituents for opening and closing ceremonies at the Pune
         Games and for cluster 1 and 6 at CWG 2010 was found to be similar barring a few items
         within each specific menu and constituents. However, the rate per head quoted by Graviss
         for CWG 2010 was found to be higher for each constituent similar to the constituents in
         Pune Games The details of the same is as under:

         Table 15.2: Cluster1- (Opening and Closing ceremonies)


         Name of Constituents                  Rate Per Head in Pune Rate per Head in Excess                             Rates
                                               2008                        Delhi 2010                 Charged      at    Delhi
                                                                                                      2010


         Opening            &         Closing 500456                       1,360                      860
         Ceremonies                   (Games
         Families)


         Opening            &         Closing 350                          680                        180
         Ceremonies (VIP’s)
                                               350                         1,360                      860


         Media & Technical Officials           250                         600                        100




         Rates as obtained from LOI with Graviss for CWG 2010 and as per financial bid for Pune Games457.




         456
           Pune Games did not provide specific rate for Games families. We have assumed the highest rate charged (VVIPs) in
         Pune Games towards Games families.

         457
               Refer Annexure 15.8.


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                                Fifth Report of HLC – Organizing Committee

         Table 15.3: Cluster6- DU (Rugby and 11 Training Centers)


         Name of Constituents           Rate Per Head in Pune Rate per Head in Excess                  Rates
                                        2008                    Delhi 2010             Charged    at   Delhi
                                                                                       2010


         AVM (Athlete Venue Meals)      1,660                   4,500                  2,840


         Technical officials            1,660                   4,500                  2,840


         Rates as obtained from LOI with Graviss for CWG 2010 and as per financial bid for Pune Games458.


15.4.3   Further, the number of persons catered to in Pune Games for the above constituents were
         less than the number of persons catered for CWG 2010 for the similar constituents. This
         clearly suggests that economies of scale were not considered by the OC while negotiating
         with the vendor and instead contract were awarded simply on an isolated L1 basis without
         proper comparisons. This lack of proper contracting coupled by the fact that two of the
         members in the technical and commercial evaluation committee were common for CWG
         2010 and Pune Games suggests an apparent bias towards the vendor Graviss.

15.4.4   EB in its meeting held on 19 August 2010459 accorded its approval for the appointment of
         these three vendors at total cost of INR 13.93 Crores which was finally approved by
         Chairman OC on 20th August 2010. Further, additional Scope of work460 amounting to INR
         36 Lakhs was awarded to Graviss Hospitality towards serving meals for 10 days to Athletes,
         team officials and Technical officials in cluster 1 which was approved by CEO on 22nd
         September 2010.


15.5     Agreement on terms potentially detrimental to interest of the OC

15.5.1   The OC issued letter of Intent (LOI)461 to Graviss Hospitality, Seven Seas Hospitality and
         IRCTC for catering services at all lounges in competition and training venues on 20 August

         458
               Refer Annexure 15.9

         459
               Refer Annexure 15.10

         460
               Refer Annexure 15.11

         461
               Refer to Annexure 15.1


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                                    Fifth Report of HLC – Organizing Committee

             2010 amounting to INR 13.93 Crores.             This was issued pursuant to approval by FTC,
             Chairman and EB. It is pertinent to note that hardly six weeks were left by then for the start
             of the games. The breakup of the contracts awarded is as under:

             Table 15.4: Breakup of LOI issued for venue lounges


             Cluster                             Name of Vendors                 Amount (in INR Crores)


             Cluster 1                           M/s Graviss Hospitality         5.20


             Cluster 6                           M/s Graviss Hospitality         0.74


             Cluster 2                           M/s IRCTC                       1.70


             Cluster 3,4,5,7 and 8               M/s Seven Seas Hospitality      6.29


                                                 Total                           13.93


15.5.2       It was noted that certain terms and conditions in the LOI issued to all three vendors were
             potentially detrimental to interest of the OC and appeared, prime facie, appear to be a lapse
             on part of OC primarily due to the paucity of time. These are as under:

                  The OC did not enter into formal contract with Graviss Hospitality, IRCTC and Seven Seas
                   Hospitality thereby exposing itself to risks normally associated with procurement on the
                   basis of LOI. This appears to be in violation of clause 12 of RFP462, which clearly states
                   that “the contract shall be signed with the eligible bidder with in 7 days of issue of LOI of
                   acceptance beyond which period; non execution would form sufficient grounds for
                   cancellations of the offer and forfeiture of EMD. Further, it was also a violation of the
                   Financial and Administrative Guidelines which state that any contract of a value of more
                   than INR 10 Lacs has to be signed as a contract.

                  An advance of 60% of the contract value was provided to the Graviss against which the
                   vendor provided a bank guarantee of 5% of contract value. A provision of 5% of the
                   contract value appears to be in violation of part (a) of clause 8 of RFP which states that
                   “Advance payment of not more than 15% of the contract value would be given by the OC


             462
                   Refer Annexure 15.12


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          on submission of bank guarantee of equivalent value”. This led to approximately 55% of
          the contract value or approximately INR 3.26 Crores being paid to vendor as unsecured
          advance. Further, an advance of INR 25 Lakhs (70% of 36 Lakhs) was also paid to the
          vendor without any bank guarantee against this amount. Also, the bank guarantee
          provided by Graviss expired on 5 November 2010 against the stipulated date of 30
          November 2010 as required by clause 1.5 of RFP463.

         An advance of 60% of the contract value was provided to the IRCTC against which the
          vendor provided a bank guarantee of 10% of contract value. A provision of 10% of the
          contract value appears to be in violation of part (a) of clause 8 of RFP which states that
          “Advance payment of not more than 15% of the contract value would be given by the OC
          on submission of bank guarantee of equivalent value”. This led to approximately 50% of
          the contract value or approximately INR 85 Lakhs being paid to vendor as unsecured
          advance464.

         An advance of 60% of the contract value was provided to the Seven Seas against which
          the vendor provided a bank guarantee of 10% of contract value. A provision of 10% of the
          contract value appears to be in violation of part (a) of clause 8 of RFP which states that
          “Advance payment of not more than 15% of the contract value would be given by the OC
          on submission of bank guarantee of equivalent value”. This led to approximately 50% of
          the contract value or approximately INR 3.14 Crores being paid to vendor as unsecured
          advance465.

         The OC through making payment of unsecured advance to the three vendors exposes
          itself to risks against which no risk mitigation was carried out. Further, OC violated clause
          6 of RFP466 stating the terms of payments narrates that “Advance Payment of not more
          than 15 % of the contract value would be given by OC on submission of BG of equivalent
          value”. Also, acceptance of bank guarantee of 5% from Graviss against 10% from other
          two vendors appears to be a clear example of bias towards a particular vendor.

    463
          Refer Annexure 15.13

    464
          Refer Annexure 15.14

    465
          Refer Annexure 15.15

    466
          Refer Annexure 15.10


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15.6     Summary and conclusions

15.6.1   The OC by releasing the second RFP at a very late stage could not muster a strong response
         thereby resulting in a very limited number of vendors applying for the contract. Further, the
         technical evaluation committee overlooked certain information that was not provided by
         the vendor thereby allowing a potentially non-qualified vendor to qualify the technical
         evaluation. The evaluation conducted by the OC appears to have a strong bias towards the
         shortlisted vendors.

15.6.2   Further, the OC did not negotiate on the rates quoted by the vendor who apparently had
         quoted far lower rates in Pune Games for similar menu and constituents. This coupled by
         the fact that two of the members evaluating this vendor in CWG 2010 and Pune games were
         common suggests a convoluted process of contracting. Further, bias towards a vendor in
         terms of lowering the requirement for a bank guarantee suggests that the contracting for
         catering services at venue lounges was ineffective and fractured to a large extent.




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16 Chapter 16: Ceremonies – Aerostat
          Awarding and monitoring this contract could have been done in a more economical way to
          avoid undue benefits to suppliers. Opportunities to reduce costs were not availed which
          resulted in wasteful expenditure of INR. 2.9 crores as consultancy charges for an abandoned
          concept; INR 6 crore for a decision to not utilize a component taken 20 days before the
          games; INR 1.4 crores not recovered from the supplier for not providing ‘flying crew’. There
          was inadequate diligence to identify alternate suppliers; placing blind reliance on
          ‘international consultants’; agreeing to terms and conditions that gravely exacerbated risk
          to the OC for non-performance of equipment in a turnkey project. etc.


16.1     Background

16.1.1   Creative Director, Bharat Bala, Event Management Firm M/S Wizcraft and International
         Consultant Mr. Ric Birch were appointed by OC for preparing the concept & theme of
         opening and closing Ceremonies. Initially it was decided to design a trench and foundation
         for a pavilion/bandstand in the centre of the field (Jawaharlal Nehru Stadium). This concept
         was later abandoned and a new concept of deployment of “Aerostat” was approved.

16.1.2   Aerostat was a helium-filled balloon which would be suspended over the field of play. This
         would provide a 360 degree surface for video projection of graphics and also a large
         number of mirrors that would reflect lighting that will be required during the opening &
         closing ceremonies.

16.1.3   A brief chronology of the key events relating to the award of contract to K-Events is set out
         in the table below.




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Table 16.1: Chronology of Events

Date                    Particulars




16 October 2009         Recommendation for appointment of Mark Fisher as consultant for Band
                        Stand/Pavilion

20 October 2009         Appointment of Mark Fisher approved by GOM

9 December 2009         GOM decision to abandon the concept of band stand/pavilion

3 February 2010         Chairman OC, approved note for awarding contract for aerostat on Fast
                        Track Mechanism without RFP

4 February 2010         Enquiry made by consultant to K-Events for design and supply of aerostat

12 February 2010        K-Events responded with Cost details and timelines for supply of aerostat

15 February 2010        Concept of Aerostat presented to GOM

18 February 200         Chairman OC presentation to GOM on Aerostat and K-Events
                        appointment approved by GOM on single offer basis

19 February 2010        Dr Lalit Bhanot, SG, OC accords principle approval for appointment of K-
                        Events

22 February 2010        Negotiation Committee approves the appointment of K-Events

26 February 2010        Draft Agreement sent to K-Events for review & approval

3 March 2010 & 6 Proposal for appointment of K-Events discussed in Finance Sub-
March 2010              Committee OC

8 March 2010            Executive Board approved appointment of K-Events

18 March 2010           Contract entered between K-Events & OC for Euros 5.8 Million (Approx
                        INR 36 crores)




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16.2     Wasteful Consultancy Charges due to change in concept of Opening & Closing
         Ceremonies:

16.2.1   Creative Director, Bharat Bala vide letter467 dated 16.10.2009 to Chairman, OC
         recommended appointment of Mark Fisher as consultant for design and construction of
         Pavilion/Trench and Bandstand which was the original concept for opening & closing
         ceremonies

16.2.2   Group of Ministers (GOM) in their meeting dated 20.10.2009, approved, based on
         recommendation of Creative Director, Bharat Bala, the appointment of Mark Fisher for
         compilation of design for a trench and foundation for pavilion/bandstand in the centre of
         the field (Jawaharlal Nehru Stadium). Total fees agreed for Mark Fisher amounted to INR 2.5
         crore (plus applicable taxes).

16.2.3   It is surprising to note that OC did not conduct any negotiations with the consultant Mark
         Fisher and agreed to all terms and conditions of the consultant even in view of the
         significant consultancy charges to be paid. As per minutes of meeting of GOM dated
         02.12.2009, total cost for construction of Bandstand/Pavilion was estimated at INR 80 crore
         excluding fees for consultancy charges.

16.2.4   However GOM during their meeting468 dated 09.12.2009 decided not to proceed further in the
         construction /implementation of the Pavilion/Band Stand on the following ground:“Since 800 tons of
         steel is estimated to be used in the construction/implementation of the Pavilion/Bandstand. There
         are serious safety, security and technical, approval considerations, including the time taken in
         procurement, calling bids, award of work etc. The opening ceremony should be produced without the
         construction of the proposed Pavilion/Bandstand. In addition, the GOM notes the potential jeopardy
         to the athletic track and turf on account of the movement of heavy machinery in and out of the
         stadium for the opening ceremony. The potential damage would place considerable risk on delivery
         of the athletic events.”

16.2.5   It was also decided that “Engagement of Services of Mark Fisher is linked to the design of the
         Pavilion/Bandstand. As the Pavilion/Bandstand is not be to constructed, the services of Mark Fisher
         on this account is not necessary”


         467
               Letter from creative director to Chairman OC recommending appointment of Mark Fisher – Annexure 16.1

         468
               GOM meeting dated 09.12.2009, decided to change the concept for opening/closing ceremonies – Annexure 16.2


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16.2.6   It was extraordinary to note that aspects related to safety, security, approvals and time lag
         for procurement of material and awarding of work had not been considered at the time of
         approval of concept of construction of Pavilion/Band Stand. It appears that the reason to do
         away with construction of Pavilion/Bandstand was basically paucity of time available and
         demonstrates inadequate planning done for Opening & Closing ceremonies by OC.

16.2.7   However, the consultant Mark Fisher had already been paid469 his consultancy charges
         amounting to INR 2.9 crore for the abandoned concept as discussed above. The amount of
         INR 2.9 crore represents profligate expenditure that arose out of decisions taken at a very
         late stage.


16.3     Inconsistencies in contracting and award of work to K-Events

16.3.1   A new concept of “Aerostat” in place of the abandoned proposal of Bandstand designed by Mark
         Fisher was placed before the GOM on 15.02.2010 and was duly approved. A note470 approved by
         Chairman OC dated 03.02.2010 was found on record clearly mentioning that OC had no background
         to scope of work, or details of design or suppliers of aerostat and was not in a position to issue RFP.
         Based on these ground the recommendation awarding the contract for procurement of “Aerostat”
         on Fast Track Mechanism was approved.

16.3.2   In the meeting of GOM held on 18/02/2010, Chairman OC informed that the estimated cost
         of aerostat project471 would be about US $ 8.1 million on single offer basis. He also
         mentioned that this cost would be over and above the cost of ceremonies already indicated.

16.3.3   In meetings of Negotiation Committee472 constituted by the Chairman, OC dated
         22/02/2010 & 23/02/2010, it was mentioned that “International Consultant and Event
         Management Firm made efforts to find out about the companies who would be willing to
         deliver the customized aerostat in such a short time. However as is the practice
         internationally, most of the companies work on a larger time frame and therefore they are
         not willing to take up this project. In order to produce such a customized Aerostat, which will

         469
               Details of payment to Mark Fisher – INR. 2.9 crores – Annexure 16.3

         470
               Detailed note recommending not to issue RFP for aerostat – Annexure 16.4

         471
               Bid from K-Events with cost details – Annexure 16.5

         472
               Refer MOM of Negotiation Committee dated 22.02.2010 – Annexure 16.6


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                             Fifth Report of HLC – Organizing Committee

         be one of its kind only M/S K-Events on the recommendation of International Consultant (Mr.
         Ric Birch) responded to send OC a formal proposal”.

16.3.4   On a review of minutes of the meeting of Finance Sub-Committee for OC the following was
         observed :

              In meeting dated 03/03/2010 it was mentioned that due to paucity of time and
               requirements of high standards of skill & expertise, for the specially customized proposed
               aerostat for Delhi 2010, assistance was sought from the International Consultant and the
               Event Management Firm, who have been mandated to source potential suppliers. It was
               decided by OC not to issue RFP.

              In meeting dated 06/03/2010 it was mentioned that 23 firms spread over USA, UK,
               China, Germany, Australia, Ireland and India had been contacted for the aerostat. Of
               these, 3 expressed initial interest. Similarly 15 firms for reflecting mirrors, 1 for tape, 8
               for Helium Gas and 5 for Anchors were contacted, however given the criticality of time
               and customization required only M/S K-Events supported by Lindstarnd Technologies,
               agreed to undertake a turnkey project.

16.3.5   Executive Board473 in its meeting dated 08/03/2010 passed the resolution for appointment
         of K-Events for productions, installations and management of Aerostat for the opening and
         closing ceremonies as per the proposed terms and conditions. It was again emphasized in
         meeting that due to paucity of time, high degree of professional expertise required and
         customization involved, only K-Events agreed to undertake this turnkey project.

16.3.6   From the chronology of events and recordings in minutes of meetings of Finance Sub
         Committee and Executive Board it is evident that:

              OC was not interested in making enquires on its own or issue RFP to find a suitable
               supplier of Aerostat and they appeared to be completely relying on the International
               Consultant & Event Management Firm.

              No details of RFP letters or email enquiries made to various suppliers by consultants
               were made available. It could not be validated which suppliers expressed interest;


         473
            MOM of Executive Board Meeting passing resolution for appointment of K-Events for supply of aerostat – Annexure
         16.7


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                whether any negotiations were done by OC or the consultant with those suppliers; the
                price quoted and other terms and conditions discussed. Further no regret letters or
                letters from other supplier on the ground of shorter time frame were also found on
                record.

               The decision for not issuing the RFP was based on advise of International Consultant (Mr.
                Ric Birch), Event Management Firm which appeared to portray a picture under which K-
                Events emerged as the only supplier available in world who could complete this work as
                a turnkey project within the available time frame.

               It is interesting to note that documents474 substantiating that K-Events was working with
                Mr. Ric Birch for past 5 years on several projects were found on record. Consequently, it
                is likely that there was a bias towards selection of K-Events for supply of Aerostat.

16.3.7   It should also be noted that resolution to appoint K-Event was approved by Executive Board
         OC on 08/03/2010, however Lalit K Bhanot, Secretary General, OC vide letter475 dated
         19/02/2010 wrote a letter to K-Events mentioning that “The organizing Committee agrees in
         principle to the Aerostat being a part of opening and closing ceremonies, subject to the
         discussion on the contract during your forth coming visit to Delhi next week. The same would
         become part of the contract after following necessary procedure”. Further, Jarnail Singh,
         CEO, OC vide letter476 dated 26/02/2010, confirmed appointment of K-Events and agreed to
         a timeline for signing the contract. Thus, it is evident that the decision to appoint K-Events
         had already been taken much before the proposal was taken to the EB and Finance Sub-
         committee. This shows utter disregard for the role of oversight and approval committees
         and further corroborates the observation that approval of such bodies were taken for
         granted by OC functionaries.


16.4     Conflict of interest- Due diligence on the supplier

16.4.1   It was surprising that the Consultant who identified the supplier was also entrusted with the
         responsibility for carrying out due diligence on them. A reference was also made to Indian

         474
               Letter from K-Events mentioning 5 year old relationship with Ric Birch – Annexure 16.8

         475
               Letter from Lalit Bhanot to K-Events – Annexure 16.9

         476
               Letter from Jarnail Singh to K-Events – Annexure 16.10


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                               Fifth Report of HLC – Organizing Committee

         Embassy in Italy through email correspondence dated 05/03/2010, however this was done
         after in principle contract was awarded to M/S K-Events.

16.4.2   Further no documents were forthcoming for any analysis of rates or justification of rates
         quoted by supplier. It was observed that OC largely appeared dependent on advice of
         International Consultants and Event Management Firm who depicted a picture that K-Events
         was the only supplier in the world who was ready to design and construct the aerostat. As
         there is no justification or explanation available for the rates, there is no evidence that what
         the OC paid was comparable or in line with market rates. Further, though there was an
         evident close relationship between the International Consultant, Ric Birch, and the K-events,
         it is surprising that the OC did not initiate any secondary level checks to ensure that this
         position was not misused by either the consultant or the supplier to the detriment of the
         OC.


16.5     Inconsistencies in representations

16.5.1   In meeting of Negotiation Committee477 constituted by the Chairman, OC dated 22/02/2010
         and 23/02/2010, it was discussed that “An option of hiring of such a device should be
         evaluated as such a device would have negligible or no legacy value, however it was
         brought that for making the Opening & Closing Ceremonies d spectacular & world class,
         would warrant customizing the device in order that it fit the bill of ceremonies function of
         Delhi 2010. This aerostat being one of its find such device would not be available off the
         shelf anywhere else in the world”. Consequently, the Negotiation Committee appeared to
         simply make a statement that the device would not be available off the shelf without any
         evidence that a due diligence was done or attempts were made to validate their assertion.

16.5.2   Further it was misrepresented that purchase of aerostat was within the limits of bill of
         ceremonies, as in contrast to this Chairman OC himself acknowledged in the GOM
         meeting478 dated 18/02/2010 that “The estimated cost of aerostat would be about US $ 8.1
         million project on single offer basis and this cost would be over & above the cost of
         ceremonies already indicated”.

         477
               Refer MOM of Negotiation Committee dated 22.02.2010 – Annexure 16.6

         478
               Details of MOM of GOM meeting dated 18.02.2010 – Annexure 16.11


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16.6     Ignoring legacy considerations

16.6.1   There were no legacy considerations documented or recorded anywhere by the OC in the
         records made available.

16.6.2   Further, according to contract clause 24 of Schedule 2 of agreement479 entered between OC
         and K-Events it was mentioned that adequate training would be provided by K-Events to
         Delhi CWG Officials for use of Aerostat post CWG games. However no records were
         forthcoming of such training being provided to Delhi Government officials.


16.7     Inadequate testing for airlift of Aerostat before its dispatch from point of
         manufacture

16.7.1   As per the Schedule 2 (Scope of Work) and Schedule 3 (Fees & Payment) of Turnkey Project
         Agreement480 entered upon by Organizing Committee and K-Events dated 18th March 2010
         “Inspection to be done by 4 to 6 officials from Delhi 2010 at the point of manufacture of the
         aerostat outside India and a total of 25% of the total payment was to be made after the
         aerostat test in the UK”.

16.7.2   According to the above terms, the final testing of Aerostat was conducted by K-Events in
         presence of OC representatives on 17th and 18th August 2010. However as per the project
         report481 on test conducted it was mentioned that “Test to airlift the aerostat would not
         happen due to adverse climatic conditions, inclement weather and strong winds. Hence the
         OC team were not able to see the Aerostat air borne and thus OC team was not in a position
         to comment on its feasibility & fullest capacity”

16.7.3   Thus it is evident that feasibility of airlift of aerostat was not tested, which was the core
         purpose for which aerostat was proposed for opening & closing ceremonies and for which 5
         people from the OC traveled to the UK.




         479
               Extract from contract between OC & K-Events – Annexure 16.12

         480
               Extract from contract between OC & K-Events – Annexure 16.12

         481
               Details of the Project test report – Annexure 16.13


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                                 Fifth Report of HLC – Organizing Committee

16.7.4   Further it was also evident that the 25% payment amounting to INR 8.81 crores was
         released to K-Events event though aerostat was not tested at the point of manufacture as
         expressly documented in the contract.


16.8     Payments made without submission of Bank Guarantee and Insurance

16.8.1   As per Clause 11.6 of the contract agreement482 between OC & K-Events, a Performance
         Bank Guarantee (PBG) amounting to 10% of contract value (Approx INR 3.6 crore) was
         required to be submitted before making any payment. It was observed that advance of 20%
         (Approx INR 7.2 crore) was made to K-Events without submission of PBG. Executive Board in
         its meeting dated 08/03/2010 exempted K-Events from submission of any Bank Guarantee
         on the basis of references received from 3 reputed banks regarding the credit worthiness of
         the vendor. However no such reference letters were found on record.

16.8.2   As per Clause 32 of the contract agreement between OC & K-Events, following types of
         insurance documents were required to be furnished by K-Events after payment of 1st
         Milestone (20% advance payment):

               Public Liability Insurance (Approx INR 25 crores)

               Professional Indemnity Insurance (Approx INR 2.5 crore)

               Product Performance Insurance (Approx INR 36 crores)

16.8.3   It was observed that 2nd, 3rd & 4th milestone payments483 were released to K-Events without
         submission of Professional Indemnity Insurance & Product Performance Insurance. Such
         payments amounted to approx INR 20.03 crores. All these payments were made as special
         waivers duly approved by Chairman OC484, vide Letter dated 19/07/2010 where it was
         mentioned that “Despite non fulfillment of contractual obligations by M/S K-Events in
         respect of non-furnishing of Insurance Policies, special waivers have been given in order to
         ensure that the project proceeds on time”



         482
             Extract from contract between OC & K-Events – Annexure 16.12

         483
               File note, detailing special approvals accorded for waiver – Annexure 16.14

         484
               Letter authorized by chairman, OC approvals for non submission of insurance policies – Annexure 16.15


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                                 Fifth Report of HLC – Organizing Committee

16.8.4   From above it evident that OC appeared submissive to the demands and conditions of K-
         Events. Vendor dictated its own advance and payments terms, even without submission of
         the critical Insurance documents, the payments were released to vendor giving an undue
         advantage to vendor. Further, the absence of insurance documents and PBG would have
         gravely endangered the OC in the event of unsuccessful performance of the underlying
         equipment.

16.8.5   Executive Board485 in its meeting dated 16/04/2010 approved a proposal that submission of
         “Bank Guarantee for advances and Performance Bank Guarantee for execution of contract
         may not be required for International/Domestic Consultants/Experts/Artists since these
         persons are of International/National repute and their payments are released in stages
         based on certification of work by the Functional Area”.

16.8.6   The waiver of submission of Bank Guarantee/PBG increased the risk on OC leaving no re-
         course action available in case of default by any such suppliers. Approval of such a proposal
         was thus complacent and arbitrary in nature. It is likely that such decision was taken to give
         an undue advantage to some of preferred suppliers and consultants working for OC.


16.9     Incurring expenses on behalf of the supplier, K-events with no recovery

16.9.1   As per the letter486 from K-Events dated 17/02/2010, it was requested that:

               The Delhi 2010 OC, shall provide two business class return airfares from Milan, Italy to
                Delhi in accordance with a schedule to be mutually agreed between K-Events & OC

               The Delhi 2001, OC shall provide Hotel Accommodation in Delhi of five star standard at
                Lalit Hotel, Imperial Hotel, Oberoi Hotel or Sheraton Hotel and shall pay for all costs of 2
                rooms for duration of the visit by K-Events Representatives

16.9.2   The purpose of aforesaid meeting was to sign contract with OC and it was observed that
         tickets & accommodation was arranged by OC for K-Events representatives. This is
         inexplicable as the vendor was expected to pay for its journey to sign the contract and OC



         485
               MOM of Executive Board meeting – Annexure 16.16

         486
               Letter from K-Events for meeting in Delhi – Annexure 16.17


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                               Fifth Report of HLC – Organizing Committee

        should not have taken any obligation to meet such costs. There could be no justification of
        OC bearing such expenses.


16.10   Contractual savings by K-Events not considered for subsequent changes to design &
        theme of Opening & Closing Ceremonies


        Component “Sausage” of Aerostat was not used while ceremonies

16.10.1 A project report was submitted by K-Events on 12/04/2010 detailing that Aerostat will
        consist of two major components:

              The “Torus” – elliptical shaped tube 12m in diameter measuring 80m long and 40m wide
               and internal volume of approx 18,000 cum. A cable net is attached to the underside of
               the Aerostat to support approximately200 mirrors, each of which has a diameter of 2.4m.
               There is a decorative “skirt” around the outside of the torus. There is a series of 36
               hanging points on the underside of the Torus to support the 36 drummers who will be
               deployed at the beginning of the opening ceremony and a 25m long truss will be
               suspended beneath the “Sausage” which contains 4 off “Scenic” winches which may be
               used to raise and lower a combination of scenic items & performers”

              The “Sausage” – cylindrical shaped 36m long with a diameter of 12m and an internal
               volume of approx 3,600 cum. It sits inside the “Torus” along with centerline and is
               attached to the Torus with a series of cables.

              No break up of material/design/construction cost of major components was detailed in
               contract or any details were provided by K-Events.

16.10.2 In a mutual decision between OC and K-Events487 vide note dated 09/09/2010 (20 days
        before the opening ceremony) it was decided that “Sausage” would be removed completely
        and would be carefully packed away and handed over to OC after the closing ceremony
        along with the rest of the aerostat. Following were the reasons mentioned for non usage of
        “Sausage”




        487
              Detailed note for non usage of “Sausage” dated 9 Sept 2010 – Annexure 16.18


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                                Fifth Report of HLC – Organizing Committee

               “Sausage” was introduced in order to provide the additional buoyancy in centre of the
                aerostat for scenery while the 36 drummers were lifted by the Torus, since drummers
                (Flying crew) have been cut from the show there is no need for the additional buoyancy.

               The quality of projected images will benefit from the increased stability of the Torus that
                the elimination of the Sausage will provide.

16.10.3 It is not clear why the decision to abandon the use of “Sausage” was taken just at the anvil
         of the games and after OC had already incurred expenditure running into crores of rupees
         procuring the equipment under ‘emergency’ situations. In this regard, the following issues
         are especially evident.

               Such a decision taken after the design and construction was already finalized indicates
                uninformed and unprofessional decision making. Substantial costs could have been
                saved on design, engineering and construction of “Sausage” if its usage was challenged
                at the time initial design and               drawings were approved by OC lead by team of
                ‘International Consultants’.

               One sixth of the total cost of Aerostat was attributable to “Sausage” and a timely
                decision would have led to a savings of approx INR 6 crores (1/6 of the total contract
                value of INR 36 crore). However as per computations done by OC, cost488 of INR 1.71
                crores has been determined as cost to be deducted for non utilization of Aerostat, since
                “Sausage” in deflated condition has been handed over to OC so no deduction is made on
                account of material & other components cost. It is extraordinary that the OC downplays
                the cost incurred and represents a loss of INR 1.71 crore, when in reality, the entire cost
                of INR 6 crores resulted in an equipment component that was not used at all in the
                ceremonies, with full knowledge and approval of the OC.

               It also becomes questionable whether all these aspects mentioned for non utilization of
                “Sausage” were considered while testing was conducted at point of manufacture in UK
                during August 2010. No such considerations/comments for additional buoyancy were
                detailed in testing report.




         488
               Computation by OC for non utilization of Sausage – Annexure 16.19


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                                Fifth Report of HLC – Organizing Committee

         Non utilization of Flying Crew during the Ceremonies

16.10.4 As per the Schedule 3 of contract entered into between OC and K-Events, a total of INR3.58
         crore was towards Flying & Rigging, the detailed break down was as under:

         Table 16.2:

         Flying and Rigging                                      Euros     INR

         Scenic Rigging Winches                                  178,125   10,687,500

         Power Distribution                                      94,875    5,692,500

         Winches Feight                                          88,650    5,319,000

         Scenic Rigging Crew                                     157,516   9,450,960

         Flying Rigging Crew                                     77,045    4,622,700

                                                                 596,211   35,772,660


16.10.5 A letter dated 19/07/2010489 by Chairman OC, mentioned that “Even though a turnkey
         contract has been entered into with M/S K-Events for supply of aerostat states that scope of
         work includes all rigging and flying equipment and manpower, yet we at OC are quite
         aware that this lends itself to several interpretations. We all too would like to have the
         flying artistes both on the periphery as well as on the inner circle along with the raising of
         the scenic pops”.

16.10.6 However in a meeting490 dated 28 July 2010, it was unanimously decided that flying of
         performers should be dispensed with due to following reasons:

               When flying performers, the safety of the Aerialists and adjacent performers is
                paramount. Any accident of injury would generate negative publicity and risk spoiling the
                positive image of the commonwealth games.

               Insufficient time at JLN stadium for ensuring safety of flying performers as the Aerostat is
                expected at the end of August and its setting up itself would take 10 to 12 days.

         489
               Letter from Chairman OC – Annexure 16.20

         490
               Meeting for non usage of Flying crew – Annexure 16.21


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              Aerostat has been designed and engineered to withstand wind speeds in excess of
               10m/sec the various scenic elements and any performer flying would fall victim to the
               weather at much lower wind speeds. The huge investment required to deliver performer
               flying would then be completely wasted and the expectations not delivered

              The impact of having only 10 performers flying would not create the desired effect for
               they would be lost under the huge aerostat and the flying performers would be visible
               only as small pecks

16.10.7 It is questionable that why these safety issues were not considered at the time of design and
         construction of the Aerostat, the grounds on which use of flying performers have been
         rejected, it demonstrates that Internal Consultants, OC representatives and designer were
         not able to address these issues and highlight remedies. Due to this, theme of flying
         drummers was dropped.

16.10.8 It should be noted that no deduction was made from the payments made to M/S K-Events,
         even though company would had a saving of approx INR 1.4 crore due to non utilization of
         flying & scenic crew as detailed above.


16.11    Summary and conclusions

16.11.1 From the review of the entire contracting and execution process, it is evident that the OC
         officials did not handle the awarding and monitoring contracts in adequately professional
         and well informed manner and this could have resulted in undue benefits to suppliers.
         Opportunities to reduce costs were not availed and on the contrary there was significant
         wasteful and avoidable expenditure. This summary arises from the following key points:

              The decision by GOM to do away with construction of Pavilion/Bandstand came too late
               with the consequence of wasteful expenditure of INR 2.9 crores paid as consultancy
               charges for its design, a concept that was abandoned.

              Delay caused due to the late decision to abandon the Bandstand created a situation
               where OC officials were left with very little time and opportunity to making enquires on
               their own or issue RFP to find a suitable supplier of Aerostat. However, they completely
               replied upon the information and experience of International Consultant & Event



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      Management Firm in stead of developing their own inquiries to make informed
      decisions..

     The decision to not issue an RFP was solely based on advice of International Consultant
      (Mr. Ric Birch), and Event Management Firm (Wizcraft) which portrayed circumstances
      under which K-Events emerged as the only supplier available in the world, who could
      complete this work as a turn key project within the available time frame. OC officials
      should have seen the implication of the relationship between the consultant and the
      supplier K-Events for past 5 years on several projects. In view of these facts a likelihood
      of a bias towards the vendor cannot be ruled out.

     In principle agreement/confirmation to K-Event for design, technical implementation,
      manufacture and project management of the aerostat by Lalit K Bhanot, Secretary
      General, OC vide letter dated 19.02.2010, even before the proposal was recommended
      by Finance Sub-Committee or approved by EB, rendered the approval by the EB to a
      formality for the legitimacy of a decisions already taken by OC senior functionaries.

     The fact that aerostat was approved to be shipped even without testing of airlift of
      Aerostat, gravely endangered the feasibility and capacity testing. Payments released to
      K-Events even without submission of Insurance documents based on special waiver
      approved by Chairman OC was an undue advantage to supplier.

     Timely decision on design for finalization of aerostat would have helped exchequer save
      approx INR 6 crores as component “Sausage” was not used during games.. It is not clear
      why all these aspects mentioned for non utilization of “Sausage” were not considered in
      testing report while testing was conducted at point of manufacture in UK during August
      2010.

     Savings would have been made by supplier due to non utilization of flying
      drummers/crew but no deduction was made from contract value. Approx INR 1.4 crore
      was saved by K-Events, on this account thus giving undue advantage to supplier.




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17 Chapter 17: Ceremonies – Art Director

17.1     Background

17.1.1   For the production and delivery of opening and closing ceremonies a contract was required
         for Art Director and Production Designer and for Scenic workshop Construction works. After
         issue of separate RFPs for the two works, contract for both works was given on a single
         tender basis to the same vendor (Omung Kumar) who was strongly recommended by the
         Creative Director, EMF and International Consultant.

17.1.2   A brief chronology of the key events relating to the award of contract in respect of
         Searchlights, Lightings and Lighting Designer is set out in the Table 1 below.

         Table 17.1:

         Date                       Particulars




         20.03.2010                 5 Nominations made by Wizcraft, Ric Birch and Bharat Bala for the
                                    work of Art Director and Production Designer for opening and
                                    closing ceremonies.

                            Omung Kumar was strongly recommended by Creative Director, Event
                                    Management Firm (EMF) and International Consultant and he was
                                    asked to submit a quotation.

         06.04.2010                 RFP issued on 27.03.2010 for Scenic workshop construction
                                    cancelled

         12th April’2010            Revised scope of work sent to Omung Kumar including the work for
                                    scenic workshop management and construction company

         17th April’ 2010           Revised offer received from Omung Kumar in 2 parts-

                                    -Fees as creative Art Director and Production Designer- INR 1.48
                                    crore

                                    -Charges in percentage on the cost of producing, manufacturing


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                        and delivering the art and scenic props- 20%

26th April’2010         Negotiation by the negotiating committee consisting of :

6th May’ 2010           ADG ( F& A)

                        ADG ( Procurement)

                        SDG (C&C)

                        Representative of Wizcraft

14th May’ 2010          List of props was sent to the vendor asking for a single quote for
                        both works of Art Director and Production Designer and production
                        of art and scenic props.

                        Quotation of INR 20 crore received from the vendor.

25th May’ 2010          Reduced list of props sent to Omung Kumar ( due to changes in
                        creatives)

23rd June’ 2010         Revised proposal of INR 13.10 crore received for reduced list of
                        props.

25th June’ 2010         Further negotiations held by the negotiating committee comprising
                        of :

                        ADG ( F& A)

                        DDG ( Legal)

                        DDG ( C& C)

                        Representative of Wizcraft

                        FTC approved contract price of INR 11 cores plus taxes plus cost of
                        business class air tickets on Air India (max of 48).

9th July’2010           Date of Contract awarded to Omung Kumar for opening Ceremony.

19th August 2010        Decisions of FTC ratified by EB in 24th meeting held on 19.08.2010




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         29th September’ 2010           Date of addendum to contract for opening ceremony amounting to
                                        INR 1.45 crores plus taxes (approved in FTC meeting held on 3rd
                                        September’2010)

         10th October’ 2010             Date of contract for closing ceremony amounting to INR 4.04 Crores
                                        plus taxes (approved in FTC meeting held on 16th and 26th
                                        September’2010)



17.2     No Quotations were asked for Construction of props

17.2.1   Wizcraft, International consultant and Bharat Bala recommended 5 nominations for
         potential vendors for the work of Art Director and Production Designer for opening and
         closing ceremonies. Of them, Omung Kumar was strongly recommended by Wizcraft,
         International consultant and Bharat Bala in FTC meeting held on 20.03.2010 491. Therefore
         initially quotation was asked only from Omung Kumar. But as the RFP for the scenic
         workshop was scrapped (discussed in the following paras) due to high value of bids and
         Omung Kumar was having his own workshop, scope of work for Art Director and Production
         Designer was merged with the work of scenic workshop management and construction.
         Accordingly Omung Kumar was asked to make a new quote for increased scope of work on
         12th April, 2010. Omung kumar was finally contracted for both the works without inviting
         fresh quotations for the scenic props fabrication. As a result the same vendor was awarded
         two works492 without any effective competition.

17.2.2   The earlier RFP for scenic workshop management and construction of workshop and scenic
         fabrication did not include props fabrications. The clauses 19.3.5 and 19.3.6 of RFP493 asked
         for the different quote for workshop Construction and for fabrication of props. According to
         the flow chart given under clause 19.3.6494, Agency for workshop construction would send
         quote for scenic fabrication to Wizcraft and IPD (Indian Production Designer), based on the


         491
               Refer Annexure 17.1

         492
            Two works include work of Art Director and Production Designer for the production and delivery of the ceremonies and
         the scenic workshop management and construction

         493
               Refer Annexure 17.2

         494
               Refer Annexure 17.2


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                                Fifth Report of HLC – Organizing Committee

         drawings etc provided by IPD. Then such quote would be reviewed and approved by
         Wizcraft and IPD and OC would send the agency a purchase order for the same.

17.2.3   Therefore the vendor for construction of workshop was to be finalized and then finalists
         would be sent quote for the props to be made according to the designs of Production
         Designer. As the RFP for Workshop Construction Company was scrapped on 06.04.2010495
         (as approved by FTC on 14th April, 2010496) due to high price bids no quotation was asked for
         the fabrication of props.

17.2.4   It thus appears that as a consequence of improper planning by OC officials and Wizcraft,
                                                                     497
         around 4 months were wasted (Jan 2010                             – April 2010) in respect of setting up of a
         separate workshop or using an existing workshop. Further, without searching for potential
         vendors for fabrication of props, the work was given to Omung Kumar who was initially
         nominated only for the work of Art Director and Production Designer. In the 3 months gap
         between the date of cancellation of RFP for scenic workshop and actual date of awarding
         the contract to Omung Kumar (06.04.2010 to 9.07.2010), a comparative price for the
         contract for fabrication of props could have been obtained through tendering process.


17.3     Delays in finalization of contracts for Opening and closing ceremonies

17.3.1   It is relevant to note that the concept and theme for opening and closing ceremonies was
         presented in the GOM meeting held in September’09 and December’09. But various scenic
         elements and props were finalized and contracted in September’2010498 and
         October’2010499 for opening and closing ceremonies respectively. Hence it took 10 to 12
         months in finalizing the props for the ceremonies. Further this left OC without appropriate
         time to negotiate the price quoted by the vendor or to make market rate comparison. Table
         2 below shows the delays in the tender processing:



         495
               Refer Annexure 17.3

         496
               Refer Annexure 17.3

         497
               Idea of scenic workshop construction and management was initiated in Jan 2010.

         498
               Refer Annexure 17.4

         499
               Refer Annexure 17.4


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                          Fifth Report of HLC – Organizing Committee

         Table 17.2:

          S.    Starting Date                            Ending Date                       Delays ( in
          No                                                                               months)

          1     Concept     and   theme   for   opening Addendum to the contract for 12
                ceremonies was presented in the GOM Opening Ceremony-29.09.2010
                held on 11.09.2009

          2     Concept     and   theme   for    closing Contract for closing ceremony- 10
                ceremonies was presented in the GOM 10.10.2010
                held on 20.12.2009

          3     Nominations for Art Direction and Finalization of Original Contract 3.5
                Production Designing in Fast Track (for Art Direction & Production
                meeting- 20.03.2010                      Designing      and      Scenic
                                                         Workshop)- 09.07.2010

          4     Finalization of Original Contract (for Art Changes   proposed   to   the 2.5
                Direction & Production Designing and existing scope of Work in
                Scenic Workshop)- 09.07.2010             respect of opening ceremony
                                                         very late. Addendum to the
                                                         contract      for      Opening
                                                         Ceremony-29.09.2010

          5     Date of cancellation of RFP for Scenic Finalization of Original Contract 3
                Workshop- 06.04.2010                     (for Art Direction & Production
                                                         Designing      and      Scenic
                                                         Workshop)- 09.07.2010

          6     Date of cancellation of earlier RFP for Contract for closing ceremony- 6
                Scenic Workshop- 06.04.2010              10.10.2010



17.4     Major reduction on account of reduced list of items

17.4.1   The cost reduction achieved by OC, in respect of the contracts awarded to Omung Kumar for
         opening and closing ceremonies was mainly on account of curtailed scope of work as
         discussed below:

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                       Fifth Report of HLC – Organizing Committee

      Initially the vendor made separate proposals for Art Direction and for Scenic Workshop.
       After the second negotiation meeting held on 6th May, 2010 and the discussion between
       EMF and FA (ceremonies), he quoted the lumpsum amount of INR 20 Crore for both
       works.

      It has been observed that out of the total reduction of around INR 9 crore, INR 7.50
       Crore were reduced on account of reduction in scope of work and changes in creatives
       for the scenic workshop. On the basis of such reduced list500, vendor made a new
       proposal of INR 13.10 Crore on 23rd June 2010 (i.e. after reduction of INR 6.90 crore).
       After negotiation price was further reduced by INR 2.10 Crore (out of which 0.60 crore
       was on account of reducing number of train compartments).Therefore reduction of
       INR7.5 crore (INR 6.90 crore plus INR 0.60 crore) related to reduction in list of props to
       be fabricated by the vendor.

      The quotation of INR 1.45 crore (i.e. INR 0.76 crore for puppets plus INR 0.69 crore for
       changes in the existing props of opening ceremony) made by the vendor was not
       reduced.

      In respect of closing ceremony, the price demanded by the vendor was marginally
       reduced by reducing the scope of work as shown in Table 3 below.

Table 17.3:

    Name of Segment                        Quotation      Contract price   Diff
                                           received

    Agni and Music of Universal Love       3.89 Crores    3.70 Crores      0.19 crores

    Countdown and Vande Matram             0.34 crores    0.34 Crores      -




    Total                                  4.23 Crores    4.04 Crores      0.19 Crores




500
      Refer Annexure 17.5


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                                Fifth Report of HLC – Organizing Committee

17.4.2   It appears that Stage canopies with folded mechanism, costing INR 19.73 lakh and Lectern,
         costing INR1 lakh (aggregating INR 21 lakh) as per quotation, were not included in the final
         contract. Therefore it may be concluded that reduction of INR 0.19 Crores in this contract
         was achieved by excluding the above mentioned two items.


17.5     List of props to be fabricated for the opening and closing ceremonies was not
         efficiently made

17.5.1   The BOQ for the opening ceremony was not made properly. After entering into the contract
         with Omung Kuamr for opening ceremony on 09.07.2010 a requirement of additional props
         like cable hangar brackets with accessories were identified501. Contract for these
         equipments were entered into with another vendor.

17.5.2   Further, there was delay in proposing changes and additions to the existing Scope of Work
         in respect of opening ceremony for which contract was entered into with Omung Kumar on
         09.07.2010. Bharat Bala and Shyam Benegal suggested some changes to the existing props
         and additional puppets for the Opening Ceremony to Omung Kumar after their visit to the
         Ceremonies Production Workshop on 3 – 5 August 2010. Omung Kumar in turn proposed
         some of the suggested changes with cost and other without cost (i.e. to be adjusted in the
         original contract price only).Total price for the changes and additions as approved by the
         Fast Track Committee on 3rd Sep 2010 was INR 1.45 Crores plus Taxes. The Addendum to the
         contract for Opening Ceremony regarding changes and additions to the props was entered
         into with Omung Kumar on 29th September, 2010, only a few days before the Opening
         ceremonies OC had no option to negotiate price for such changes/ additions due to the
         shortage of time.


17.6     Some of the props of ceremonies were not used at all

17.6.1   It has been found that some of the props valuing INR 3.04 crore contracted for opening and
         closing ceremonies were not used at all.




         501
               Refer Annexure 17.6


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                                Fifth Report of HLC – Organizing Committee

               6 out of the total 16 puppets were not used as all 14 (2 out of 16 were used in
                rehearsals) puppets could not be adjusted on the stage. The price of 6 puppets
                aggregates to INR 0.28 Crores502.

               Further in respect of closing ceremony, props valuing INR 2.76 Crores503 were not used in
                the Ceremony. The unused props are kept unpacked (see photographs attached 504).


17.7     Some of the items as per contract not provided by the vendor

17.7.1   According to the calculation made by OC, items amounting to INR 1.74 Crores505 were not
         received in respect of opening and closing ceremonies. The total amount includes the price
         of the props ( including rehearsals props) amounting to INR 1.44 Crores relating to the
         Opening Ceremony and INR 0.30 Crores pertaining to value of vehicles used as props whose
         ownership was not handed over by the vendor to OC. The value of same has been decided
         to be deducted by OC from the last installment amounting to INR 1.75 Crores payable to the
         vendor.

17.7.2   The props amounting to INR 1.44 crores not provided by the vendor were not used in the
         ceremonies. This means that such items/ props were not actually needed for the
         ceremonies and the BOQ was not prepared accurately.


17.8     Other issues


         Single Tender issued while nomination for 5 firms was in hand

17.8.1   Wizcraft suggested for a single source in respect of the work of Art Director and
         Construction of workshop to produce and create props, in the FTC meeting held on 18 th




         502
               Refer annexure 17.7 for the calculation done considering price as per addendum to contract for opening ceremony

         503
            Calculation of the value of loss was done after considering prices of individual props/items as per the quotation made
         by supplier (Refer Annexure 17.8) as lumpsum contract price of INR 4.04.crore was given in the contract for closing
         ceremony.

         504
               Refer Annexure 17.9

         505
               Refer Annexure 17.10


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                                Fifth Report of HLC – Organizing Committee

         March’2010506. The FTC committee disagreed with the same and recommended that limited
         tender should be issued for the above mentioned work.

17.8.2   However, Bharat Bala, Ric Birch and Wizcraft argued that RFP could not be issued and
         suggested names for consideration of FTC. FTC took into consideration the names along
         with their profiles as suggested by the Creative Director, EMF and International Consultant
         in its meeting held on 20.03.2010507. In the meeting Wizcraft, Ric Birch and Bharat Bala
         strongly recommended the nomination of Omung Kumar. Even though there were 5 options
         with OC including Omung Kumar, no RFP was issued to all and quotations was asked from
         Omung Kumar. If Limited tender was issued to the 5 nominations, competitive prices could
         have been received by OC.

17.8.3   It is pertinent to mention that Omung Kumar was engaged in other projects with Wizcraft
         like project of ‘Kingdom of Dreams’508. Recommendation of this vendor by Wizcraft may be
         seen in this context. Therefore they had clear commercial and business relation before
         Omung Kumar was recommended by Wizcraft, International Consultant and Creative
         Director.


         No other option but to work on terms of a vendor

17.8.4   Omung Kumar refused to provide flag poles costing INR 1,56,700 plus taxes vide its letter
         dated 14th July,2010509 on the ground that the changes suggested by Bharat Bala on the
         props was to be redone by Omung Kumar several times.

17.8.5   In consequence flag poles were purchased from another vendor. As there was not much
         time left for the ceremonies, OC could not do anything other than engaging another vendor
         for such items.




         506
               Refer Annexure 17.11

         507
               Refer Annexure 17.1

         508
               Refer Annexure 17.12

         509
               Refer Annexure 17.13


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                                 Fifth Report of HLC – Organizing Committee

         No stock entry for the props purchased for rehearsals of ceremonies at the Rehearsal Ground

17.8.6   While verifying the Delivery Challans maintained at JLN Stadium in respect of props received
         from the vendor, it was found that some of the challans510 were on account of rehearsal
         props transferred from rehearsal ground to JLN Stadium. This means Rehearsal Props were
         directly supplied from the scenic workshop at Chattarpur to the rehearsal ground.

17.8.7   However, no stock entry procedure was followed in respect of props received in and
         transferred out of the rehearsal ground. The stock register maintained by the Logistics
         department was in respect of props received at the JLN Stadium from the workshop and
         rehearsal ground. Therefore it is not known what all props were transferred from the
         Chattarpur workshop to rehearsal ground and then from rehearsal ground to JLN stadium.


         No Insurance was taken for the props

17.8.8   Wizcraft indicated that no insurance was required for the props and scenic elements as once
         the goods are handed over to OC for rehearsals followed by shows, it would ultimately
         become the responsibility of OC. Therefore, no insurance clause was inserted in the
         agreement entered into with Omung Kumar511.

17.8.9   It is noticed from the Delivery Challans that materials/ props sent by Omung Kumar started
         arriving from 11th September’2010 at JLN stadium and these were kept at the stadium
         without any insurance cover till the date of opening and closing ceremonies. This was an
         unacceptable risk.


         Returning of entire Stage Material to OC was doubtful

17.8.10 The challans512 for delivery of Material/ Props at the stadium were bearing dates after the
         closing ceremony duly signed by the vendor. Ceremonies FA clarified that challans were in
         respect of returning of the stage material of the Opening Ceremony that were taken away
         by the vendor in the confusion that the stage was not a property of OC. But after the matter
         was cleared that the stage was under the ownership of OC as per the contract, the same

         510
               Refer Annexure 17.14 for few copies of challan

         511
               Refer Annexure 17.15

         512
               Refer Annexure 17.16


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                                Fifth Report of HLC – Organizing Committee

         was returned to OC after the closing ceremonies. As per the contract, price charged by the
         Vendor for the stage was INR 1.85 Crores.

17.8.11 According to the Ceremonies FA, the stage while being taken out by the vendor, was cut
         into pieces (as per the issue voucher dated 04.10.2010513). But when returned to the OC it
         was not in same number of pieces and cut into more pieces (challans for the date after the
         closing ceremony was in respect of these pieces only) and Wizcraft was responsible for
         verifying the same. No certificate or report from Wizcraft is available with OC certifying that
         the whole stage was returned to OC.


17.9     Summary and Conclusions

17.9.1   A vendor who was initially nominated to work as an Art director and Production Designer
         also got the contract for scenic props fabrication due to the convoluted process of
         contracting. In view of the commercial relation already existing between the vendor and the
         event management firm, the selection process for the vendor appeared to have been
         influenced by the event management firm.

17.9.2   Due to extensive delays in contracting for opening and closing ceremonies, OC had to
         contract the work at rates asked by the vendor. It was left with no time to check and
         confirm if quotations by the vendor were comparable with the market rates.

17.9.3   A result of preparing an extravagant BOQ, as seen from unused and unsupplied items was
         that OC took upon itself a non recoverable loss of INR 3.04 cores.




         513
               Refer Annexure 17.16


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                           Fifth Report of HLC – Organizing Committee

18 Chapter 18: Ceremonies – Lighting and
         Searchlights

18.1     Background

18.1.1   Special lightings and searchlights were required for opening and closing ceremonies at the
         JLN Stadium and proper light effects for the Aerostat which was procured from M/s K
         Events. The FA (ceremonies) was tasked with the opening and closing ceremonies and
         procurement of the facilities relating to ceremonies.

18.1.2   On the recommendations of International Consultants including Technical Director, Mr.
         Piers Shepperd, Lighting Designer, Mr. Durham Marenghi, International Consultant, Mr. Ric
         Birch and Creative Director, Mr. Bharat Bala, two limited RFPs were issued to the companies
         nominated by the Technical Director and event management firm, wizcraft in respect of
         hiring of supplier for providing Turnkey solution for Searchlights and Lightings at JLN
         Stadium.

18.1.3   While the RFPs were issued for Searchlights and Lightings separately, OC ultimately awarded
         contract to one vendor for a combined package for searchlights, lightings and Lighting
         Designer at the insistence of the vendor. The equipments finally contracted were different
         from the BOQ made earlier by the Lighting Designer and viability of the rates was not
         assessed as number of items of equipments and item wise rate of equipments were not
         obtained by OC.

18.1.4   A brief chronology of the key events relating to the award of contract is set out in the Table
         18.1 below.




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Table 18.1:


 S.no Date                          Particulars


 1     30th April, 2010             Limited tender issue to 5 companies nominated by Piers
                                    Shepperd and M/s Wizcraft in respect of each of the
                                    following:

                                    1. Turnkey Solution for Searchlights at JLN Stadium

                                    2. Turnkey Solution for lighting at JLN Stadium


 2     Submission of bids           Following vendors responded to the RFP:

                                    Searchlights:

                                    1. Syncrolites, USA

                                    2. A+O technology GmbH, Germany

                                    3. PRG, Belgium

                                    4. BeiAO Events, China

                                    Lightings:

                                    1. Neg Earth Lights, UK

                                    2. Agora ' srl, Italy

                                    3. PRG Belgium.

                                    4. BeiAo Events, China


 3     17th May 2010                Opening of technical bid


 4     Meeting         I-   19th Technical evaluation
       May’2010- Meeting II- 25th
       & 26th May’2010-


 5     28th May’2010                Opening and evaluation of commercial bid


 6     4th June’2010                Re- Evaluation of Technical Bids in respect of Searchlights




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                          Fifth Report of HLC – Organizing Committee

          S.no Date                            Particulars


          7      9th June 2010                 Negotiations with PRG which was decided as L1 in both the
                                               above cases.


          8      9th June 2010                 Proposal of Combined package comprising Searchlights,
                                               Lighting and Lighting Designer was received from PRG.


          9      17th & 18th June 2010         Approved in the Fast Track Committee at a combined package
                                               of $ 3.5 million or INR 16.46 crores for lighting, Searchlights
                                               and Lighting Designer.


          10     27th June 2010                Approval in EB for combined package for Searchlights and
                                               Lighting and Lighting Designer


          11     9th July 2010                 Contract awarded to PRG for combined package




18.1.5   The OC officials, International consultants and event management firm, involved in the
         tendering process are given in the Table 18.2 below:

         Table 18.2:


          Name                                 Designation


          Searchlights:                        Mr. J N Mittal- DDG (A/cs)

          Technical Evaluation Committee:      Ms. Purnima Pendse- DDG (C& C)

          Commercial              Evaluation Mr. Surjit Lal- DDG (Logistics)
          Committee:
                                               Mr. R P Gupta – ADG (Venue Operations), OSD (GV)
          Lightings:
                                               Mr. J N Mittal- DDG (A/cs)
          Technical Evaluation Committee:
                                               Ms Sujata Ayer- Director (C&C)
          Commercial              Evaluation
                                               Mr. J N Mittal- DDG (A/cs)
          Committee:
                                               Ms. Purnima Pendse- DDG (C& C)
          Negotiation Committee:
                                               Mr. Surjit Lal- DDG (Logistics)


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                                Fifth Report of HLC – Organizing Committee

          Communications with various Mr. R P Gupta – ADG (Venue Operations), OSD (GV)
          consultants, EMF etc
                                            Mr. J N Mittal- DDG (A/cs)

                                            Ms Sujata Ayer- Director (C& C)

                                            Mr. Sanjiv Mittal- JDG – Procurement

                                            Mr. R P Gupta – ADG (Venue Operations), OSD (GV)

                                            Mr. Ram Mohan- DDG (Legal)

                                            Mr. Bharat Prasad- (DDG- F & A) appointed by SDG (F&A)

                                            Ms. Indu Anand- Convenor (C&C)

                                            Mrs. Shovna Narayan- SDG- (C& C)


          M/s Wizcraft                      Event Management Firm (M/S Wizcraft)

                                            Involved in nominations suggested for Searchlights and
                                            Lightings, making budget estimates and participating in all
                                            negotiations meetings.


          Mr. Piers Shepperd & team         Technical Director, Ceremonies

                                            Suggested nominations for vendors for searchlights and
                                            Lightings alongwith Wizcraft


          Mr. Durham Marenghi & Team        Lighting Designer, Ceremonies

                                            Involved in preparation of Lighting Design and BOQ for both
                                            Searchlights and Lightings



18.2     Inefficient evaluation of Technical Bid

18.2.1   The Table 18.3 below shows the marks given to the bidders after evaluation of their
         technical bids514:




         514
               Refer Annexure 18.1 & 18.2


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         Table 18.3:


          Name of the bidder                                        Points given out of 60


          Searchlights:


          Syncrolites, USA                                          48


          PRG Belgium                                               48


          BeiAo Events, China                                       13


          Lightings:


          PRG Belgium                                               60


          Agora Srl                                                 39


          BeiAo Events, China                                       10




18.2.2   It is noticed from the evaluation sheet515 and the points given under each clause for the
         tender for searchlights and lightings that technical evaluation done was not fair (Tables 18.4
         & 18.5)

         Table 18.4: Searchlights


          Bidders and marks Clauses                   as    per   the Findings
          given                             requirement


          Maximum Marks: 10                 The bidder should have Marks were given to PRG though PRG did
                                            minimum annual Turnover not provide the Turnover for last five
          Syncrolites, USA: 10
                                            of $ 5000000 USD and years and only provided the financial
          PRG, Belgium: 10
                                            should have been registered statements of Procon Multimedia AG for

         515
               Refer Annexure 18.1 & 18.2


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 BeiAo Events, China: 7     for at least 05 years.          the   period     ending       December’2009.
                                                            Procon was acquired by PRG in December
                                 1) Company’s Size and
                                                            2009 through the Subsidiary of PRG.
                                    scale
                                                            Consolidated Financial Statements of
                                 2) Past performance of
                                                            Procon were showing net loss of Euros
                                    the Company
                                                            6794 for the year ending December,
                                 3) Current
                                                            2009516.
                                    Commitments
                                                            PRG was nominated and also issued the
                                 4) Financial Capability
                                                            RFP. So financial statements of PRG was
                                    of the Company
                                                            required to be submitted for the period
                                 5) Company Structure       as per the RFP clause mentioned above.

                                                            Therefore 0 marks should have been
                                                            given to PRG under this clause.


 Maximum Marks: 25          List of Equipments that will As per clause 23.2.3 of RFP517 the
                            be    supplied    to     satisfy equipments listed in the scope of work
 Syncrolites, USA: 25
                            technical brief or offer valid were the preferred choice of the Lighting
 PRG, Belgium: 18
                            alternative equipment           designer. Alternative fixtures could be
 BeiAo Events, China: 5                                     suggested by suppliers but must be
                                                            capable     of   satisfying    the   principle
                                                            technical requirements of the lighting
                                                            designer.

                                                            Both PRG and BeiAO events mentioned
                                                            alternative equipments518 but in tech
                                                            evaluation, BeiAO got 5 marks and PRG
                                                            got 18 Marks out of 25 marks.

                                                            According to Durhum, systems proposed
                                                            by BeiAo and PRG were identical i.e. 4.5
                                                            Kw Gel Scroller Searchlights and 4 Kw


516
      Refer Annexure 18.3

517
      Refer Annexure 18.4

518
      Refer Annexure 18.5


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                        Fifth Report of HLC – Organizing Committee

                                                             HMIs with gel scrollers. Thus PRG was
                                                             favoured.

                                                             Equal marks should have been given to
                                                             PRG and BeiAO.


 Maximum Marks: 5                 Details     of      OH+S No marks were given to PRG, Syncrolites
                                  documentation certificates and BeiAO in respect of this parameter
 Syncrolites, USA: (No
                                  and procedures             though:
 marks given)
                                                             Syncrolites519   had     provided     testing
 PRG,        Belgium:       (No
                                                             reports/certificates and procedures as
 marks given)
                                                             required in the bids.
 BeiAo Events, China:
                                                             PRG520 had provided only the procedures/
 (No marks given)
                                                             control     measures       for   using   the
                                                             equipments and no certificates and report
                                                             were found with its bid.

                                                             BeiAO521 also provided the certificate of
                                                             Registration from WSC (World standards
                                                             Certification Centre).

                                                             Therefore marks on that basis should
                                                             have been given to all the bidders.

                                                             However, PRG and BeiAO Events were
                                                             given 5 and 2 marks respectively, out of
                                                             the maximum marks in respect of lighting
                                                             contract, on the basis of same documents
                                                             as provided in respect of Searchlights522.




519
      Refer Annexure 18.6

520
      Refer Annexure 18.6

521
      Refer Annexure 18.6

522
      Refer Annexure 18.1


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                       Fifth Report of HLC – Organizing Committee

Table 18.5: Lightings


 Bidders and marks Clauses              as     per      the Findings
 given                      requirement


 Maximum Marks: 10          The bidder should have Full 10 marks were given to PRG though
                            minimum annual Turnover PRG did not provide the Turnover for last
 PRG, Belgium: 10
                            of $ 5000000 USD and five years. Instead of furnishing its
 Agora Srl: 3
                            should have been registered financial statements, PRG provided the
 BeiAo Events, China: 1     for at least 05 years.             financial    statements       of     Procon
                                                               Multimedia AG for the period ending
                                 6) Company’s Size and
                                                               December’2009. Procon was acquired by
                                    scale
                                                               PRG in December 2009 through the
                                 7) Past performance of
                                                               Subsidiary of PRG.
                                    the Company
                                                               Moreover, the consolidated Financial
                                 8) Current
                                                               Statements of PRocon were showing net
                                    Commitments
                                                               loss of KEuros 6794 for the year ending
                                 9) Financial Capability December, 2009523.
                                    of the Company
                                                               As PRG was issued the RFP financial
                                 10) Company Structure         statements of PRG should have been
                                                               submitted as per the clause mentioned
                                                               above.

                                                               Therefore 0 marks should have been
                                                               given to PRG under this clause.

                                                               The other bidder Agora Srl got 3 out of 10
                                                               marks though on verifying the financial
                                                               statements of Agora Srl, it was found that
                                                               Agora fulfilled the conditions524.


 Maximum Marks: 10          List of Equipments that will Full 25 marks were given to PRG
                            be    supplied    to     satisfy
                                                               After comparing the list provided by PRG

523
      Refer Annexure 18.3

524
      Refer Annexure 18.7


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          PRG, Belgium: 10           technical brief or offer valid alongwith the technical bid with the list
                                     alternative equipment         given under clause 23.3 of the RFP525
          Agora Srl: 3
                                                                   issued for Lightings, it was found that PRG
          BeiAo Events, China: 1
                                                                   had     suggested      one     alternative
                                                                   equipment526 namely, Marting MAC Wash
                                                                   XB( 192 units) in place of Clay Paky Alpha
                                                                   Wash 1500 LT ( 192 units).


18.2.3   From the above tables it appears that Technical Evaluation in respect of both Searchlights
         and Lightings were not done impartially. If the technical marks were properly given it is
         possible that contract for one/both work would have been awarded to vendors other than
         PRG especially in case of searchlights where both Syncrolites and PRG got 48 marks out of
         60 and PRG quoted just $5900 less than the estimated cost.


18.3     Lighting Designer’s views not considered in evaluating the technical bids for
         searchlights

18.3.1   The clause 23.2.3 of RFP states that the equipments listed in the scope of work are the
         preferred choice of the Lighting Designer. Alternative fixtures can be suggested by suppliers
         but they must be capable of satisfying the principle technical requirements of the Lighting
         Designer.

18.3.2   Reviewing of a mail from Durham, the Lighting Designer on 26th May 2010 527 it was noticed
         that he was not satisfied with such alternatives and he mentioned that neither PRG nor
         BeiAO qualify on the technical bid as they both failed to fulfill a Principle Technical
         Requirement that of using Dichroic colour filters which will not melt in the unique
         application that we require, that of uplighting the Aerostat. PRG also Offered 4.5 KW search
         lights rather than the 7 Kw Searchlights specified which would mean far more units being
         placed on the Field of Play. Further it states that the systems proposed by PRG and BeiAO
         are a lot simpler, appropriate and less expensive.

         525
               Refer Annexure 18.8

         526
               Refer Annexure 18.8

         527
               Refer Annexure 18.9


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                                Fifth Report of HLC – Organizing Committee

18.3.3   However, the Technical Evaluation meeting held on 25.05.2010 and 26.05.2010528 ignored
         the comments of Lighting Designer and bid of PRG was justified by Technical Evaluation
         Committee on the following reasons:

               PRG provided alternative equipment as per clause 23.2.3 of RFP.

               PRG is a world leader in providing lighting equipments and successfully provided lighting
                equipments for events of the size of the CWG.

               It has been pre selected by technical experts which means they are capable to do the
                necessary work.

18.3.4   Though PRG provided alternative equipments as per terms of RFP only but according to such
         clause, such equipments were required to satisfy the principal technical requirements of the
         Lighting Designer. As explained earlier the Lighting Designer was not satisfied and PRG got
         qualified on other considerations.


18.4     Small difference in the rates quoted by PRG and the Estimated Cost

18.4.1   Commercial bids quoted by PRG was USD 17,94,100529 and the estimated cost in respect of
         searchlights in line with budget prepared by Wizcraft was $ 1.8 million USD530.

18.4.2   It is likely that if the bid of PRG was properly evaluated at technical Evaluation stage,
         Syncrolites would have strong possibility of emerging as T1 (They were both awarded 48
         marks out of the maximum marks of 60 in the technical round). In that case the techno
         commercial bid evaluation would have opened other possibility. The errors in evaluation
         appeared to have tilted the balance in favour of PRG.


18.5     Equipments contracted were different from the BOQ in the RFP

18.5.1   It was noticed that most of the equipments contracted531 from PRG in respect of lightings
         and searchlights were different from equipments listed with the RFP532. During negotiation

         528
               Refer Annexure 18.1

         529
               Refer Annexure 18.10

         530
               Refer Annexure 18.11

         531
               Refer Annexure 18.12


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                                Fifth Report of HLC – Organizing Committee

         a lumpsum price for combined package was made by PRG but OC did not ask for the BOQ
         including price of each equipment from PRG. Therefore no market rate comparison could be
         done for these items quoted by PRG. Due to this erroneous procedure OC had no
         opportunity to assess if there was over charging of prices for these equipments.

18.5.2   Further justification of the numbers of equipments mentioned in the contract cannot be
         assessed as equipments were provided by PRG without BOQ, rates and designs. PRG
         provided quotation for $ 3.5 million or INR 16.46 crores in lumpsum including the cost of
         Lightings, Searchlights and Lighting designer and team.


18.6     Other Issues


         Limited Tender issued against the advise of open tender by FTC

18.6.1   Fast Track Committee gave its approval on 14th April 2010533 for issuing open tender in
         respect of Lighting and Searchlights on the recommendations of Wizcraft. But on the
         insistence of international consultants ( Piers Shepperd (Technical Director), Durham
         Marenghi ( Lighting Designer), Ric Birch, Bharat Bala), limited RFP was issued on 30th April’
         2010 to companies nominated by Piers Shepperd and Wizcraft in respect of both Lightings
         and Searchlights separately. According to international consultants, Aerostat needed special
         lights requirements and there were very limited numbers of companies worldwide that have
         the capabilities and experience to supply, install, maintain, operate and remove this high
         end projection system.

18.6.2   It was likely that the consultants wanted to work only with a supplier with whom they
         worked earlier in disregard of the scope of economy as was achievable through open
         tender. In this situation there was a possibility of influencing the selection of vendor and
         allowing uneconomical rate, at the insistence of the international consultant.




         532
               Refer Annexure 18.4 & 18.12

         533
               Refer Annexure 18.13


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                                Fifth Report of HLC – Organizing Committee

         Re- evaluation of Technical Bids not done in respect of Lightings

18.6.3   Though the Lighting Designer (Durham Marenghi) suggested and SDG, C & C advised to re
         evaluate the technical bids in respect of Video Projection, Lightings and Searchlights 534, it
         was noticed that technical re-evaluation was done in the case of searchlights only. CEO
         approved a new committee for re- evaluating the technical bids of Searchlights with Mr.
         Sanjiv Mittal (JDG – Procurements/OSD), Mr. Jeychandran (OSD), Gp. Capt. KUK Reddy (ADG
         – F & A), Mr. Ram Mohan (DDG- Legal) and Ms Indu Anand (Director- C& C). Of them only
         three members were present in the meeting held on 04.06.2010 to re- evaluate the
         technical bids, namely, Mr. Sanjiv Mittal ( JDG – Procurements/OSD), Mr. Ram Mohan (
         DDG- Legal) and Ms Indu Anand ( Director- C& C). These members did not appear to have
         competence for technical evaluation. The incorrect technical evaluation as mentioned in
         Para 1.2 earlier was not noticed by this committee who also apparently did not consider the
         comments of Durham. They again qualified PRG based on so called fresh technical
         evaluation535.


         Vendor was dictating terms to OC

18.6.4   Negotiation committee in its meeting held on 09.06.2010536 observed that a combined
         package would be a better option in terms of commercial viability and also easier for
         contract related process. It is to be noted that suggestion of combined package was given by
         PRG only. Moreover it is seen from the minutes that PRG adopted a strong position in
         course of negotiation and proposed to reduce cost only on its own terms. For example PRG
         made following condition for the reduction in prices quoted by them:

               Reduced cost if the equipments are taken from their current stock available rather than
                from PRG subs or other vendors.

               Scope of work with unidirectional specifications for at least 30% for the products
                reflected the inflexibility of the lighting Designer and thus could lead to a higher cost for
                the entire project.

         534
               Refer Annexure 18.14

         535
               Refer Annexure 18.15

         536
               Refer Annexure 18.16


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                            Fifth Report of HLC – Organizing Committee

              It could provide theirown Lighting Designer that could assure harmony between the
               designing and related procurement for lighting for the show.

              Overall cost of the project could be reduced if a combined package of Lighting, Search
               lights and lighting designer as PRG is also a best bidder in lighting. Total cost would be $
               4 million USD.

              Amount of performance bank guarantee may be reduced to the extent it had furnished
               performance bank guarantee of 2.5 % of contract value in other contracts.

              Requested for relaxation in terms of payment.

18.6.5   It may be seen from the above that the vendor was not ready to change the equipments
         suiting the technical requirements of lighting consultant but proposed its own lighting
         designer and to ensure supply of its own equipments.

18.6.6   The vendor’s suggestion that the lighting designer equipments would increase the cost was
         not found correct. The unit rate of the equipments suggested by Syncrolite and PRG with
         their bids in respect of searchlights, were compared and unit cost of PRG works out higher
         than that of Syncrolite. The same is reproduced in the table 6 below:

         Table18. 6:


         Serial No.     PRG, Belgium           Price per Syncrolite, USA           Price per Difference
                                               Unit                                unit      (in INR)


                                               A                                   B         A–B


         1              Strand Par 4Kw HMI     2750       Philips arena vision     1286.25   1463.75


         2              Biglite 4.5            8300       Syncrolite SXB- 7/3      7717.5    582.5


         3              Hagenbach and Grill
                        MagMax                 1300
                                                          Syncrolite       Arena
                        Hagenbach and Grill               colour Colour changer    1800.75
                        Dark Vader Shutter     2100


                        Total                  2400                                          599.25



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                          Fifth Report of HLC – Organizing Committee

         4             Biglite 4.5          8300       Syncrolite Mx4         5659.5      2640.5



18.7     Summary and Conclusions

18.7.1   The technical bids were not evaluated properly and the suggestions of the Lighting Designer
         in respect of Searchlights were ignored by the OC authorities.

18.7.2   The vendor dictated terms once it was qualified in both the bids. OC accepted the
         equipments and a new lighting designer at the quoted rate of the vendor and overlooking
         BOQ made by the Lighting Designer.

18.7.3   Negotiating Committee of OC could not negotiate the individual rates of equipments with
         the vendor and achieved some reduction in rate only after accepting the combined package
         for lightings and searchlights offered by the vendor. As OC did not obtain the basis and rates
         of the equipments actually contracted, it was in no position to reduce cost based on analysis
         of rates for individual items.




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                           Fifth Report of HLC – Organizing Committee

19 Chapter 19: Ceremonies – Wizcraft

19.1     Background

19.1.1   In the first meeting of the Group of Ministers dated 02/07/2009 for reviewing the progress
         of Commonwealth Games it was decided to take on board, Bharat Bala, Shyam Benegal,
         Javed Akhtar and Prasoon Joshi in addition to other members of the OC, to shortlist the
         International Consultants and Event Management Company.

19.1.2   Event management firm (EMF) was required to organize, produce, coordinate, direct,
         manage, execute and deliver Opening & Closing Ceremonies of Commonwealth Games 2010
         Delhi to be held at the Jawaharlal Nehru Stadium, New Delhi in 2010 as per first class
         international standard. It was required to work with the Creative Director, the Creative Core
         Group, the International Consultant and OC to fully develop the creative theme and core
         elements of the Ceremonies for D2010.

19.1.3   A brief chronology of the events relating to the award of contract to EMF is set out in Table
         19.1.

         Table 19.1:

         Date                    Particulars


         12th September 2008     Publication of EOI

         18th October 2008       EOI received from 14 firms

         22nd June 2009          Evaluation of EOI

                                 5 firms shortlisted

         24th July 2009          Issue of RFP

         1st August 2009         2 corrigendum issued with RFP

         3rd August 2009

         6th August 2009         Opening of RFP



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                                Fifth Report of HLC – Organizing Committee

                                     Evaluation of Technical Bids

                                     Opening and evaluation of commercial bids

                                     Evaluation of Techno Commercial bids

         7th August 2009             Commercial Negotiations with Wizcraft

         14th October 2009           Report by Group of Officers after review of RF P

         5th November 2009           Report by negotiating committee on the observations made by Group of
                                     Officers.

         6th November 2009           Approval for initiating further action regarding EMF selection by Jarnail
                                     Singh, CEO

         6th November 2009           Issue of LOI to wizcraft

         1st December 2009           Contract entered into with Wizcraft

         7th to 13th September Re negotiations in respect of Agency charges
         2010

         20th September 2010         Approval of Agency Charges in FTC meeting

         21st September 2010         Approval of Agency charges in 26th EB meeting

         24th September 2010         Addendum to contract with Wizcraft in respect of Agency Charges



19.2     Irregularities in the Selection process


         Delay in Evaluation of EOI

19.2.1   An EOI was issued by OC on 12/09/2008 for award of work to a reputed event management
         organization to produce, organize, coordinate and manage Opening and Closing Ceremonies
         of Commonwealth Games 2010 Delhi on turnkey basis for response by 03/10/2008. After 18
         days of the issue of this EOI, a corrigendum was issued on 30/9/2008537 where the condition
         of turnkey basis was withdrawn and date of response was changed to 18/10/2008.

         537
               Refer Annexure 19.1


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                                Fifth Report of HLC – Organizing Committee

19.2.2   In response to the EOI, 14 firms responded and five firms were shortlisted on 22/06/2009
         for issue of RFP. Processing of EOI took 8 months and the RFP was issued on 24/07/2009. It
         was noticed that evaluation of EOI could not be done within reasonable time as MYAS
         ordered for postponing the evaluation of EOI on 15.12.2008 giving the reason that there are
         some pending issues relating to ceremonies. Finally on evaluation of RFPs, Wizcraft was
         selected.


         Associations between International consultant, Event Management Firm and other
         Consultants even before the EOI was published

19.2.3   Review of the response received from Wizcraft , in respect of the EOI , revealed that in
         respect of the eligibility criteria 2f538 where the bidder was required to provide documents
         in respect of well developed back-end infrastructure and international contacts and
         associations with some of the world’s best event infrastructure and creative companies,
         Wizcraft furnished eight letters of consultants539( Table 2) . These letters showed that:

               Most of these letters were addressed to Mr. Ric Birch, International consultant
                appointed by OC for Delhi 2010 Games

               All these letters except one have same content and common narrations.

               Most of these letters bear the same date i.e. 1st June 2008.




         538
               Refer Annexure 19.1

         539
               Refer Annexure 19.2


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                              Fifth Report of HLC – Organizing Committee

         Table 19.2:


             S. No Name Of the Consultant           Date of letter        Letter addressed to


             1       Andrew Walsh                   29.09.2008            Viraf Sarkari

                     Director- Accolade                                   Director- Wizcraft


             2       Mark Fisher- Mark Fisher 01.06.2008                  Ric Birch- Spectak Productions
                     Studio

                                                    01.06.2008
             3       Richard Hartman- RHA Ltd                             Ric Birch- Spectak Productions

                                                    01.06.2008
             4       Stephen Found- Bytecraft                             Ric Birch- Spectak Productions

                                                    01.06.2008
             5       Durham Marenghi- Lumitect                            Ric Birch- Spectak Productions

                                                    01.06.2008
             6       Piers Shepperd- Stagelink                            Ric Birch- Spectak Productions

                                                    01.06.2008
             7       Douq Jack                                            Ric Birch- Spectak Productions

                                                    01.06.2008
             8       Laurence H. Estrin                                   Ric Birch- Spectak Productions


19.2.4   These letters raise the following issues:

                While EOI was published on 12/09/2008, the above mentioned letters appended with
                 the response to EOI are bearing date of 1/06/2008. It is apparent that Wizecraft and Ric
                 Birch were aware of the decision to issue EOI and started developing the team of
                 consultants for this assignment long before even the EOI was issued.

                Evidently the letters were written based on the same format developed for the purpose
                 of this EOI and the consultants were provided copy of these letters for this purpose.

                Looking at the uniform content of the letters it will be reasonable to conclude that Ric
                 Birch and Wizcraft were already in business relations in regard to a potential contract
                 with OC.

                Apparently these consultants were approached by Ric Birch to work with Wizcraft and
                 Ric Birch as if it was known that Wizcraft was going to be selected as event management
                 firm.

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                                Fifth Report of HLC – Organizing Committee

19.2.5   It is noticeable that five of above mentioned consultants540 were appointed by OC on the
         subsequent recommendations of Ric Birch and Wizcraft at a total cost of US $ 10,00,173
         USD or INR 4.70 crores.


         Response to RFP

19.2.6   Analysis of the response of Wizcraft to the RFP indicated the following additional issues:

               According to the clause 8.2 (a)541 of RFP in respect of commercial bid, bidder had to
                provide, Ceremonies management fees on account of administrative expenses of all the
                expertise and support to be engaged in the opening and closing ceremonies to cover all
                administrative expenses.

               However it is noticed that bidder asked for management fees in respect of manpower
                that were employed by Wizcraft542 and asked for additional manpower at the cost of OC.

               A scrutiny of the technical bid of Wizcraft, revealed that in respect of management
                model543 to deliver the scope of work, Wizcraft had suggested additional manpower
                requirements and proposed that the additional manpower was to be hired and paid by
                OC.

               From the above facts, it appears that while Wizcraft introduceed associations with the
                above mentioned 8 consultants in the response to EOI, in its bid in response to RFP, it
                projected the requirements of the services of the consultants as additional manpower to
                be funded by OC.

               A group of Officers set up by GOM on 11/09/2009 for examination of the RFP for the
                Event Management Company raised the issue of additional manpower and suggested in
                their report dated 14/10/2009 that OC should renegotiate with Wizcraft to make it clear




         540
           Five consultants comprises of Durham Marenghi (Lighting Designer), Piers Shepperd (Technical Director), Richard
         Hartman (Rigging and Staging), Mark fisher ( Production Designer ) and Larry Estrin ( Comms Director).

         541
               Refer Annexure 19.3

         542
               Refer Annexure 19.4

         543
               Refer Annexure 19.5


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                                 Fifth Report of HLC – Organizing Committee

                that the additional manpower would be hired by the event management firm itself and
                not the OC544.

               The negotiating committee545 formed by OC to negotiate with Wizcraft observed in
                respect of observations made by the Group of officers that, ‘the issue of additional
                manpower was discussed in detail with Wizcraft as to bearing the related cost. However
                the firm has not agreed for incurring any cost towards additional manpower, since it is
                the responsibility of the OC. The committee is of the unanimous view that all additional
                manpower other than the core personnel identified by the event management firm will
                be the responsibility of the OC’.


         Conflict of Interest in selection process of Wizcraft

19.2.7   Based on the response to EOI, five firms were shortlisted for issue of RFP which was issued
         on 24/07/2009 to all the five shortlisted firms for response by 06/08/2009.

19.2.8   A core group constituted by GOM546 (comprising of S/Sri Shyam Benegal, Javed Akhtar,
         Bharat Bala , Prasoon Joshi) for selection of the event management firm met on 06/08/2009
         to evaluate the creative elements of the proposals received in response to RFP. Technical
         evaluation was done for 70 marks (comprising 35 marks for technical element and balance
         35 marks for creative element). Creative presentations were made by all the firms. Wizcraft
         was decided as T1 with 60 marks out of the maximum 70 marks followed by DNA and
         Cineyug with 38 marks each547. Following various stages of evaluation of commercial bids
         and price negotiation Wizcraft was selected for award of the contract at a price of INR 21.48
         crore.

19.2.9   On 6/09/2009548, members of the core committee (Shyam Benegal, Javed Akhtar, Bharat
         Bala , Prasoon Joshi) wrote a letter to the Secretary MYAS confirming their unanimous

         544
               Refer Annexure 19.6 in respect of letter from secretary, MYAS to OC regarding observations made by group of officers.

         545
            The comprised Mr. Jarnail Singh, Mr. Shyam Benegal, Mr Bharat Bala, Ms shovna Narayan and Gp Capt KUK Reddy.
         Refer Annexure 19.7

         546                                    st
               Refer Annexure 19.8 relating to 1 GOM meeting held on 02.07.2009

         547
               Refer Annexure 19.9

         548
               Refer Annexure 19.10


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                                Fifth Report of HLC – Organizing Committee

         support in the selection of M/s Wizcraft International Entertainment Private Limited as the
         event management firm. The committee mentioned that they were not involved in
         evaluation and negotiation of the commercial bid.

19.2.10 It has been confirmed by the Director of Income Tax – (Inv) II549 Mumbai that two members
         of the core group ( Javed Akhtar and Prasoon Joshi) received significant payments from
         Wizcraft International Entertainment Private Limited during 2005-06 to 2009-10 for services
         rendered by them to the firm (Javed Akhtar – received in 2005-06 INR 5 lakh for Lyrics for
         commonwealth games , Melbourne and INR 51 lakh in 2009-10 by Great Indian Nautanki Co.
         Private Ltd (a joint venture between Wizcraft and Apra group 550) for Story, Screenplay and
         Dialogues for Zangoora play and Prasoon Joshi received in 2007-08 INR 10 lakh for lyrics for
         launch of GMR , Hyderabad Airport ,Hyderabad).

19.2.11 Therefore it appears that the technical evaluation of the creative elements, done by the
         core group consisting of persons, who had commercial relationship with the vendor, could
         not be objective and impartial and was therefore vitiated due to conflict of interest. Records
         provided by OC do not indicate that these two members of the Core Group informed
         GOM/OC about their previous commercial relationship with Wizcraft.

19.2.12 The overall selection process also has to be considered in the context that Wizcraft was in
         commercial relation with OC for CWG Delhi 2010 since long. It was selected as Event
         Management Firm in Melbourne Games 2006 and Pune Youth Games 2008. Irregularities
         were noticed in these selections as well (discussed in section 19.3).


         No Cost reduction achieved by OC

19.2.13 The commercial bid received from Wizcraft was amounting to INR. 21.53 Crore comprising
         INR 15.53 for Management fees and INR 6 crores in respect of agency charges (being 15 %
         of INR 40 Crores budget of procurements). After negotiation, Wizcraft brought down the
         management fees from INR 15.53 crores to INR 5.40 crores and percentage of agency
         charges from 15% to 13.84%.



         549
               Refer Annexure 19.11

         550
               Refer Annexure 19.12


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19.2.14 However, it was noticed that due to the increase in budget of ceremonies from INR 106
          crores to INR 300 crores and after re negotiations held in September 2010, the agency
          charges to be paid to Wizcraft came to INR 16.09 crores as given in Table 4 below.

          Table 19.4:


           Procurements( INR in Cores)     Agency Charges in % of Agency charges in INR
                                           the      cost      of
                                           procurements


           Upto 40 Crores                  13.84                   5.536


           More than 40 to 100 crores      10.50                   6.30


           More than 100 to 150 crores     8.50                    4.25


           Total Agency charges                                    16.086


19.2.15 But it was revealed from the background material551 for the negotiating meeting held by the
          re constituted committee in the period from 7th to 13th September 2010 that INR 150
          crores was decided by OC on hit and trial basis i.e. calculation of agency charges was done
          on the basis of various options of budget like INR 250 crores, INR 200 crores and INR 150
          crores with different rates to be applied on procurements.

19.2.16   The final contract amount aggregated to INR 21. 48 Crore comprising INR 5.40 Crore for
          Management fees and INR 16.08 Crores as Agency Charges. Therefore it may be concluded
          that at the end there was no achievement in respect of cost reduction by the negotiation
          committee. Reduction of INR 10 Crores in management fees and agency charges in the
          beginning by Wizcraft was covered by increase in Agency Charges to be paid on the cost of
          procurements.


          Wizcraft was to assist in budget making and was also to be paid on the basis of the same

19.2.17 As per the scope of work defined in the agreement, Wizcraft was required to assist in
          budget making and was to be paid on the basis of cost of procurements. It may be seen that

          551
                Refer Annexure 19.13


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                                Fifth Report of HLC – Organizing Committee

         at the time of appointment of Wizcraft i.e. on 1st December 2009, the total approved
         budget was INR 106 crores which was gradually increased to INR 300 crore in June 2010.
         However, the capping of procurement budget to INR 150 crores for the calculation of
         agency charges was done in September’2010. Therefore it may be possible that Wizcraft,
         who was also involved in the negotiations with the vendors in 2009-2010, did not have the
         incentive to make efforts to bring down the prices quoted by various vendors.


         Bank Guaranttee not provided by Wizcraft within the time limit as specified in the contract

19.2.18 As per Para 11.5a of the contract552, M/s Wizcraft International Entertainment (P) Ltd was
         required to submit the performance security in the form of Bank Guarantee within 10 days
         of signing of the contract. However, Wizcraft on 5/12/2009 asked for extension of date of
         submission of Bank Guarantee. The bank Guarantee was received from M/s Wizcraft on
         22/12/2009553.


19.3     Improper Selection process followed in the Melbourne Games 2006 and Pune
         Games 2008

19.3.1   Review of the tendering process and related documents for the selection of the Event
         Manager for Melbourne Games 2006 and Pune youth Games 2008 revealed that OC
         followed an improper selection process that appears to favour Wizcraft over other
         competitors. The specifics of the process followed and discrepencies noted are detailed in
         the ensuing paras:


         Selection of Event Manager for Melbourne 2006

         Table 19.5: The chronology of tender process


          Date                          Particulars


          28th July 2005                Issue of EOI




         552
               Refer Annexure 19.14

         553
               Refer Annexure 19.14


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                                Fifth Report of HLC – Organizing Committee

          5th August 2005                       EOI received from 5 Firms


          26th August 2005                      Evaluation of EOI and 4 firms got selected


          5th September 2005                    Meeting of Cultural event committee.

                                                Presentations made by 4 shortlisted firms

                                                Committee asked shortlisted firms to present budget estimation for
                                                cultural event


          12th September 2005                   Meeting of Cultural event committee.

                                                Criteria of past performance followed and Wizcraft short listed on
                                                that basis.


          13th September 2005                   Approval given in 3rd EB meeting


          22nd December 2005                    Budget of INR 29.76 crores approved in 4th meeting of EB
                                                (comprising INR 2.49 crores pertaining to management fees and INR
                                                27.27 crores towards production cost and other costs)


          3rd January 2006                      Date of contract awarded to Wizcraft


19.3.2   It appears that the Wizcraft was selected as the Event Manager for the Melbourne games
         without following an appropriate tender processing. From the minutes of the evaluation
         committee held on 26/08/2005, it was noted that 4 firms were selected out of the 5 firms
         that responded to the EOI.

19.3.3   It was noticed, from the extracts of Cultural Event committee554 meeting minute held on
         5/09/2005555, that instead of issuing RFP to 4 short listed firms, the bidders were asked to
         present budget estimate for the cultural segment of 20 minutes in Melbourne.

19.3.4   Cultural event Committee in its meeting held on 12/09/2005556 deliberated and decided
         that it would be impossible to have any cost estimate in the absence of a specific concept.

         554
               Members of the committee were : Mr. Rajiv Shrivastava, Mr. A K Mattoo, and Mr. Muthusamy Varadarajan

         555
               Refer Annexure 19.15

         556
               Refer Annexure 19.16


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The committee concluded that the criterion could only be the past performance of the party
in managing similar cultural events in international sports meets. Therefore Wizcraft was
selected on the basis of past performance notably its experience at the Afro-Asian Games
(2003) and ceremony for IOA’s bid at Jamaica for commonwealth games.


Selection of Event Manager for Pune Youth Games, 2008

Table 19 6: The chronology of tender process


 Date                            Particulars


 2nd May 2008                    Issue of EOI


 10th May 2008                   EOI received from 2 firms.

                                 Both firms did not meet all the requirements.



 16th May 2008                   Presentation on Technical bids by both bidders

                                 Wizcraft selected.


 27th May 2008                   Opening of commercial bid of Wizcraft


 5th July 2008                   11th EB meeting

                                 EMC was authorized to negotiate and take final decision
                                 regarding commercial terms of Wizcraft


 30th July 2008                  Commercial negotiations on the basis of which final quotation
                                 was sent by Wizcraft on 5th August 2008


 1st August 2008                 Date of contract awarded to Wizcraft


 5th August 2008                 Revised & final quotation from Wizcraft of INR 9.88 crores + INR
                                 1.50 or   15% of total procuring cost ( whichever is lower)
                                 excluding service tax + lodging, boarding and local transport on
                                 actual basis




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          28th August 2008                        Quotation by Wizcraft approved in 33rd EMC meeting


          Not found from the minutes Ratification by EB
          of EB


19.3.5   In response to EOI issued on 2/05/2008, bids were received from 2 firms namely, Alternate
         Brand Solutions Ltd and Wizcraft international Entertainment P Ltd. After evaluation of EOI
         it was found by the committee that both firms did not fulfill all the requirements as
         specified in EOI. ABSL fulfilled 4 and Wizcraft fulfilled 6 conditions out of the total 7
         criterion557.

19.3.6   It was noticed that one of the requirements in respect of having annual turnover of INR 125
         crores was not fulfilled by both the firms. As it was a crucial conditions set for weeding out
         the incompetent firms, the committee should have considered to re invite the tender.

19.3.7   But it was noticed from the available records that Committee instead of re tendering, asked
         both the firms to make presentation on technical bids558. After evaluation of the same
         Wizcraft got selected and commercial quote of Wizcraft was opened. At the end the
         contract was given to Wizcraft at a price of INR. 12.76 crore inclusive of taxes (comprising
         INR 11.10 crore towards production cost and INR. 1.66 crores for management fees).

19.3.8   While the vendor submitted its revised bid on 05/08/2008 based on negotiation meeting
         held on 30/07/2008, the contract was signed on 01/08/2008 i.e. before the approval of
         quotation of Wizcraft in the EMC meeting (28/08/2008).

19.3.9   Besides, though the value of the contract was above the limit of INR 3 crore, it was not put
         for approval of EB.


19.4     Summary and Conclusions

19.4.1   The selection of Wizcraft based on the Technical evaluation by the Core Group was vitiated
         due to conflict of interest caused by existing commercial relationship of two members of


         557                                                                th
            Refer annexure 19.17 relating to minutes of the meeting dated 10 May 2008 for evaluation of pre qualification bids
         received in response to EOI

         558
               Refer Annexure 19.17


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                         Fifth Report of HLC – Organizing Committee

         core group with Wizcraft. Selection of Wizcraft by OC in two earlier assignments (Melbourne
         2006 and Pune 2008 games) was marred by favoritism and incorrect procedures.

19.4.2   In view of the long standing commercial relationship of OC with Wizcraft and the procedural
         irregularities, the selection of Wizcarft appeared to be pre decided. The reference letters
         attached with its response to the EOI raised doubt that Wizcraft was aware of issue of EOI
         much before it was actually issued.

19.4.3   OC apparently disregarded the possibility of collusion between the event management firm
         and the International Consultant which resulted in appointing of other consultants as
         recommended by them. Wizcraft ultimately passed on the cost of the additional manpower
         which was supposed to be borne by wizcraft as per the RFP.

19.4.4   The cost reduction of around INR 10 crores during negotiation in respect of management
         fees achieved by the negotiating committee was covered by increase in the agency charges
         paid to the firm at the end.




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                             Fifth Report of HLC – Organizing Committee

20 Chapter                              20:              Cleaning                         and                Waste
         Management
               The OC awarded substantially the entire work to a single vendor, whose capability and
               experience in providing similar services was not proven. The ineffective appointment
               resulted in a situation that the vendor was unable to provide the manpower required at the
               time of games leading to serious delivery issues. Further, there was no negotiation with the
               vendor on prices for a specific component where, by OC’s own estimate, the rates quoted by
               the vendor were higher than market rates.                  This resulted in the potential loss of
               approximately INR 1.98 crores as the OC did not engage further with the vendor to reduce
               prices. There is also evidence of vendor favoritism as only one vendor was called for a
               presentation on ‘instructions of chairman’ in the bid evaluation phase while the other
               competitors were not.



20.1     Background

20.1.1   The cleaning and waste management FA of the OC was primarily tasked with activities
         related to maintaining cleanliness at games venues. The main area of responsibility of this
         FA involved engaging vendors to provide manpower and materials (cleaning supplies,
         disposal bins, etc) in respect of cleaning activities.                   The words “waste management”
         associated with this functional area was perhaps a misnomer as waste movement (off site
         removal) and disposal activities were carried out by the relevant Delhi Administration civic
         agencies and were not under the ambit of the OC.

20.1.2   For the purpose of contracting, the OC divided the venues into packages numbering 1 to 9559
         which included competition and non-competition venues and the commonwealth games
         village. A brief chronology of the key events relating to the award of these 9 packages is set
         out in the table below.


         559
            Packages 1 to 9 are as follows: Package 1 (JLN Stadium and ceremonies), Package 2 (SPM and Talkatora Stadium),
         Package 3 (Yamuna Sports Complex and Central Vista), Package 4 (MDC, IG), Package 5 (Thyagraj Stadium), Package 6
         (Rughby (DU) TRG venues), Package 7 (Karni Singh and Kadarpur), Package 8 (Siri Fort and R.K. Khanna Stadium) and
         Package 9 (CGV).


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                          Fifth Report of HLC – Organizing Committee


         Table 20.1: Chronology of tendering process for cleaning and waste management contracts

         Date                    Particulars




         October 2009            Release of EOI

                                    23 vendors responded
                                    14 vendors were qualified for issuance of RFPs
         December 2009           Issuance of RFPs

         January 2010            Site visits permitted by Cleaning and Waste Management FA for all 14
                                 qualified vendors.

         Submission of bids      Six vendors responded to the RFP:

                                        A2Z Management & Engineering Services Private Limited
                                        Sarvatra Integrated Services
                                        Cleanevent International PTY Limited
                                        ISS Integrated Facility Services
                                        IL & FS Property Management Services
                                        Lion Services Limited
         February 2010           Opening of technical bid

         March 2010              Technical evaluation carried out

         March 2010              Opening of commercial bid

         July 2010               LOI issued to A2Z Management and Engineering Services Private Limited
                                 (M/s A2Z) towards Package 1 and 3 to 9.

         July 2010               LOI issued to M/s Sarvatra towards Package 2




20.1.3   In summary, the entire process from the release of the EOI to the awarding of the LOI took a
         period of almost 10 months and resulted in 8 packages being awarded to M/s A2Z and 1



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                                 Fifth Report of HLC – Organizing Committee

         package to M/s Sarvatra. The observations stated under are with respect to the award of
         contract to A2Z for packages 1 and 3 to 9.


20.2     Flawed planning and budgeting

20.2.1   There was no expense head budgeted for cleaning and waste management in the initial
         budget prepared by the OC in 2007. Through a series of budget revisions, the zero expense
         in 2007 grew to INR 31.22 Crores in 2010. A summary of the key revisions summarized from
         the budgets of the OC is set out in the table below.

         Table 20.2: Revisions to budgets for Cleaning and Waste Management expense

          Date of budget/ Amount                           Reasons/Justification for the revision
          revision                      allocated (In
                                        INR
                                        Crores)560

          April 2007                    Nil                    The functional area was not budgeted as an expense in
                                                                this budget.
          November             2008 5.71                       Budget increased due to requirement of cleaning and
          (revised estimates                                    housekeeping work required at the Games Village which
          by EKS/EY)                                            would have been responsibility of OC.
                                                               All other activities such as collection, transportation and
                                                                disposal of waste from a common point at the games
                                                                village was the responsibility of NDMC/MCD and cleaning
                                                                of all venues would be done by Venue owners.
                                                               Waste bins etc at the Games village would be provided by
                                                                NDMC/MCD.
          26 September 2009             11.22                  Reasons for revision not available

          7 June 2010                   31.22                  Re-appropriation of budget for approximately 3 times
                                                                increase in cost since September 2009 estimate and
                                                                approximately 6 times since November 2008
                                                               Increased cost reflects the amounts in the tenders


         560
               Refer to section on Budgets for breakup of budgets into various functional areas.


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                                Fifth Report of HLC – Organizing Committee

             Date of budget/ Amount                   Reasons/Justification for the revision
             revision                 allocated (In
                                      INR
                                      Crores)560

                                                          submitted.
                                                         Total cost quoted by A2Z and Sarvatra amounted to INR
                                                          24.47Crores.



20.2.2   The above summary indicates the following.

               OC did not seem to have any clarity or appreciation with respect to the budgeted cost
                involved in cleaning and waste management FA. This is evident from the absence of the
                expense head in the initial budget and the frequent re-appropriations in budget amounts
                that grew over 5 times from the first time a budgeted amount was provided in
                November 2008.

               Till a very late stage, the OC was not clear on the complete ambit of its responsibilities
                and there was, at minimum, confusion with respect to responsibilities with other
                agencies such as the MCD and NDMC and venue owners.

               A direct result of these unclear roles and responsibilities was the impact on costs (which
                grew from a budget of zero in 2007 to INR 31.22 Crores in 2010) and on time (contracts
                for this functional area were finally awarded only in mid 2010 with delivery issues as
                discussed in ensuing sections of this report).

20.2.3   The minutes of the meeting of the OCFC dated 23 December 2009561 stated that the total
         estimated cost for this functional area would be INR 7.8 Crores562. The minutes also state
         that the actual total cost involved would only be known after the commercial bid is opened.
         It may be mentioned that one of the most significant revisions made to the budget was the
         increase from INR 11.22 Crores to INR 31.22 Crores post opening of the commercial bids as
         summarized in figure 2. In this regard, it is extremely surprising that budgets were made

         561
               Refer Annexure 20.1.

         562
           The Source for INR 7.8 Crores has not been provided neither is this amount mentioned in any of the budget documents
         made available to us.


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                                Fifth Report of HLC – Organizing Committee

         post receipt of commercial bids, with significant and material departures from previous
         estimates and without any accompanying logic other than high rates quoted by vendors.
         This also indicated the complete break down of planning processes and an apparent lack of
         diligence on the part of the OC functionaries to make proper estimates or determinations
         and reflect these in their financial estimates that were critical from a decision making
         perspective.


20.3     Delivery risks arising from concentration of packages with a single vendor

20.3.1   In accordance with the technical evaluation carried out by the committee 563, five out of the
         six vendors qualified for opening of commercial bid. The final determinations were made
         based on the lowest price on L1 basis. The ranking of the selected vendors based on their
         commercial bids is set out in the following Table.

         Table 20.3: Ranking of vendors based on commercial bids564

          Package number                       L1 vendor                            L2 vendor




          1                                    A2Z                                  ILFS

          2                                    Sarvatra                             A2Z

          3                                    A2Z                                  Clean Event

          4                                    A2Z                                  ILFS

          5                                    A2Z                                  Sarvatra

          6                                    A2Z                                  Clean Event

          7                                    A2Z                                  Sarvatra

          8                                    A2Z                                  Clean Event



         563
            The committee comprised of Major M.S. Seetharaman (Director- CWM), Mr. Sudhir Mittal (Special DG), Mr. Sanjiv Mittal
         (OSD) and Mr. KUK Reddy (ADG- F&A).

         564
               Refer Annexure 20.2 and 20.3.


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                                 Fifth Report of HLC – Organizing Committee

          Package number                     L1 vendor                               L2 vendor




          9                                  A2Z                                     Clean Event




20.3.2   M/s A2Z were awarded 8 of the 9 packages and the balance package (package 2) was
         awarded to M/s Sarvatra. The decisions to award these packages were recommended by a
         selection committee constituting various OC officials565. It may be mentioned that the Mr.
         M.S Seetharaman (Director- CWM) made a number of suggestions/recommendations that
         were pertinent from a games delivery and legacy perspective. These were howsoever not
         followed through by the FA/selection committee in the final awarding of the contracts. The
         OC perhaps should have considered limiting the number of packages to be awarded to a
         particular vendor thereby mitigating the delivery risk to a greater extent. The key concerns
         raised that were not addressed are set out in the figure below.

         Table 20.4: Concerns that were not addressed by concentrating contracts with a single vendor

         “Concerns         and        considerations”    by   Mr. Ensuing actions
         Seetharaman (Director-CWM)




         Multiple players should be selected as service 8 contracts were awarded to A2Z contrary to
         providers to minimize risk involved and allowing these recommendations.
         Indian vendors not having such experience to
         work to create a legacy for such future event
         management.566                                               As discussed further in paragraph 1.5.4, A2Z
                                                                      were unable to provide the manpower for which
                                                                      they were contracted resulting in a significant
                                                                      under delivery on contracted commitments with


         565
            These OC officials were part of a committee constituted upon the orders of CEO to negotiate with the vendor. They
         were Sanjiv Mittal (JDG - Procurement), BB Kaura (JDG-Protocol), KUK Reddy (ADG-F&A), A K Kesri (DDG- Secretary General
         ‘office) and A K Chaturvedi (DDG-CWM).

         566
               Refer Annexure 20.4.


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                        Fifth Report of HLC – Organizing Committee

“Concerns         and       considerations”   by   Mr. Ensuing actions
Seetharaman (Director-CWM)




                                                        an impact on the conduct of the games

The OC should take advantage of the most M/s Clean Event were L2 in 4 packages, however
experienced player in this work and Clean Event contracts were awarded only to L1 vendors and
(the only international vendor) was identified as hence legacy considerations were not built upon
“Numerous Uno” on such services the world in this particular area.
over.

The Quality of services to be provided should be
the emphasis rather than the cost involved while
selecting the service provider.

It was also noted that all 4 Indian vendors did
not have any prior experience in delivery of
services required under this functional area.567




“To have Legacy in our country for future 8 contracts were awarded to A2Z contrary to
handling of events it becomes as a ‘Thought these recommendations.
Provoking consideration’ that we have more
Indian takers and not get pinned down on the
‘Lowest Bid’ which could be taken as an ‘Entry
Gimmick’ by one of the vendor giving quotes for
opening his accounts and books”568.

The overall manpower needed for delivering As discussed further in paragraph 1.5.4, A2Z
service under all packages is approximately were unable to provide the manpower for which
2,500.       Further, knowing the service market they were contracted resulting in a significant
quite well, it is not possible for any one single under delivery on contracted commitments with


567
      Refer Annexure 20.5

568
      Refer Annexure 20.5


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                                  Fifth Report of HLC – Organizing Committee

         “Concerns          and       considerations”      by    Mr. Ensuing actions
         Seetharaman (Director-CWM)




         service provider to bring on board this strength. an impact on the conduct of the games.
         This leads us to consider diversity and going for
         multiple players in ensuring a sustainable
         delivery569.



20.4     Engagement with only a single vendor in the bid evaluation stage

20.4.1   Our review of the documents leading to the awarding of packages indicated that post
         opening of commercial bid, while the evaluation committee was deliberating on the
         concerns and considerations stated by Director-CWM and a final decision regarding the
         vendor had not been taken, A2Z were called in to provide a detailed presentation to the
         Evaluation committee on 13 May 2010. The document570 states that this was based on
         Chairman’s orders571 conveyed by ADG Games, OC on 10 May 2010. We further noted that
         a decision to invite the L1 bidder to clarify their capabilities to deliver the specific packages
         was taken in a meeting between Peter Stewart (ADG-Games) and Suresh Kalmadi (Chairman
         –OC) on 7 May 2010.

20.4.2   The remaining five vendors that were apparently not called in to provide detailed
         presentations included Clean Event (the only international vendor with apparent experience
         in delivering these services in a games environment).

20.4.3   The reasons for excluding other vendors from an opportunity to engage in the evaluation
         stage are not apparent or documented. Further, the decision to call a particular vendor was
         under instructions of the OC Chairman. It appears that the Chairman did not consider the
         concerns/considerations placed by Director- CWM and ordered for negotiations with L1
         bidder.          In view of the above, particularly as only a single vendor was called for

         569
               Refer Annexure 20.5.

         570
               Please refer Annexure 20.6 for extract of the minutes of the evaluation committee meeting held on 13 May 2010

         571
               The copy of the Chairman’s orders conveyed by ADG (Games) on 10 May has not been provided for review.


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                                   Fifth Report of HLC – Organizing Committee

         presentation and was engaged in discussions in the evaluation phase, the possibility of a
         bias or favouritism towards the vendor on the part of OC functionaries cannot be excluded.


20.5     Lack of competence of the selected vendor

20.5.1   The EOI for cleaning and waste management specifically states that any respondent/bidder
         eligible for multiple packages should demonstrate that it has an annual turnover specifically
         related to cleaning and waste management services of at least INR 10 Crores in each of the
         last 3 financial years i:e: FY 05-06, FY 06-07, FY 07-08. In this regard, the following issues
         emerge:

               A review of the organizational structure in the red herring prospectus issued by A2Z on
                30 July 2010 revealed that the company providing Facility Management Services is “A2Z
                Infraservices Limited” (One of the group companies under A2Z) and “CNCS”. The facility
                management business was transferred by A2Z to A2Z Infraservices Limited in 2008. 572

               The certificate of the statutory auditors as furnished by A2Z to OC does not provide
                specific revenue figures for A2Z Infraservices Limited. Further, a review of financials of
                A2Z does not reveal revenue pertaining to its cleaning business573.

               Based on the above, it is not clear whether A2Z, the entity contracted by the OC actually
                met the EOI criteria on eligibility.

20.5.2   From a review of the minutes of the evaluation committee dated 13 May 2010, it was
         evident to the evaluation committee at the onset that A2Z was unable to understand
         specific issues related to providing services574 across multiple venues in a games
         environment. The committee also noted lack of previous game time experience of the
         vendor.

20.5.3   In order to address issues with relevant game time experience, the minutes of the
         evaluation committee dated 13 May 2010 state that A2Z indicated that they would hire



         572
               Refer Annexure 7.

         573
               Refer Annexure 7.

         574
               Refer Annexure 6


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                                 Fifth Report of HLC – Organizing Committee

         experts with such experience to efficiently deliver the services. In this regard, the following
         issues emerge.

               The contract between the OC and A2Z does not contain any provisions under which M/s
                A2Z were required to provide experts with skill sets to deliver services in the games
                environment. Consequently, this constitutes a significant omission on the part of OC
                functionaries to rectify a major deficiency identified in the evaluation phase against
                which commitments were made by the vendor.

               There is no evidence to demonstrate that A2Z actually provided requisite experts with
                game times experience promised by them during the negotiation stage.

20.5.4   A2Z were unable to execute actual delivery of services under the contract terms agreed.
         The actual deployment of manpower was significantly lower than what was agreed by them
         under the contract and venue plans.575 Thus ignoring potential red flags in the vendor
         evaluation stage and awarding contract to an entity whose experience and competence in
         the field was not on record, resulted in serious repercussions such as improper delivery of
         critical services at the time of the games576.


20.6     Failure to negotiate and reduce costs

20.6.1   A LOI was issued to A2Z for Package 1 and 3 to 9 on 16 July 2010 for a final cost of INR 19.30
         Crores. This was lower than the cost quoted earlier by A2Z that aggregated to INR 23
         Crores.

20.6.2   The cost reduction achieved above aggregating to approximately INR 3.70 Crores was
         attributable to scope changes comprising of the following577.

               Reduction of service period from 1August 2010 to 18 October 2010 as compared to 1
                August 2010 to 31 October 2010 proposed earlier.

               Removal of certain items from scope of the services as under:



         575
               As per the email dated 30 September 2010 from Sudhir Mittal, Special DG, to Jarnail Singh, CEO

         576
               Refer Annexure 20.8

         577
               Refer Annexure 20.9


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                                Fifth Report of HLC – Organizing Committee

                          -   Cost of Archery Final- Central Vista of approximately INR 12.53 Lakhs was
                              removed as archery event was dropped from Central Vista.

                          -   Cost of soap dispensers for all packages amounting to INR approximately 18
                              Lakhs was removed as these were agreed to be provided by the venue
                              owners.

                          -   Limiting of the service period by the OC led to a direct reduction in the cost
                              by INR 93 Lakhs.

                          -   Limiting of the duration of hours to 8 for each resource to be provided by the
                              vendor also led to reduction in manpower/labour cost amounting to INR 2.45
                              Crores.

20.6.3   It is pertinent to note that the cost quoted by the vendor for the manpower component
         (INR 8 Crores/42% of total cost) was not negotiated for reduction and it appears that the
         budget was revised to incorporate the high manpower cost quoted by vendor.

20.6.4   One of the components under the services required to be provided was project cost which
         appeared to be directly related to manpower costs. While manpower costs were brought
         down due to reduction in the service period, the project cost finally approved did not bear
         any decrease on account of reduced manpower cost. This suggests that there was an
         opportunity to further reduce costs which was not considered by OC.

20.6.5   In its evaluation, the minutes of meetings capture the ‘market rates’578 for the ‘Manpower
         Component’. These market rates were lower than rates quoted by A2Z for the ‘Manpower
         component’(For example, the market rate for Supervisor was INR 42 per hour579 and the
         rates quoted by A2Z for the same level was INR 69 per hour). However, the vendor refused
         to reduce the rates during negotiations carried out on 1 & 3 June 2010 stating that there has
         been an escalation in minimum wages by the Government of India post submission of rates




         578
           We were not been provided with the source of the market rates for manpower as considered by the committee in their
         meeting held on 22 April 2010.

         579
               Rate as considered by the OC’s evaluation committee.


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                                Fifth Report of HLC – Organizing Committee

         by them. The vendor also stated that they have quoted the least amount thereby becoming
         L1 and as such was not in a position to reduce the rates further580.


         Comparison with ‘market rates’

20.6.6   The evaluation committee documents ‘market rates581’ which appear to be lower than rates
         quoted by the vendor. On a comparison582 of these rates with those quoted by the vendor,
         an opportunity to reduce costs by approximately INR 1.98 Crores583 was lost by the OC as no
         negotiations were carried out. It is pertinent to note that there is no information as to the
         source and authenticity of these market rates as obtained by the evaluation committee.

20.6.7    In view of the above, a significant opportunity to further reduce costs aggregating to INR
         1.98 Crores was lost even though these were clearly in contemplation of the OC at the time
         contracts were agreed. This computation is based on rates that the OC has documented in
         its own minutes. It is not clear why these opportunities were not availed resulting in
         potential overpayments to vendors.


20.7     Other issues


         Time delays in vendor finalization

20.7.1   The delays ranging in relation to this contract ranged from approximately 1.5 months to 3.5
         months in various stages of the tendering process and total time taken in processing the
         contract was approximately 9 months. Thus suggests that the activities were not planned
         properly which led to time pressures that also contributed to the non - rationalization of
         issues such as those discussed in the sections above.




         580
               Refer Annexure 20.10

         581
               The date on which the rates were obtained by the OC have not been provided to us.

         582
            This comparison excludes market rates for managers as it was not considered by the committee and was not made
         available.

         583
               Refer Annexure 20.11


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                                Fifth Report of HLC – Organizing Committee

         Table 20.5

           Start Date                          End Date                                    Delays    (   in
                                                                                           months)

           Opening of EOI- 21.10.2009          Issue of RFP 24.12.2009                     2

           Technical bid opening- 02.02.2010   Evaluation        of      Technical    bid- 1.5
                                               16.03.2010

           Commercial bid opening-29.03.2010   Awarding     of        contract   to   A2Z- 3.5
                                               16.07.2010



         Appointment of consultant

20.7.2   The OC appointed Mr. David Payne (“Consultant”) for consultation of catering, cleaning and
         waste management at the venues and for providing assistance and guidance to the OC to
         achieve international benchmarks. As per the terms of the contract between consultant and
         OC , the consultant was required to submit detailed monthly reports of work done and
         submit the same along with monthly invoices to specific functional area head within OC (in
         this particular case, COO of OC was appointed as the specific functional area head). Further,
         on the conclusion of the contract, the consultant was required to submit a report on the
         conduct of the catering, cleaning and waste management before end of the contract on 31
         October 2010584.

20.7.3   One of the services required to be provided by the consultant under the contract was to
         “Review and evaluate tender proposals from bidding companies”. A review of minutes of
         various meetings conducted for evaluating various bidders and finalizing the vendor for
         provision of services does not indicate the presence or involvement of the consultant in
         these meetings. Further, a review of various consulting reports as submitted by the
         consultant reveals that the subject of evaluation of tender has been mentioned by the
         consultant in reports submitted in May and June but no further details on the specific work
         done by the consultant have been provided585.

         584
               Refer Annexure 20.12.

         585
               Refer Annexure 20.13.


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                             Fifth Report of HLC – Organizing Committee

20.8     Summary and conclusions

20.8.1   The above mentioned issues indicate that the OC awarded substantially the entire work to a
         single vendor, whose capability and experience in providing the service was not proved, The
         OC failed to provide adequate safeguards such as:

              Executing specific contract terms on bringing games environment skills that would have
               obligated vendors to bring relevant expertise. The possibility that such omission was
               deliberate with a view to facilitate the vendor cannot be excluded.

              Limiting number of packages that can be awarded to a vendor and thereby increasing
               vendor base

              Not negotiating with the vendor on prices for specific component when, by OC’s own,
               estimate, the rates quoted were higher than market rates

20.8.2   The infective appointment resulted in the situation that the vendor was unable to provide
         the manpower required at the time of games leading to serious delivery issues. This
         situation was wholly avoidable had OC functionaries themselves adhered to the red
         flags/concerns identified by them during vendor finalization.

20.8.3   The role of the OC functionaries involved in the process is against the norms of propriety.

              It is not clear why only one vendor which did not have games time experience was called
               for presentation based on ‘instructions of chairman’ even though the evaluation
               committee was still deliberating on the vendor to be hired.

              Red flags on the capability of the vendor as per established evaluation criteria were
               ignored

              Opportunity to save costs of approximately INR 1.98 crores through negotiations was
               lost as OC did not engage further with the vendor in this regard.




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                                Fifth Report of HLC – Organizing Committee

21 Chapter 21: Games News Service
           The contract for Games News Service was initiated at a very late stage as the OC
           commenced the tender only 10 months before the games. The contract was tendered twice
           due to clear failure of the OC officials to follow laid down procedures and there was evidence
           of very restrictive conditions imposed apparently to limit the number of participants. The
           RFP was issued twice and each time only one vendor responded who was finally awarded
           the contract for INR 9.06 crore.                Incidentally, this function was done in-house at the
           Melbourne Commonwealth Games in 2006. While on one hand a price reduction was
           achieved by reduction in scope of work, on the other hand the OC changed the payment
           terms with the vendor (between his price bid, the LOI and final contract) resulting in an
           additional expense to the OC.




21.1     Background

21.1.1   Press Operations Functional Area (FA) was responsible for providing all the facilities and
         media services to accredited print journalists, photographers and non-right holders to
         ensure seamless functioning of the media during the Games. The Press Operations FA’s
         objective was to co-ordinate with all other relevant functional areas to ensure “seamless
         delivery of services at the Main Press Centre (MPC) and at all Venue Media Centres
         (VMCs)”586.

21.1.2   Under this FA, a contract for Games News Service (GNS) was signed on 17 June 2010 587 with
         Infostrada Sports (“Infostrada”), a company based in The Netherlands. The key services
         required under this contract related to “providing editorial content for the Games
         Information System (GIS) including accurate athlete biographies and past performance
         statistics, which provides real support time results as well as news, background and




         586
               Refer Annexure 21.1- Official CWG Website

         587
               Refer Annexure 21.2 – Agreement between OC and M/s Infrostrada


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                                Fifth Report of HLC – Organizing Committee

         information on the Games”588. The value of the contract awarded to Infostrada was USD
         2.06 million or INR 9.06 crore on an exclusive of all taxes589 basis.

21.1.3   A brief chronology of the key events relating to the award of the contract to Infostrada is as
         follows.

         Table21.1: Chronology of tendering process for GNS

         Date                             Particulars




         1 October 2008                   Press Operations FA becomes operational

         8 June 2009                      Appointment Mr. Manish Kumar, Director, Press Operations

         23 December 2009                 Proposal to issue RFP submitted to various OC employees such as ADG
                                          (Finance), DG (OC), DDG (Legal) and OSD

         27 January 2010                  Issue of RFP only on the website of OC

         30 January 2010                  Pre- bid conference

                                              2 parties attended the conference
         10 February 2010                 Last date for submission of bids

                                              Only one bid received from Infostrada
         12 February 2010                 Pre- qualification bid opened and evaluated

                                              Bid Opening Committee recommended opening of Technical bid
         15 February 2010                 Pre- qualification bid compliance report prepared

         23 March 2010                    Examination of Pre- qualification bid by evaluation committee

                                              Re- tendering recommended
                                              Reduction in bidding time recommended
         25 March 2010                    Permission for putting on fast track the re-tendering of Games News



         588
               Refer Annexure 21.1 – Official CWG Website

         589
               Refer Annexure 21.2 – Last page of the agreement


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                                Fifth Report of HLC – Organizing Committee

         Date                             Particulars




                                          Service

         27 March 2010                    Re-issue of RFP

         10 April 2010                    Last date for submission of bids

                                              Only one bid received from Infostrada Sports
         12 April 2010                    Opening of Pre- qualification bid

         15 April 2010                    Technical bid opened and evaluated

         16 April 2010                    Commercial bid opened and evaluated

                                              Committee recommended formation of Negotiation committee
         28 April 2010                    Negotiation committee meeting held between Infostrada Sports and OC

         25 May 2010                      Letter of Intent issued

         17 June 2010                     Contract with Infostrada Sports signed




21.1.4   In summary, the OC undertook a process spanning a period of 6 months and this involved
         repeating the tender process twice. Both times only a single vendor, Infostrada, responded
         to the RFP (with no other bids received) and the contract was awarded to them.


21.2     “Lack of expertise” cited to outsource contract

21.2.1   There was no expense head budgeted for Games News service provider under Press
         Operations FA in the initial budget prepared by the OC in 2007. 590

21.2.2   Subsequently, in the revised budget submitted for approval to the Ministry of Youth and
         Sports Affairs in July 2009, a budget of INR 0.68 crore was estimated for GNS. This estimate
         was arrived at by extrapolating the actual amount spent in Melbourne games in 2006 “to a



         590
               Source: Refer Chapter 2 on OC’s Budget


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                                 Fifth Report of HLC – Organizing Committee

         Delhi environment”.591 In this regard it should be noted that the games news service in
         Melbourne was conducted in-house and not outsourced to anyone592. It was also clarified
         in the 12th Finance sub-committee meeting on 19 May 2010 that while estimating the
         budget “the fact that OC Melbourne had deployed its own staff for GNS was lost sight of”593.

21.2.3   Given that GNS was provided by an in-house team during the Melbourne CWG 2006 games,
         the OC contacted Press Information Bureau (‘PIB’) to undertake the responsibility for
         provision of GNS during D 2010.                         However, PIB declined, citing “lack of requisite
         expertise”.594

21.2.4   According to the report provided by the Press Operations FA the Director, Press Operations,
         Mr. Manish Kumar, (appointed in June 2009), was of the view that GNS cannot be provided
         by an in-house team, on account of “lack of requisite expertise in our country”595 and that an
         experienced international agency should be hired. Thus, after almost 16 months from the
         date when Press Operations FA was made operational596, a proposal was put up to hire a
         vendor for GNS.


21.3     Time pressures created due to delayed contracting

21.3.1   The first proposal for issue of RFP for Games News Service was prepared and submitted by
         the FA to the competent authority597 only in December 2009. Due to “conceptual errors” in
         the first RFP, the RFP was re-issued resulting in further delays. Thus, the entire process from
         the release of the first EOI cum RFP to the awarding of the LOI took a period of almost 6
         months to complete.




         591
               Refer Annexure 21.3 for extract of revalidated budget prepared by E&Y and EKS consortium.

         592
               Source: Refer Annexure 21.4: As per Brief Report on Press Operations FA – Para 1, Page 1

         593                                                                       th
               Source: Refer Annexure 21.5 – Minutes of the FSC meeting held on 10 May, 2010 – Pt. (v), Agenda item no. 1

         594
               Source: Refer Annexure 21.4 – Para 5(c), Page 3

         595
               Source: Refer Annexure 21.4 – Para 5(c), Page 3

         596
               Source: Refer Annexure 21.4 – Para 5(a), Page 2 The Press Operations FA was constituted in October 2008.

         597                                                     rd
           Source: Refer Annexure 21.6: Note-sheet dated 23 December, 2009 submitted to Mr. KUK Reddy, ADG (F&A); Mr. VK
         Verma, DG (OC); Mr. Ram Mohan, DDG (Legal); Mr. Jiji Thompson, OSD


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                                 Fifth Report of HLC – Organizing Committee

21.3.2   Consequently, it is evident that the contracting for such services was relegated to a stage
         where an intense time pressure was built up due to the conduct of the OC officials. It is
         surprising that firstly the FA realized so late in the run up to the games that such services
         were needed and secondly, took another 6 months to finalize a contract even when they
         were aware that these were needed.


21.4     Circumventing tender procedures

         Restricting EOI/RFP circulation through improper notification

21.4.1   The EOI cum RFP was released on the CWG website on 27 January 2010598 and this
         constituted the sole medium to solicit responses. It should be noted that as per the terms
         of the financial and administrative guidelines, para 3.7 “An enquiry for seeking ‘Expression of
         Interest’ from consultants should be published in at least two national dailies and the web
         site of the organisation. The website address should be given in the advertisements”.599

21.4.2   Mr. Manish Kumar, Director, Press Operations, made a note in the proposal sheet on 8
         January 2010, stating “The RFP is ready to be put on the website/ to be issued in newspaper.
         Being submitted for legal approval”.600 Further, in the same note sheet, on 12 January 2010,
         he reiterated “The advertisement for Games News Service Provider RFP is to be given in
         national dailies. The content and expense sheet of the advertisement is attached herewith
         and same is being submitted for financial concurrence for amount of INR 153,799.24. The
         DG has already instructed to release the RFP that was approved in his presence by the
         Finance Committee601”.

21.4.3   In spite of being aware of the procedure as mentioned above, the EOI cum RFP was
         published only on the CWG website (D2010). The explanation put forward by Mr. Manish
         Kumar, DDG602 Press operations, for not adhering to the procedure was “The RFP could not
         be advertised in national newspapers since permission was not received on time and ADG,

         598
               Source: Refer Annexure 21.7 – Archived Tenders on CWG website

         599
               Source: Refer Annexure 21.8 – Financial & Administrative Guidelines of OC – Pt. 3.7, Page 29

         600                                                            rd
               Source: Refer Annexure 21.6 – 3/N – Note-sheet dated 23 December, 2009

         601                                                                    rd
               Source: Source: Refer Annexure 21.6 – 4/N – Note-sheet dated 23 December, 2009

         602                                                       nd
               Source: Refer Annexure 21.9 – Office order dated 22 February, 2010


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                                Fifth Report of HLC – Organizing Committee

         Games Service had suggested that the RFP be made online to avoid delays”603. A direct
         consequence of publishing this RFP solely on the website of CWG (D2010) and in
         contravention of OC’s own guidelines is that its distribution was restricted.

21.4.4   Further, as the expense in question was only INR 1.5 lakhs,604 the plea that there were
         delays in obtaining financial approvals for advertising expense seems frivolous. It may be
         noted that the proposal for content and expense for the advertisement was submitted for
         financial concurrence on 12 January 2010605 and the RFP was published on the website on
         27 January 2010.

21.4.5   Additionally, the proposal for issue of RFP606 stated that, “the expertise of providing GNS is
         limited to only a few companies all over the world”. The financial and administrative
         guidelines of the OC to be followed in case of procurement of goods607, define the
         procedure as following.                “Where it is felt that the goods of the required quality,
         specifications etc., may not be available in the country and it is necessary to also look for
         suitable competitive offers from abroad, the copies of the tender notice may be sent to the
         Indian embassies abroad as well as to the foreign embassies in India”.                          Further, this
         condition is also mentioned in the GFR.

21.4.6   Accordingly, since the Press operations FA knew that GNS was a specialized service being
         provided by only a few companies all over the world, they could have adopted the above
         mentioned procedure in regard to RFP to obtain competitive bids from more vendors. Since
         no such action was taken by the FA, it will be reasonable to assume that there was a lack of
         inclination of the OC to broaden the potential supplier base and obtain requisite expertise
         through fair competition.

         Difference of opinion on vendor qualification




         603                                                                            rd
               Source: Refer Annexure 21.10- Minutes of evaluation committee meeting on 23 March 2010.

         604                                                    th
               Source: Refer Annexure 21.11 – Note-sheet dated 25 March, 2010

         605
               Source: Refer Annexure 21.7

         606
               Source: Refer Annexure 21.6 for note sheet dated 23 December 2009.

         607
           Source: Refer Annexure 21.8 – Para 2.5, Page 22


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                                Fifth Report of HLC – Organizing Committee

21.4.7   As per the information provided, the pre- qualification bid received from Infostrada Sports
         was evaluated twice by two different committees, on different dates with different
         recommendations. The details are set out in the table below.

         Table 21.2

          Date of meeting          Committee members                        Recommendation

          12          February        Mr. Bharat Prasad, DDG,                 The committee after scrutinizing
          2010                         Finance,                                 the    relevant     documents from
                                      Mr.      Surjit     Lal,     DDG         Infostrada Sports found the firm
          (Bid         Opening
                                       Procurement,                             qualified in the pre- qualification
          Committee)608
                                      Mr. Ram Mohan, DDG, Legal                bid.
                                       and                                     The        committee,        therefore,
                                      Mr. Manish Kumar, DDG,                   recommended that the technical
                                       Press Operations                         bid of the firm maybe opened as
                                                                                per RFP.
          23 March 2010               Mr. Sanjiv Mittal, OSD,                 OSD and ADG, Procurement were
                                      Mrs.       G.     Kaur,      ADG         of the view that since all the
          (Evaluation
                                       Procurement,                             procedures for the tender were
          Committee)609
                                      Mr. Derek Phillips, Director,            not followed resulting in only one
                                       Accredition and GMS                      bid therefore, the concerned FA
                                      Mr. Manish Kumar, DDG,                   should re-tender the RFP for GNS
                                       Press Operations                         by advertising in the national
                                                                                newspapers.
                                                                               It was also suggested that the 4-5
                                                                                known companies in the world
                                                                                could be contacted to respond to
                                                                                the bids which would be made
                                                                                available on CWG’s website.
                                                                               Further, it was decided that in
                                                                                view of paucity of time, the
                                                                                prospective vendor’s could be

         608                                                                                   th
               Source: Refer Annexure 21.12 – Minutes of Bid opening committee meeting held on 12 Feb 2010

         609
               Source: Refer Annexure 21.10


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                                Fifth Report of HLC – Organizing Committee

          Date of meeting          Committee members               Recommendation

                                                                     given two weeks time only for
                                                                     bidding in spite of it being an open
                                                                     tender enquiry.

21.4.8   The opinions given by the two committees above are completely contradictory to each
         other. It is surprising how the bid opening committee on 12 February 2010 recommended
         that the proposal to appoint Infostrada be approved even though the evaluation committee
         opined that procedures for tender were not followed. The difference of opinion, by
         different committees (with one common member) is extraordinary given that the difference
         pertains to basic facts related to the tender process and methodology and not overly
         complex determinations.

         Fast track permission from Chairman not ratified

21.4.9   Due to paucity of time, Mr. Manish Kumar, DDG, Press Operations, obtained permission
         from the Chairman, Mr. Suresh Kalmadi to “fast track”610 the re-tendering of the GNS RFP.
         According to the letter seeking permission, DDG, Press Operations has requested that time
         for bidding be reduced to 2 weeks from 4 weeks as they were “racing against deadlines”.
         Further, he cited the reason for re-tendering as “the initial tender was made only online and
         not published in the national newspaper”.

21.4.10 It has not been determined whether the permission from the Chairman, has been ratified in
         the Executive Board meeting as per the rules and regulations of the OC. Perusal of the
         minutes of the EB minutes did not reveal this as an agenda item.

21.4.11 The RFP was re-issued on 27 March 2010,611 in 2 national newspapers and on the CWG
         website. The bidding time was reduced from 4 weeks to 2 weeks as per approval from the
         Chairman obtained in the manner referred to above.

         Inadequate performance security

21.4.12 According to the financial and administrative guidelines of the OC, performance security at
         the rate of 5% to 10%612 of the value of the contract should be collected. Accordingly, even

         610
               Source: Refer Annexure 21.13

         611
               Source: Refer Annexure 21.7- Official CWG website


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                                 Fifth Report of HLC – Organizing Committee

         at 5% of the total value of the contract, the OC should have demanded a performance
         security of INR 0.45 crore. However, as per the LOI issued by the OC, duly authorized by the
         Secretary General of OC, Dr. Lalit K Bhanot, a performance security of INR 0.05 crore was
         demanded from the vendor613. No reason for non adherence with the guidelines was
         mentioned or explained. Also, as informed by the Press operations FA, no approval for
         demand of less performance security was obtained by the FA or Dr. Bhanot.

         The Director was promoted while he short-circuited tender process

21.4.13 It is worth noting here, that even though the tendering of the RFP for GNS was improperly
         done in the first instance and there was consequent delay attributable to the Director the
         OC, instead of taking action against him for his omissions and commissions, as the Director
         Press Operations, promoted Mr. Manish Kumar to DDG, Press Operations in February 2010
         with an increase in core salary of INR 8,000 per month.614 The promotion was awarded for
         his ability to drive “the FA forward to meet the timelines in the Games”615 which is quite
         contrary to fact as explained above.


21.5     Lack of inclination to undertake a “price negotiation”

21.5.1   On the basis of the recommendation of the evaluation committee616 formed to examine the
         commercial bid of the GNS, a negotiation meeting was conducted with the vendor on 28
         April 2010.617

               The vendor made an offer of INR 12.58 crores

               This was brought down by 27.95%, to INR 9.06 crore

21.5.2   The members of the negotiation committee were:

         612
               Source: Refer Annexure 21.8 – Para 2.4, Page 22

         613
               Source: Refer Annexure 21.14 – Copy of Letter of Intent (LoI) issued to M/s Infostrada Sports

         614
               Source: Refer Annexure 21.9

         615                                                       th
               Source: Refer Annexure 21.15 – Notesheet dated 13 January, 2010 by Director (Estt.)

         616                                                                       th
           Source: Refer Annexure 21.16- Evaluation committee meeting on 16 April, 2010. Members: Gp. Capt. KUK Reddy, Mrs.
         Gurjot Kaur, Mr. Surjit Lal, Mr. Manish Kumar and Mr. Derek Philips. Mrs. Gurjot Kaur, has not signed the evaluation
         committee minutes.

         617                                                                              th
               Source: Refer Annexure 21.17 – Minutes of negotiation meeting held on 28 April, 2010


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                                 Fifth Report of HLC – Organizing Committee

         -        Mr. M. Jeychandran, OSD. Finance and Accounts
         -        Gp. Capt. KUK Reddy, ADG, Finance and Accounts
         -        Mr. Manish Kumar, DDG, Press Operations
         -        Mr. Derek Philips, DDG, Accreditation and GMS

21.5.3   Analysis of the negotiation reveals the following.

               The reduction in total cost was achieved not by price negotiation, but by a reduction in
                scope of work. The initial offer made by the vendor was reduced by removing “certain
                elements covered in the scope of work” which were in the “nature of adding
                enhancement to the quality of the output and not affecting the essential features of the
                                         618
                intended output”.              The negotiation committee noted that this decision was taken
                considering the reduced time available before the games in Delhi and the feasibility of
                providing GNS without compromising on the essential output.

               Further, the negotiation committee acted under pressure to accept the offer by the lone
                vendor as evident from minutes of meeting wherein it was stated that “The Negotiation
                committee is thus faced with the most unenviable task of choosing between the options
                of either accepting the offer of the firm at the quoted rate, albeit at a perceivably (validly
                or otherwise) at a high cost and provide the crucial service to the games or run the risk of
                rejecting the offer on the grounds of high cost and jeopardizing the games”.619

21.5.4   It is clear from the above that the contract was awarded to Infostrada with full knowledge
         that their rates were high, yet the OC chose to explain it away by citing that not engaging
         the vendor would “jeopardize” the games. It is relevant to note that, as explained above,
         the delays are directly and exclusively attributable to the conduct of the concerned OC
         officials and therefore they are accountable for the high price that was paid to the sole
         vendor.




         618                                   rd
               Source: Refer Annexure 21.17 – 3 Para, page 1

         619
               Source: Refer Annexure 21.17 – Last Para, page 2


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                         Fifth Report of HLC – Organizing Committee

21.6     Discrepancies in payment terms resulting in additional costs to OC

21.6.1   A review and comparison of the payment terms in the commercial bid, letter of intent and
         contract revealed the discrepancies which have resulted in additional costs to the OC. The
         discrepancies and additional costs have been set out in the table below:




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                       Fifth Report of HLC – Organizing Committee

Table 21.3

 Particulars Payment terms                                                                  Remarks

                    Commercial Letter of Intent621                       Contract622
                    bid620

 Total cost         Part A: INR Total          value         of   the Payment terms As the Payment
                    46,500,000       contract: INR 90,640,000 changed to USD in INR changed
                                     including all incidentals, Delhi 2010, shall to                USD         in
                    Part B: INR
                                     out of pocket expenses, pay                       fees contract,
                    79,300,000
                                     clerkage, etc.)                     exclusive of all additional
                    Reduced to                                           taxes,             Foreign exchange
                    INR                                                  USD 2,060,000.     cost of approx.
                    90,640,000                                                              INR 0.38 crores
                    after                                                                   on payments till
                    negotiation.                                                            date.

 Direct             Not              Witholding tax shall be Exclusive of all Additional                      cost
 taxes              mentioned        applicable as per DTAA taxes                           on        OC       as
                                     between           the        two                       withholding        tax
                                     countries as per provision                             is applicable per
                                     of       the       IT        Act.                      DTAA      between
                                     Withholding         tax        is                      the 2 countries.
                                     included in the contract
                                     value above.




 Indirect           Not              Service    tax      shall     be Exclusive of all Additional cost of
 taxes              mentioned        applicable as per the taxes                            service     tax    of
                                     Service Tax Act and this is                            approx INR 1.43
                                     included in the contract                               crore              on


620
      Source: Refer Annexure 21.17 – page 1

621
      Source: Refer Annexure 21.14

622
      Source: Refer Annexure 21.2 – Last page of agreement


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                                             value.                                                      payments           till
                                                                                                         date.


21.6.2   It is evident from the above that the final contract terms with Infostrada are very different
         from their commercial bid and the letter of intent issued by the OC to them. They were also
         compensated for withholding taxes and service charge in India which based on the
         payments already made to them aggregate to INR 1.43 crores623. These were reimbursed to
         them over and above what was quoted in their bid and the letter of intent. Further, the
         contract switched the payment currency from INR to USD. Consequently, the OC incurred
         an exchange rate related loss for INR 0.38 crore on payments already made, resulting from
         this switch. Had the OC continued to set the contract in Indian rupees as contemplated in
         the RFP and the bid, this exchange loss would have been avoided.

21.6.3   The LOI and the contract were signed by Dr. Lalit Bhanot, Secretary General of the OC. It is
         not clear from the available records if the changed payment conditions, particularly
         payment in USD were duly approved by the EB, which was empowered to approve
         expenditure above INR 6 crore.


21.7     Other issues

         Management change

21.7.1   On 25 September 2010, through an office order624 from CEO, Mr. Jarnail Singh, Mr. Manish
         Kumar, DDG Press Operations was transferred to Sustainability and Environment Functional
         Area. In his place, Ms. Manjushree Roy, was appointed as DDG, Press Operations. The office
         order does not state any reason for this sudden transfer of Mr. Manish Kumar to another
         functional area just 2 weeks prior to the games.

21.7.2   As per the information provided by Ms. Manjushree Roy, Mr. Manish Kumar was removed
         from Press Operations due to “management reasons”. We were further informed that
         Mr. Manish Kumar, did not hand over any papers pertaining to the FA to Ms Roy and that he
         instigated 7 employees from the FA to boycott work. Ms. Manjushree Roy also stated that
         623
            We understand that Infostrada has not been paid in full. In this regard, this excess expenditure will further increase if
         payments to Infostrada made under the old arrangements as entered into by the OC.

         624                                                       th
               Source: Refer Annexure 21.18 – Office order dated 25 September, 2010


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         the papers related to the FA and the GNS contract were handed over to her, after a great
         deal of persuasion, only after the games were completed.625

21.7.3   It is to be noted that Manish Kumar’s appointment was in itself not carried out in a
         transparent manner. His appointment was first recommended by the Search Committee
         comprising Mr. VK Verma, Mr. Lalit Bhanot and Mr. Randhir Singh pursuant to an interview
         on 16 September 2008626. However, the offer made by the OC was declined by Manish
         Kumar as he already had a better offer in hand and stated that unless the OC was able to
         match the same, he would not be able to join 627. Subsequently, a search committee
         meeting was held on 5 June 2009 attended by Mr. Lalit Bhanot and Mr. VK Verma where it
         was decided to up the offer to Manish Kumar in order to have him on board as Director
         (Press Operations). This was approved by the Chairman and as noted, by the Vice Chairman
         over the phone and the offer was made on 6 June 2009628. However, what is surprising is
         that in an email to Mr. Suresh Kalmadi dated 12 June 2009 recovered through Computer
         Forensics629, Mr. Mike Hooper stated that though the COO had been given full authority
         over recruitment of foreign hires for certain roles (including Director, Press Operations), and
         the same had been discussed at a meeting on the previous day, he had now learnt that
         Manish Kumar had been appointed in this role. He mentioned that this was not in his
         knowledge or the knowledge of the COO.

21.7.4   Further, another email630 also recovered through Computer Forensics highlights the
         inappropriate behaviour of Manish Kumar at the workplace. This email is the resignation
         letter submitted by Mr. Gnanapragsam Anthony Mariadass to the attention of Mr. VK
         Verma, Mr. Peter Stewart and Mr. Anshul Kwatra. Mr. Tony Mariadass, in this letter, states
         that his reason for resigning was the treatment meted out to him by Manish Kumar. He
         mentioned that Manish Kumar had personality issues and clashes with individuals in the OC,


         625                                 st
               Source: Refer Annexure 21.4 – 1 para, page 2

         626
               Please refer to Annexure 21.19 - Minutes of the Selection Committee Meeting dated 16 September 2008

         627
               Please refer to Annexure 21.20 - communication received from Manish Kumar

         628
               Please refer to Annexure 21.21 - the Minutes of the Search Committee Meeting and Offer

         629
               Please refer to Annexure 21.22 - email from Mike Hooper to Suresh Kalmadi

         630
               Please refer Annexure 21.23 - The email from Tony Mariadass


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                                 Fifth Report of HLC – Organizing Committee

         and he was dragged into the same and told not to attend meetings by these individuals by
         Manish Kumar. Manish Kumar had also publicly humiliated him for doing so. He stated that
         in this situation, it was not possible to continue working for the OC anymore.

         70% of contract value paid prior to commencement of games631

21.7.5   According to the terms of the contract, 70% of the total contract, amounting to
         USD 1,442,000632 was paid by the OC prior to the commencement of the games. As per the
         payment vouchers prepared by Finance and accounts, the DDG, Press Operations, Mr.
         Manish Kumar had certified that the deliverables were as the per contract and thus
         payment was processed.

21.7.6   However, as per the successor DDG, Press Operations, Ms. Manjushree Roy, appointed on
         25 September 2010, the vendor did not deliver the contracted scope of work. Accordingly,
         30% of the contract value has been thereafter held back by the OC for non-delivery by the
         vendor.


21.8     Summary and conclusions

21.8.1   It is evident from the review that the services for which contract was made with Infostrada
         need not have been contracted out and the work could have been handled in house as was
         done in Melbourne 2006. The OC agreed to the price without any effective negotiation of
         price with the vendor even while OC officials were aware that the rates at which this was
         contracted were higher than what the circumstances would warrant. However, the OC
         chose to disregard all concerns citing that the conduct of games would be in question if the
         contract was not awarded to the vendor. This contract clearly represents a situation where
         the following occurred.

               The OC commenced the tender process less than 10 months before the games making
                OC vulnerable to aggressive pricing by the sole vendor.




         631
               Source: Refer Annexure 21.4 – Point 4, Page 2

         632
               Source: Refer Annexure 21.24 – Ledger sheet from Tally dump.


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              The contract was tendered twice as the RFP was issued first time without following the
               procedure of notifying it adequately .The tender process took an overall time of 6
               months leading to the award of the contract.

              The restrictive advertising, done by the OC was indicative of an attempt to avoid wider
               circulation and make it exclusive. A direct result of it was that each time the RFP was
               issued only one vendor, Infostrada, responded and it was given the contract at their
               terms.

              The contract rate was brought down by the OC through reducing project components to
               fit it within the re-appropriated budget633 and there was no effective reduction in rate.

              The very basis for remuneration to the vendor underwent a change between his price
               bids, letter of intent issued to him and the final contract. The OC does not have any
               documentation on who approved or authorized these changes. As a result the vendor
               got the benefit of exclusion of withholding tax and service tax that were inclusive as per
               the bid and LOI. Further the base currency was changed from INR to USD. These
               together caused a financial burden of at least INR 0.38 crore on the basis of payments
               made so far and will increase further if additional payments are made to the vendor.

21.8.2   Changes in favor of the vendor could not have taken place without the collusion of the staff
         of OC and senior management. In this regard, the conduct of the following individuals is
         expressly noted.

              Mr. Lalit Bhanot, Secretary General who signed the LOI and the contract with all these
               changes

              Mr. Manish Kumar, DDG, who issued the RFP in contravention of the guidelines of the
               OC

              The bid opening committee (on 12 Febuary 2010) comprising of Mr. Bharat Prasad, DDG,
               Finance; Mr. Surjit Lal, DDG Procurement; Mr. Ram Mohan, DDG, Legal and Mr. Manish
               Kumar, DDG, Press Operations who approved the bid of Infostrada in violation of the
               guidelines.



         633
             Source: Refer Annexure 21.17- The re-appropriated budget has not been approved by MYAS till date


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                  Fifth Report of HLC – Organizing Committee

     The Chairman, who approved the promotion of Mr Manish Kumar DDG for contribution
      to games when his actions actually caused substantial delays owing to the re-tender and
      eventual payment of extra price.




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22 Chapter 22: Sports Equipment & Surfaces

          The review conducted shows that there was potential for misconduct on part of employees
          engaged in procurement related activities for sports surfaces. This is particularly relevant as
          according to the sports FA’s own data, procurements for some items were made at rates
          significantly different than those budgeted. Further, procurement for badminton court mats
          was made far in excess of requirements with no reasonable explanation for such an inflated
          demand. Brands for most surfaces were pre-determined with restrictive criteria that inhibited
          new entrants.



22.1     Overview

22.1.1   The Sport FA was led by Mr. A.S.V. Prasad, Additional Director General (Technical). The
         number of employees engaged in this FA was around 300 and comprised a senior team of 9
         DDGs and 17 competition managers.

22.1.2   According to the overview provided by ASV Prasad the Sports FA was primarily responsible
         for handling the technical aspects related to the games that included following guidelines of
         the CGF and the norms of International Federations634. The objectives of this FA included
         centralized planning, policy and operational support, planning and implementing the
         presentation for all sports.

22.1.3   Initially government planned for the purchase of equipments and surfaces by the venue
         owners However, in the CCC meeting held on 19th June, 2009, it was decided that
         procurement for SAI venues would be done by OC. Later in the EB meeting held on on 19th
         December, 2009, Sports FA was authorized to procure sports equipments for all venues.
         Various agencies and committees were actively engaged with the sports FA in respect of
         procurement and management of sports equipment and sports surfaces. These included
         the following.




         634
            Please refer to Annexure 1 for the copy of the email with Sports FA overview as provided by Mr. Anand (office of ASV
         Prasad)


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                                 Fifth Report of HLC – Organizing Committee

               Expert Committee- On 24th May, 2008, Mr. Suresh Kalmadi, constituted an Expert
                committee to finalize the selection of sport surfaces and sports equipments for
                Commonwealth Games 2010, Delhi. The committee was chaired by Dr. Lalit K. Bhanot,
                Secretary General, OC CWG and consisted of representatives from National Sports
                Federations, GNCTD, SAI and a representative each from all venue owner agencies635.

               Centralised Co-ordination Committee (CCC)- On 14th June, 2008, a CCC was constituted
                through a consensus in the meeting held by MoYAS with Chief Minister, Delhi and
                Chairman, OC on 9th June, 2008 for finalization of overlays including sports specific
                surfaces / equipments taking inputs from the expert committee and also for suggesting
                the best modalities for procurement to ensure uniformity, consistency and quality636.


22.2     Incorrect budget estimates

22.2.1   On an overall basis, the total cost of sports equipments for 17 sports was estimated at INR
         31.24 crores as reflected in the EFC note for budget approval sent to Secretary, MoYAS by
         Mr. Lalit K. Bhanot.637 Against this, we noted that the OC spent an amount of INR 26.66
         crores on purchase of sports equipments.

22.2.2   Even though OC was able to procure the sports equipments within the approved budget
         there were significant variations in the rates of the items.

               92 items were reviewed (out of total of 435 items procured by OC), and substantial
                discrepancy in the actual vs. budgeted rates was noted

               Out of these 92 rates for 50 items were higher than the estimates. For example, in case
                of Hockey Goal Post and Trampoline (Gymnastics), the purchase cost is 50 times and 90
                times over the estimated cost respectively638

22.2.3   Thus, it is clear that the budget prepared by OC were inaccurate with respect to the unit
         rates. It is a consistent finding that OC’s estimates for rates varied from the actual costs.

         635
               The detailed list of members is listed in Annexure 22.2

         636
               The detailed list of members is attached in Annexure 22.3.

         637
               Please refer to Annexure 22.4 for the EFC note for Sports Equipment budget

         638
               Please refer to Annexure 22.5 for the summary of rate variations for 50 items out of 92 reviewed


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                                 Fifth Report of HLC – Organizing Committee

22.3     Unapproved and wasteful expenditure on badminton court mats

22.3.1   DDA constructed 26 Badminton courts while only 14 were approved by OC and Venue
         Owners in the meeting held on 13th April 2009 under the chairmanship of Secretary (YAS).
         On 13th April, 2009, MoYAS circulated the final list of number of surfaces required for each
         sport and venue owning agencies639 as per which only 14 surfaces were approved to be
         procured for Badminton courts. The Chief Engineer DDA, Shri N.L. Singh stated that 26
         courts were constructed as per the direction of OC. This issue has been detailed in the
         fourth HLC report on Games Venues.

               As per an email dated 9 October 2009, Mr. NL Singh wrote to Mr. Lalit Bhanot seeking
                clarification regarding the number of Badminton courts to be developed for CWG. As per
                this email Mr. Singh wrote that DDA was asked to procure 26 badminton court mats by
                the OC. However, Mr. Singh stated that in the opinion of the DDA, instead of inviting
                tenders and procuring 26 court mats, only 18 such surfaces were needed. Mr. Singh
                further stated that the balance 8 could be utilized from the procurements made for the
                test events640.

               Thereafter Mr. ASV Prasad wrote an email dated 20 October 2009 to Mr. NL Singh
                stating that “Regarding Yonex synthetic courts BAI feels that the requirement is 26 courts
                as 8 brand new courts (5 competitions and 3 warm-up) are required during the games
                period.”641

               Consequently, DDA went ahead with the procurement of 26 court mats for badminton.

22.3.2   Mr. ASV Prasad, when requested to comment on the reasons for instructing DDA to
         construct 26 courts as opposed to 14 approved by MoYAS, provided the following response.

               The instructions for the number of 26 court mats issues to DDA as per the email dated
                10 October 2009 were “not a directive, but for information only”. Mr. ASV Prasad




         639
               MoYAS approved final list of surfaces – Annexure 22.6

         640
               Please refer to Annexure 22.7 for a copy of the email

         641
               ASV Prasad’s email to Chief Engineer, DDA – Annexure 22.8


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                                 Fifth Report of HLC – Organizing Committee

                further stated that the DDA never consulted the sports FA and also that the sports FA did
                not have any role in the procurement of these court mats642.

               Mr. Prasad also stated that the number of 14 mats that were referred to by DDA in the
                minutes of the meeting help of 13 April 2009 may be a typographical error643 and the
                actual number of court mats required was 18.

22.3.3   In summary, there was a complete disconnect between the OC and DDA on the number of
         court mats required despite the clear decision arrived at in discussion with the MoYAS for
         procurement of only 14 court mats. Even in the DDA’s own view, the opportunity to use
         mats procured for test events was not utilized and thus at best 18 would have been
         sufficient. The potential loss caused by such over procurement is INR 70.62 lakh644 if only 14
         surfaces would have been procured and INR 47 lakh if 18 were procured. The estimated loss
         only includes the cost of court mats and their installation. This does not include the
         expenses on part of developing additional portions of the venues for badminton and overall
         loss may be much higher than this. For example, Saket Sports Complex which housed 4
         Badminton courts was developed at a cost of INR 6.8 crore and was never used. By any
         measure, based on the documentation reviewed, there was no requirement to procure 26
         court mats.

22.3.4   The conduct of Mr ASV Prasad and Mr. NL Singh directly contributed to wasteful
         expenditure in unnecessary purchase of the court surfaces.


22.4     Restrictive Expression of Interest (EOI)

22.4.1   The Expert Committee short listed those surfaces which were “most suitable to Indian
         climatic conditions” as certified by respective International Federations and used in
         maximum international sporting events.. The CCC also recommended the same surfaces.
         The list of selected surfaces along with the criteria for selection was sent by Mr. Lalit Bhanot
         to Rahul Bhatnagar, JS MoYAS on 6 Jan 2009645.

         642
               ASV Prasad’s clarification to HLC for his email to DDA - Annexure 22.9

         643
               ASV Prasad’s clarification to HLC, dated 24-02-2011 – Annexure 22.10

         644
               Please refer to fourth HLC report on Games Venues

         645
               Criteria for selection of sports surfaces and timing system – Annexure 22.11

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                                   Fifth Report of HLC – Organizing Committee

22.4.2   An EOI was invited by OC on 21 Feb 2009 for inviting proposals from manufacturers and
         suppliers of the sports surfaces. 646

                 The EOI mentioned that this was for the attention of approved manufactures and
                  suppliers and those whose name was not included in the list of suppliers/vendors
                  provided in the EOI.

                 Such other vendors/suppliers were asked to respond to the OC for consideration for
                  including their names in the list of suppliers.

                 The EOI mentioned the qualification criteria and the brands that met these criteria647.

22.4.3   In view of the above and given that the Expert Committee and the CCC spent almost 8
         months creating the criteria for selection and pre-selecting vendors, it follows that the short
         list was restricted to certain brands that were pre-selected.

22.4.4   It may be mentioned that of the 8 categories for which the EOI was isssued, only in case of
         Wooden Surfaces & Lawn Bowl additional brands were identified through this process. It
         should be noted that in case of Lawn Bowl OC had not identified any brands that met EOI
         criteria.

         Table 22.1: Response to EOI and selection/rejection of brands/vendors

                                                                                  # of EOI Selected for
             #        Sport/Category                          # of EOI Received
                                                                                  further RFP

             1        Athletics                               5                   0

             2        Hockey                                  5                   0

             3        Tennis                                  2                   0

             4        Lawn Bowl                               4                   4

             5        Table Tennis                            1                   0

             6        Squash                                  2                   0


         646
                 Expression of Interest – Annexure 22.12

         647
                 Please refer to Annexure 22.12 for details


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                              Fifth Report of HLC – Organizing Committee

             7     Wooden Flooring                  6                        2



22.5     Procurement of gymnastics equipment at higher than L1 quote

22.5.1   In relation to procurement of gymnastics equipment, we noted that the supply order was
         not based on the L1 quotation received as summarized below.

         Table 22.2

                                           M/s     Banfer M/s Gymnova M/s            Janssen
                Item                                                                             L1 Bidder
                                           GmbH           (France)         Fritsen

                                           (INR)          (INR)            (INR)


         (SET 1)                                                                               M/s Gymnova
                                                                                                   (France)
         Men       Artistic   Gymnastics
         Equipment

         Women Artistic Gymnastics 4,63,68,297.93         4,01,27,393.54   5,51,50,665.28
         Equipment

         Competition Podium

         Magnesium            Carbonate
         Powder


         (SET 2)                                                                               M/s     Banfer
                                           28,55,426.25   59,30,145.34     78,57,464.7             GmbH
         Women                 Rhythmic
         Gymnastics Equipment


22.5.2   As evident from the above, M/s Gymnova were the L1 for the set 1 and M/s Banfer were the
         L1 for set 2. However, on 27th January, 2010, the bid opening date, Mr. ASV Prasad, JDG
         proposed that the entire set (for all the categories) of equipments be purchased from M/s
         Gymnova (France).

22.5.3   In this regard, Mr. Jarnail Singh, CEO, in the 21st meeting of OCFC held on 26th February,
         proposed that set 1 be procured from M/s Gymnova and set 2 be procured from M/s Banfer




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                                 Fifth Report of HLC – Organizing Committee

         GmbH (Germany)648 that was in line with the L1 quotation results. Thereafter a committee
         was set up by the CEO to evaluate the award of the contract to a single vendor. The
         committee finally determined on 21st June, 2010 that the entire contract be awarded to M/s
         Gymnova649. The reason cited was that equipments for all categories in Gymnastics should
         be procured from a single supplier to ensure uniformity of brand between men and women.
         This resulted in an overall cost escalation of INR 30.75 lakhs over the L1 rates quoted.

22.5.4   In this case, both vendors were duly qualified from a technical perspective, yet procurement
         at an inflated rate was made from one of the vendors resulting in the additional expenditure
         of INR 30.75 lakhs with a time loss of almost 6 months from the time the bids were opened.


22.6     Summary and conclusions

22.6.1   The review conducted indicates that there was potential for misconduct on part of
         employees engaged in procurement related activities. This is particularly relevant due to
         the following.

               According to the sports FA’s own data, procurements of some items were made at rates
                significantly higher than those budgeted. Consequently the budgeting process was
                inaccurate and could not be relied upon for making relevant decisions.

               Procurement of badminton court mats were made far in excess of requirements with no
                reasonable explanation for the inflated quantity. The conduct of both DDA and OC
                officials in such unwarranted, unapproved and wasteful procurement warrants
                disciplinary action.

                Brands for most surfaces were pre-determined. The EOI issued to identify ‘additional
                brands’ was enacted but that did not yield in significant additional results as the criteria
                were restrictive towards new entrants.




         648                st
               Minutes of 21 OCFC meeting – Annexure 22.13

         649
               Copy of the committee evaluation report - Annexure 22.14


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23 Chapter 23: Procurement of Lanyards

           A key issue in the award of the contract for lanyards was that both the vendors who were
           short listed in the technical round suffered from deficiencies in their test reports which were
           overlooked by the evaluation committee while other vendors were rejected on the basis of
           similar inconsistencies in test reports. The contract was finally awarded to a vendor with
           limited credentials in the bid document and who appeared to be involved as an ‘agent’ or
           ‘representative’ for foreign vendors for other contracts awarded by the OC that were
           unrelated to this area. Consequently, the award of this contract was on criteria other than
           merit of the selected vendor.


23.1     Background

23.1.1   The OC appointed Tristar Enterprises for supply of Lanyards at Commonwealth Games,
         2010. The total value of the contract was INR 68 Lakh. The peculiarity of this contract was
         the introduction of a technical requirement that resulted in a significant escalation in cost as
         compared to normal Lanyards. In this regard, the OC required Lanyards that were fire
         retardant up to 800º Celsius, made out of recycled PET650, and that fulfilled certain other
         requirements such as ‘anti-microbial properties’, ‘fabric that keeps the skin cool’, and
         ‘moisture absorbent’. The FA responsible for this procurement was the Accreditation FA

23.1.2   Salient details of the contract are provided in the table below:

         Table 23.1: Overview of the contract

         Contract                               Supply of Lanyards

         Contractor                             M/s Tristar Enterprises

         Contract Date                          05 August 2010

         Contract Value                         INR 68,40,000

         Details of Work
                                                   Supply of Lanyards that are made of recycled PET and


         650
               Polyethylene Terephthalate


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                          Fifth Report of HLC – Organizing Committee

                                                      fire retardant up to 800º Celsius.

         Details of Bids Received
                                                     Tristar Enterprises

                                                     Asian Cards

                                                     Digital ID Card System

                                                     Card Tec (India) Pvt Ltd

                                                     MR Technologies

         Details of Bidders Qualifying Pre- Only two bidders qualified,            Tristar Enterprises and MR
         qualification Round                      Technologies


23.1.3   A brief chronology of the key events relating to the award of this contract is set out in the
         table below.

         Table 23.2: Chronology of tendering process for procurement of Lanyards

         Date                       Particulars

                                    Last Date for Bid Submission & Opening of Bids for pre-qualification
         21 June 2010
                                    evaluation

         21 June 2010               Technical Bid Evaluation

         5 July 2010                Opening of Commercial Bid

         9 July 2010                Evaluation of Commercial Bid

         10 July 2010               Meeting of the Negotiation Committee

         17 July 2010               Issue of Letter of Intent

         5 August, 2010             Contract Signed



23.2     Time delays

23.2.1   Consistent with findings in many other sections, the bid submission and consequent
         activities took place only in late June 2010, a few months to the start of the games.
         Consequently, this contract was also fraught with the risk of time delay.


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                                Fifth Report of HLC – Organizing Committee

23.3     Inconsistencies in the technical evaluation of bids submitted by vendors

23.3.1   Technical evaluation committee651 selected 2 out of 5 bidders for the Lanyard contract for
         further evaluation of commercial bid. An examination of the documents provided reveals
         that the arguments set forth by the committee appear biased towards selected vendors.
         The table below lays out the names of bidders who were rejected and the reason for their
         disqualification as noted by the committee at the time of technical evaluation 652.

         Table 23.3: Bidders and the reason for disqualification


         Name of Bidder                            Reason for Disqualification


         Asian Cards                               Failed to submit a test report to prove that the material is
                                                   RECYCLED PET


         Digital ID Card System                    Material not REYCLED PET as per test report


         Card Tec (India) Pvt Ltd                  No Undertaking submitted




23.3.2   Based on the review of documents and records provided to us, it is evident that:

               Though the RFP did not explicitly state the requirement to submit a test report along
                with the bid653, one of the bidders ‘Asian Cards’ was rejected during pre qualification as
                it failed to submit the test report. Thus, one of the bidders was clearly rejected based
                on criteria that were not clearly included in the RFP itself.
               The technical evaluation committee meeting minutes note that MR Technologies
                submitted a test report as part of their bid and this formed the basis on which the
                vendor was short listed for commercial evaluation. However, no Test Report could be
                located in the bid documents of MR Technologies provided to the HLC team. Upon
                enquiry OC responded by furnishing a test report from MR Technologies that is dated 29
                June 2010 which is 8 days after the technical evaluation of the bids. Consequently, it is
         651
           Technical Evaluation Committee consisted of Derek Philips, DDG Accreditation, Ratan Bir Kalra, PO Accreditation,
         Mahesh Arora, DDG Procurement, Sajith Abraham, PO Accreditation, and Rajat Dogra, PO Accreditation.

         652
               Refer Annexure 23.1 for technical evaluation committee minutes

         653
               Refer Annexure 23.2 for the RFP


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                                  Fifth Report of HLC – Organizing Committee

                likely that documentation was created after the award of the contract only with a view
                to provide legitimacy to the decisions and conclusions already reached by the OC.
               The test report submitted by the selected vendor “Tristar Enterprises” is dated June 30
                2008 (2 years prior to the submission of technical bid) and is in the name of a Chinese
                company ‘Foshan Shi Shunde Qu Beidi Gift & Arts Co. Ltd’.654 This apparently specious
                report was overlooked by the technical evaluation committee with no mention in the
                minutes which shows a bias that might have resulted in the short listing of the vendor on
                technical grounds.


23.4     Lanyard supplied and accepted by OC did not meet RFP criteria

23.4.1   The test report submitted by Tristar Enterprises dated 02 August 2010, as part of their proof
         of compliance with RFP specifications prior to the delivery of goods, notes that the material
         supplied is FIRE RETARDANT PET LANYARD. The report does not mention that material is
         RCYCLED PET655. As mentioned in the section above, one of the vendors “Digital ID Card
         System” was rejected specifically as its test report did not specify that the material is
         RECYCLED PET.

23.4.2   Given that the technical specification of the Lanyards required it to be fire retardant a
         simple test was conducted by trying to ignite the Lanyard656 by using a lighter. The Lanyard
         immediately caught fire!

         Figure 23.1: Photo of the Lanyard that caught fire




         654
               Refer Annexure 23.3 for the test report submitted by Tristar Enterprises as part of their bid

         655
               Refer Annexure 23.4 for the test report submitted by Tristar Enteprises prior to the supply of goods

         656
               Sample LANYARD provided by OC


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                                 Fifth Report of HLC – Organizing Committee

23.4.3   In view of the above it is likely that technical specifications were made unduly rich with a
         view to award the contract to a particular vendor at additional costs with no control on the
         actual quality of material supplied.


23.5     Award of a contract to a vendor with suspected affiliations

23.5.1   The contract for Lanyards was awarded to Tristar Enterprises, the selected vendor despite
         the inconsistencies noted above. It may be mentioned that even on a general perusal of
         their credentials it was noted that they provided only 2 certificates of similar items supplied
         by them, none of which were of a scale or value close to the OC’s requirement.

23.5.2   It was also noted that Tristar have been paid approximately INR 1.3 crore in aggregate
         through this contract and for certain other procurements made by the OC through them657.
         Additionally it was noted that their sister concern GEM International and their key
         functionaries A.K. Madan and P.D. Arya were associated with other contracts such as Timing
         and Scoring and Games Management Systems as Indian representatives.( Comments on
         these two contracts are included in Chapter 9 and Chapter 10)

23.5.3   The involvement of possibly same set of vendors in multiple areas under different names
         pointes to a situation in which orders were being cornered by a single group of contractors.
         It is likely that the engagement of the vendor above was made on criteria other than their
         merit especially in view of their apparently limited experience in supply of Lanyards and
         their involvement with other contracts in the OC as agents of foreign vendors.


23.6     Summary and conclusion

23.6.1   The procurement of Lanyard is another example of OC’s crafty manner of acquiring goods
         and services for D2010. This contract appears to be marred with indications of misconduct
         as is evident from the flawed evaluations that resulted in rejection of some of the vendors in
         the technical evaluation phase; likely creation of documents etc.

23.6.2   Further, there is evidence that suggests the involvement of a vendor who appears to be
         from a select ‘club’ members of which were engaged with the OC in multiple contracts. The


         657
               These include contract for Accreditation Cards etc.


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               Fifth Report of HLC – Organizing Committee

reasons for appointment were criteria other then merit and there was misconduct on the
part of employees/FA that awarded the contract.




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                                Fifth Report of HLC – Organizing Committee

24 Chapter                               24:            Expenditure                                on   NDCC
         Building Refurbishment

24.1     Background

24.1.1   The FA (Office Administration) in OC was tasked with the responsibility of expansion of
         office infrastructure (including additional office space, EF&E and workspace) as per the
         functional requirement in the period leading to the games.

24.1.2   In August 2007, Group of Ministers (GOM)658 approved hiring of office space of 1.50 lakh
         sq.ft by OC. In response to Chairman OC’s request (October 2007), New Delhi Municipal
         Council (NDMC) allotted to OC in November 2007 office space comprising 2nd to 6th floor
         of NDMC phase II building (NDCCII) New Delhi measuring 1.37 lakh sq.ft built up area. OC
         made arrangements for refurbishing this hired space at its own cost. The project was
         implemented in two phases.

24.1.3   The first phase involved selection of an Architectural and Internal designing agency for
         preparation of estimates of cost, working drawings and conceptual designs, detailed
         working drawings and structural and services designs etc. The mandate of the consultants
         also included preparation of tender documents, short listing of contractors, supervision of
         work, certifying the quantity and quality of work billed for payment etc.

24.1.4   The second phase involved selection of the firms/contractors for executing various civil
         works. A Monitoring Committee was constituted for providing overall supervision on the
         execution of project. The main events in the processing of these works are shown below.

24.1.5   Architectural and Internal designing agency




         658                                                                     th
               Annexure 24.1 (Minutes of the Executive Board meeting of OC dated 8 January 2008)


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                          Fifth Report of HLC – Organizing Committee

         Table 24.1:

          Date                      Event

          January 2008              RFP issued to 3 firms for selection of Architectural consultant

          February 2008             Technical evaluation of proposals completed and M/s MIS
                                    Consortium selected as T1

          February 2008             Combined Technical and Commercial evaluation completed
                                    and M/s MIS Consortium ranked first.

          June 2008                 Selection of Architectural consultant finalized and contract
                                    signed with M/s MIS Consortium


24.1.6   Firms/contractors for executing civil works

         Table 24.2:

          June 2008                 Invitation to bid published in Delhi news papers for execution
                                    of interior works in floors 2nd to 6th

          August 2008               Commercial bids of three pre-qualified firms opened and bid
                                    amount of INR 21.40 crore found to be lowest. Completion
                                    period reduced from 6 to 3 months and

          September 2008            Negotiations held with all the three firms regarding cost and
                                    period of completion of work.

          September 2008            Contracts signed with-

                                     L1 for 3rd and 4th floor

                                    L2 for 5th and6th floor

                                     L3 for 2nd floor

                                    Total negotiated cost for all tenders INR 19.66 crore.

          November 2008             Invitation to bid published for execution of interior works in
                                    floors 7th to 9th and financial bids of three pre qualified firms
                                    opened. Amount of INR 8.89 crore quoted found lowest.



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                                Fifth Report of HLC – Organizing Committee

          December 2008                    Negotiations held with two pre-qualified firms

          December 2008                    work for 7th and 8th floor allotted to L1 at cost of INR 6.10 crore
                                           and 9th floor to L2 at INR 2.79 crore for completion within 2.5
                                           and 2 months respectively

          December 2008                    Invitation to bid published for execution of interior works in 1st
                                           floor and also fabricating furniture for shooting event

          January 2009                     Financial bids opened

          January 2009                     Work allotted to lowest bidder at cost of INR 1.73 crore which
                                           included INR 24.69 lakh for supply of shooting furniture. Period
                                           of completion of work :21 days



24.2     Budget provision was given a go by

24.2.1   The work of refurbishing of rented space was started from January 2008 without any budget 659
         provision. A provision of INR 12 crore was, however, earmarked in the revalidated budget of
         November 2009 for cost of shifting OC office from JLN stadium and refurbishing of the NDCM phase
         II building at estimated rate of INR 1000 per sq.ft. The actual cost aggregated to approximately INR
         32 crore at the contract award stage. The excess expenditure was met660 out of funds earmarked in
         the budget under office space rental.


24.3     Expenditure on office space hired without justification

24.3.1   NDMC offered and OC hired in the first instance 1.37 lakh sq ft and subsequently additional
         four floors (ground and 7th to 9th) of the same building of 96 thousand sq. ft. Thus, the total
         area hired was 2.33 lakh sq ft.

24.3.2   It is noticed that based on the norm for entitlement of office space for staff in GOI, the
         maximum total tertiary space (workstation, desk, storage cabinets etc) that could be
         required by OC in the peak period of its staff engagement could be approximately 1.00 lakh


         659                                  th                                   th
            Annexure.24.2 (Minutes of the 12 Executive Board Meeting of OC dated 19 Oct 2008 and revalidated budget of Nov
         2009)

         660                                                       th
               Annexure 24.3 (Minutes of the Meeting of EMC dated 13 June 2008)


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                                Fifth Report of HLC – Organizing Committee

         sq ft (50*2000). Hiring of additional 50 thousand sq.ft space (for special requirements)
         would have met the requirement of OC for primary and secondary space such as corridors,
         walkways, lobbies, meeting/conference rooms and special and temporary staff etc.

24.3.3   However OC acquired 83 thousand sq.ft more than the area that was justified(2.0 lakh sq
         ft). But no justification was made available as to why such extra space was required or if OC
         hired the additional office space with the approval of GOM or the Government.

24.3.4   It was determined that for the extra space as above , OC had to spend approximately
         INR11.40 crore on refurbishing (calculated on the basis of average cost of refurbishing per
         sft) and INR 49.80 crore towards rent (@INR 250/sft) for 24 months period.

24.3.5   It appears from the review of records that OC management did not institute a transparent
         and normative approach in allocating office space and there was no mechanism to ensure
         accountability for acquiring and refurbishing excess office space at tax payer’s money.

24.3.6   A review of this case raised serious issues of governance and wastage of public funds.


24.4     Cost Estimates

24.4.1   The justification and economy of the expenditure of INR 32 crore for carrying out interior
         works for 2.33 lakh sq.ft built up area, at an average unit rate of INR 1374 per sq ft was
         questionable.

24.4.2   It was noticed in the review that the cost estimates661 for the project were prepared by the
         Consultant Architect as and when invitation to bid for a particular work was issued. There
         was no record to indicate how the estimated cost was validated in OC. Since the cost
         estimate was based on the tenders and commercial offers and the estimates were not
         validated on independent review, reasonableness of such estimates could not be assessed.
         The Monitoring Committee constituted for providing overall supervision on the execution of
         project had also observed662 that rates quoted were on higher side.




         661                                                         th                                     th   th
               Annexure -24.4 (Minutes of the meeting of EMC dated 25 June 2008 and copy of cost estimates ( 7 – 9 Floor)

         662                                         th
               Annexure – 24.5 (Internal Note dated 14 Aug 2008 of Mr. Gaurav Duggal (Director)


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                                Fifth Report of HLC – Organizing Committee

24.5     Executive Board (EB) abdicated its responsibility

24.5.1   The Executive Board of OC was vested with the powers to approve projects estimated to
         cost more than 3 crore.( revised to INR 6 crore from March 2010). Works costing more than
         INR 3 crore could, thus commence only after the EB.’s specific approval.

24.5.2   In the Executive Board Meeting on 8th January 2008, the EB approved 663 the proposal of
         refurbishing the newly hired NDMC II building and further issued a blanket authorization to
         Executive Management Committee (EMC) to invite RFP bids/ tenders, approve engagement
         of architects and contractors for undertaking the interior works required for the new office.

24.5.3   EMC approved the RFP and award of contract for architectural services to M/s MIS
         Consortium and for execution of interior works to six firms during the period June 2008 to
         January 2009. The expenditure committed through these contracts amounted to
         approximately INR 32 crore though EMC was delegated the power to approve expenditure
         up to INR 3 crore.

24.5.4   The EB did not question at any stage the justification for significant escalation of costs and
         cost-ineffective use of office space. It is therefore inevitable to conclude that EB failed to
         detect the nearly 300 per cent increase in budgeted expenditure. EMC abused the blanket
         approval of EB to incur and approve expenditure at a level which was way above its
         delegated limit.


24.6     Tender process for selection of consulting architect was flawed

24.6.1   A ‘Request for Proposal’ for interior designing services from reputed consultancy firms and
         agencies under two bid system was issued in January 2008 through open advertisement in
         Delhi edition of two ;national dailies and CWG website . Considering that the nature of
         project work in this case was relatively simple and straight forward, requiring routine level
         of expertise and skills for providing flooring, false ceiling, air- conditioning, plumbing,
         electrical, fittings, partitioning and fixture etc for the interiors, setting up of very high




         663
               Refer Annexure 24.1


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                                 Fifth Report of HLC – Organizing Committee

         eligibility criteria in the RFP for selection of consultancy work appeared to be lacking
         justification as is evident from the following664:

               Annual turnover of more than INR 50 million in each of the last three financial years.
               Delivery of integrated inter-disciplinary designing works of theme based office interiors
                of a minimum of 1.50 lakh sq.ft. area.
               Experience of designing at least one office interior as above of INR 100 million.
               Experience of minimum 10 years in handling similar projects and having minimum of 25
                number of key personnel in multiple areas.

24.6.2   OC received bids from only three665 agencies against this tender. The poor response to
         tender could be due to restrictive criteria in the RFP which discouraged wider competition.
         Besides, the use of conditions like ‘reputed organization’ in RFP rendered the criteria for
         evaluation ambiguous and                   introduced subjective and             arbitrary elements   in judging
         eligibility.


24.7     Excessive weightage for technical aspect of the bid

24.7.1   A Technical Evaluation Committee (TEC) was constituted for evaluation of technical
         proposals. Quality and Cost based selection method with 80:20 weightage666 for quality and
         cost was adopted for selecting the consultants for providing ‘Interior designing services’.
         Under this method a firm is selected on the basis of highest combined score / marks
         awarded on quality of technical proposal and cost. There were no recorded reasons for
         determining the relative weights for quality and cost at 80:20. In view of the fact that the
         nature of project work was technically of routine nature, the relative weight of 80 percent
         for technical quality was unjustified and this could lead to subverting the selection process
         and getting on board a preferred vendor. Going by the nature of work to be undertaken,
         relative weight assigned to quality of 50 percent would have appeared to be reasonable.
         Alternatively contract could have been awarded to the bidder with lowest financial quote of
         2.90 per cent as all of the three agencies were declared technically qualified by TEC.

         664
               Annex – 24.6 ( Extract from RFP)

         665
               Annex - 24.7 (Technical and Financial Evaluation Report).

         666
               Annex – 24.8 ( Report of the Technical & Financial Evaluation Committee)


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                                    Fifth Report of HLC – Organizing Committee

24.7.2   The scores/ marks awarded667 to each of the three agencies, is indicated in table below:

         Table-3; Financial proposal

         S.No Criteria                                  Weightage Minimum        Kothari    Consortium Consortium
                                                        in          qualification Associate UTI        MIS
                                                        Technical   score        (P) Ltd.
                                                        score
         1          Project         Team         and 200            120          180        140        175
                    experience of personnel
                    proposed           to         be
                    deployed
         2          Prior experience of the 300                     180          270        220        270
                    Tenderer;1- Experience
                    in delivering integrated
                    inter disciplinary office
                    interiors          designing
                    works.
                    ll. Number of years of
                    Professional experience
                    in      handling             such
                    projects.
         3          Overall concept plan, 300                       180          220        200        270
                    design and themes used
                    by tenderer in past in
                    best      three      projects
                    undertaken
         4          Presentation of overall 200                     120          125        130        180
                    perspective of Interior
                    design      taking      in     to
                    account         international
                    character & visibility of
                    OC CWG D 2010



         667
               Refer Annex.- 24.8


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                                 Fifth Report of HLC – Organizing Committee

         5          TOTAL                          1000           600               795           690             895
         6          Stm = total technical bid                                       795           690             895
                    marks of the bid under
                    consideration
         7          SH     =    Highest    total                                    895           895             895
                    technical     bid     marks
                    amongst all evaluated
                    bids
         8          St= technival bid score =                                       .88           .77             1
                    ( Stm/Sh)



24.7.3   MIS Consortium was ranked T1 based on highest score of 895 out of 1000 marks awarded by
         TEC. It appeared that marks awarded against various criteria were arbitrary and not based
         on logic or rational methodology.

24.7.4   For example M/s Kothari Associate was awarded668 180 (out of 200) and 270 marks (out of
         300) respectively against the criteria – ‘projects team and experience of personnel’ and
         ‘prior experience.’ Against these two criteria, MIS consortium, the successful bidder was
         awarded669 175 and 270 marks. However, against the criteria of overall concept plan,
         design, themes and presentation of overall perspective, Kothari Associate was awarded 220
         and 125 marks only against 270 and 180 marks awarded to MIS consortium.

24.7.5   The quality of overall concept plan, design and overall perspective will ultimately depend on
         the quality and experience of key personnel and their experience and if Kothari Associate
         was rated highest on these criteria, the quality of their output should have logically been at
         the least, or equal quality if not better. The process of technical evaluation was thus
         questionable.

24.7.6   The Technical evaluation committee comprised670 three members’ i.e Commissioner
         Planning DDA and two OC employees in charge of Finance and Infrastructure. As two of the


         668
               Refer Annexure – 24.8

         669
               Refer Annexure -24.8

         670                                                                                                 th
               Annex-24.9 ( Office order issued by JDG under No Accommodation / 2008 / Administration dated 30 Jan 2008.


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                                Fifth Report of HLC – Organizing Committee

         members were not experts with specialization in the area of assignment, there was no
         safeguard against manipulation of evaluation of technical proposal.

24.7.7   The financial proposal of the three agencies and combined technical and financial score
         awarded to each firm was as indicated in tables below:-

         Table-24.4; Financial proposal671

         S. No                        Name of agency               Commercial quote         Financial score

                                                                   3.40 per cent of total
         1                            M/s Kothari Associate                                 0.85
                                                                   expenditure

                                                                   2.90 per cent of total
         2                            M/s UTI consortium                                    1.00
                                                                   expenditure

                                                                   6.00 per cent of total
         3                            M/s MIS consortium                                    0.48
                                                                   expenditure




         Table –24.5; combined technical and financial score672

                                                       Technical       score Functional     score
         S. No                  Name of agency                                                      Total score
                                                       80% weightage         20% weightage

                                M/s          Kothari
         1                                             80* 0.88=70.4         20*0.85=17.00          87.4
                                Associate

                                M/s              UTI
         2                                             80*0.77=61.6          20*1.00=20.00          81.6
                                consortium

                                M/s             MIS
         3                                             80*1.00=80.00         20*0.48=9.6            89.6
                                consortium




         671
               Refer Annex -8

         672
               Refer Annex -8


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                               Fifth Report of HLC – Organizing Committee

24.7.8   The contract for interior designing consultancy services was awarded to MIS consortium on
         the basis of its highest combined technical and financial score of 89.6. The fee payable to
         the selected agency was negotiated673 as 4.45 percent of the total expenditure which rate
         was determined as the average of lowest financial offer of 2.90% of UTI and highest offer of
         6.00% of MIS and contract was signed with the firm on 9 June 2008.

24.7.9   Quality and Cost based system (QCBS) is a competitive process that takes into account the
         quality of technical proposal and cost of the service in the selection of consultant agency. As
         per the best practices followed under QCBS, cost as a factor of selection is determined for
         each case depending on the nature of the assignment.

24.7.10 In view of the restrictive criteria and the flawed QCBS procedure, the selection process was
         not above board. This resulted in award of contract at an excess cost on account of
         difference between the negotiated rate of 4.45 percent and lowest offer of 2.90 per cent.

24.7.11 The contract signed with MIS Consortium was ‘percentage contract’ without a ceiling on the
         total cost on which the percentage would be applied.

24.7.12 It is generally recognized that percentage contracts implicitly lack incentive for economic
         design. In this case, undue benefit was extended to the contractor as the percentage basis
         of award was open ended and not capped to a fixed ceiling.


24.8     Phase II of the project implementation

24.8.1   This was completed in three phases as discussed below.

         2nd to 6th floor674

24.8.2   The work was due for completion within six months. Accordingly, bid was invited in June
         2008 for interior works in 2nd to 6th floor of NDMC phase II building (1.37 lakh sq ft built up
         area). Of the 14 firms that obtained tender documents, four firms only responded and three
         firms were pre-qualified. On 1 August 2008, based on the commercial bids INR 21.40 crore
         quoted by Russell Interior was found to be lowest.



         673                                                    th
               Annexure 24.10 ( Minutes of the EMC meeting dated 4 March 2008)

         674                                                    nd
               Annexure 24.11 (Minutes of the EMC meeting dated 2 September 2008)


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                                Fifth Report of HLC – Organizing Committee

24.8.3   Within 40 days of the issue of tender notice, OC management decided 675 on 11 August to
         reduce the completion time period of the internal works from 6 Months to 3 months. As L1
         reportedly expressed his inability to complete the work in three months period, Monitoring
         Committee decided to negotiated the completion period with L-1, L-2 and L-3 decided to
         allot the work for 3rd and 4th Floor to L-1, 5th & 6th Floor and L-2 and 2nd Floor to L-3 at
         the total negotiated cost of INR 19.66 crore ( INR 1435 /sft). Contracts were signed with
         the 3 firms on 16th September, 2008.

         7th to 9th Floor676

24.8.4   The notice inviting tender was published In November 2008. Tender document were issued
         to 12 firms and of the four firms that responded, three firms met pre qualification criteria
         and bid of Ultimate International for INR 8.89 crore was found to be lowest. Work was
         awarded to L-1 firm i.e. Ultimate International (P) Ltd. at cost of 6.10 crore and 9th floor to
         L-2 firm ( Sharma constructions) at cost of INR 2.79 crore for completion within two and
         half months time and two months time respectively. Letters of acceptance were issued to
         the firms on 24th December 2008. The unit cost for interior work on 7th to 9th Floor
         worked out to INR1400/ sq ft.

         1st Floor677

24.8.5   The notice inviting tender was published on 25th December 2008 for 1st Floor of NDMC
         building comprising 32810 sq.ft area and also for fabricating furniture for shooting. Out of
         the five responses received, financial bid of R.G builders for INR 1.73 crore (unit cost
         rs.527/sft) which included INR 24.69 lakh towards supply of Shooting furniture was found to
         be lowest and letter of award of work was issued to the firm on 22nd January 2009 with
         time of completion of 21 days from the day of commencement of work.

         Poor quality of work

24.8.6   Despite appointing an Architectural Consultant and a Resident Engineer for supervising
         these works, the quality of work done was                            compromised/inferior as seen from
         675
               Annexure 24.12 (Office Notes dated 19-28 Aug 2008)

         676                                                        st           th
               Annexure 24.13 (Minutes of the EMC meetings dated 1 Nov 2008 and 24 Dec 2008)

         677                                                             th                                                nd
           Annexure 24.14 (Minutes of the Evaluation Committee dated 20 Jan 2010 and note of Dir. Administration dated 2
         March 2010)


         347
                                Fifth Report of HLC – Organizing Committee

         deteriorations that these works had undergone /suffered within one and half years of
         construction.678


24.9     Summary and Conclusion

24.9.1   OC hired huge excess space without consideration of use of public funds in economical
         manner. The budget was given a go by and EB did not exercise due diligence to contain the
         cost escalation resulting from EMC’s decision.

24.9.2   The criteria for the selection of consultant were unduly restrictive and weightage of 80:20
         for the technical and commercial evaluation was totally unjustified. This facilitated unfair
         selection and higher rate than was justified.

24.9.3   Repeated and separate bidding of the wok of same nature and at same location ensured
         that OC did not get economy of scale resulting in unnecessary extra cost.

24.9.4   Rates obtained in competitive bidding were vitiated due to the award of the work on the
         basis of negotiations and discussions with the bidders including L-1 and L-2 bidders. As per
         rules rates for the L1 only was to be considered.

24.9.5   Splitting work orders and incurring extra expenditure for award of civil work at higher rates
         to multiple parties was decided ostensibly to speed up the completion of interior work
         within 2-3 months. However these works were actually completed679 with 6 to 8 months
         delays.




         678
               Photographs attached in Annexure 24.16

         679                                                    th
               Annexure-24.15 (Minutes of the meeting held on 16 March 2009 to review on going interior works)


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                                Fifth Report of HLC – Organizing Committee

25 Chapter 25: Expenditure on Beijing
         Games Observer Program

25.1     Introduction

25.1.1   Observer Programme was included in the proposed revalidated budget of OC sanctioned in
         November 2008. Sending the delegation of the Organizing Committee (OC) of Common
         Wealth Games-2010 (CWG) to Beijing Olympics (August 2008) was part of this programme.

25.1.2   The following table gives the chronology of events of this programme:

         Table 25.1:

          S. No           Event                            Date                        Main Decision

                                                                                       INR 04 crore during 2008
          1.              Budget by consultant             2008
                                                                                       for 50 persons680

                                                                                       148 hotel rooms were
                          Booking        of       hotel
          2.                                               July 2007                   booked       at     INR    4.71
                          accommodation
                                                                                       Crore681.

                                                                                       Decided       to     send    a
                                                                                       delegation         from     32
          3.              EB Meeting                       14.08.2007                  functional         areas    for
                                                                                       Beijing Olympic games-
                                                                                       2008682




         680
               Ref : Annex 25.1: Revalidated budget worksheet

         681
           Ref. Annex 25.2: Note regarding Study Group & Observer Programme for Beijing -2008

         682
               Ref:Annex 25.3: Minutes of 9th Executive Board Meeting


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                                Fifth Report of HLC – Organizing Committee

          S. No           Event                           Date                              Main Decision

                                                                                            165       persons        were
          4.              EMC Meeting                     22.07.2008                        nominated without any
                                                                                            criteria of selection683

                                                                                            Only 365684 tickets out of
                                                                                                      685
                                                                                            3601         tickets     were
                                                                                            utilized for witnessing
          5.              Dates of games                  8th to 24th August,2008
                                                                                            games.          Thus     most
                                                                                            delegation          members
                                                                                            gained little experience.



25.2     Observations

25.2.1   A review of this case raised serious issues of governance and willful wastage of public funds.

         The Chairman approved a jumbo delegation

25.2.2   The EMC of OC presided over by                       the Chairman decided (22nd July,2008) to send a
         delegation of 165 persons (please refer to paragraph 1.3.5) from different sports disciplines
         and functional areas to Beijing Olympic Games ostensibly to gain experience from the multi
         sporting event like Olympic games and for utilizing that experience in conducting the
         Commonwalth Games-2010. The minutes of EMC indicated no criteria for selection of the
         large number of delegation members. This decision was presumably a follow up of decision
         (14th August, 2007) by the Executive Board of OC in its (9th meeting) Agenda item No.10)
         held on 14th August 2007686.

         Budget manipulations



         683
               Ref. Annex 25.4: Minutes of the meeting of EMC held on 22.07.2008

         684
               Ref.Annex 25.5: Report on the Beijing Observer programme

         685
               Ref.Annex 25.6: Reply dated 15.03.2011 of OC

         686
            Ref. Annex 25.7: EB decided: Officials from all the 32 functional areas, technical experts from the various Games and
         Sports, National Sports Federation, stake holders, members of the OC be sent to Beijing Olympus to understand the total
         concept of organizing the games of such magnitude.


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                                 Fifth Report of HLC – Organizing Committee

25.2.3   We noticed that the Consultants of the OC (M/S Ernst & Young) in the revalidated budget of
         2008 proposed an estimate of INR 04 crore for the visit of 50 persons from OC for Games
         Observer programme-2008 Beijing Olympics. As against this an expenditure of INR 8.15
         crore687 was reported by OC. A provision of INR10 crore was, however, made in the revised
         estimates prepared in November, 2009. No justification for this expanded budget was on
         record.

         Persons with no connection to games/games management sent for Beijing trip

25.2.4   The delegates visited Beijing in three following batches688.

         Table 25.2:

          Sr.
                     Batch No.                 Date from                 Date to           No. of delegates
          No.

          1.         Ist                       08.08.2008                24.08.2008        23

          2.         2nd                       08.08.2008                16.08.2008        69

          3.         3rd                       17.08.2008                24.08.2008        69


25.2.5   The list (provided by OC) categories of persons who visited Beijing in this delegation
         contained names of persons, some of whom would have no connection with sports or
         games management. However, the ostensible ground for their inclusion in the delegation
         was that they were members of OC. The following list (obtained from OC records) will
         illustrate the point.689

         Table 25.3:

                           Organisazation/committees/sub-committees to
          S. No                                                                       Number
                           which delegates belonged

          1.               Chief Minister of a State                                  01



         687
               Ref Annex 25.8: Copy of Leger

         688
               Ref.Annex 25.9:Reply to letter dated 03.03.2011 from OC

         689
               Ref. Annex 25.10: List of delegated provided by OC


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             Fifth Report of HLC – Organizing Committee

        Organisazation/committees/sub-committees to
S. No                                                 Number
        which delegates belonged

2.      MP & Mayor                                    02

3.      IOA Member                                    01

4.      Legal Advisors                                04

5.      Chartered Accountant                          01

6.      FA Head                                       01

7.      Non specific categories                       16

8.      NOC/CGA                                       01

9.      OC Officials                                  18

10.     Government officials                          12

11.     Sports persons                                07

12.     Photographers/media persons                   06

13.     Publicity & media sub-committee               07

14.     GTCC Sports sub-committee                     30

15.     Volunteers sub-committee                      10

16.     Games Village sub-committee                   05

17.     Green Games sub-committee                     01

18.     CGA Relation sub-committee                    02

19.     Transport sub-committee                       05

20.     Publicity sub-committee                       06

21.     Protocol sub-committee                        08

22.     Accommodation sub-committee                   02



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                           Fifth Report of HLC – Organizing Committee

                      Organisazation/committees/sub-committees to
             S. No                                                   Number
                      which delegates belonged

             23.      Ceremonies & Logistic sub-committee            03

             24.      Reception sub-committee                        03

             25.      Security sub-committee                         01

             26.      Medical & Health sub-committee                 01

             27.      Corporate Affairs sub-committee                02

             28.      Commonwealth Youth Games, Pune                 04

             29.      Travel sub-committee                           01




         Wasteful expenditure on Beijing trip

25.2.6   Scrutiny of the above list would reveal the following issues:

              The consultant (M/S Ernst & Young) of OC proposed the visit of 50 delegates to Beijing
               Olympic Games. This number (50) of delegates was also mentioned in the sanctioned
               budget (Head No.25.11) in the OC Budget Worksheet; but the EMC selected and EB
               approved 165 persons for the delegation. EMC minutes give no Justification for selecting
               165 persons in excess of the number of delegates proposed by the consultant (161
               persons visited). It appears that the expenditure was budget driven and persons'
               selection was pre decided and then the delegation size was determined in line with an
               inflated budget provision.
              Per person average expenditure on this programme works out to INR 5,05,996.
               (Calculation based on the expenditure details provided by OC). OC, therefore, wasted
               INR 5.61 crore of government funds by sending 111 extra persons.

         Totally irrational selection of delegates

25.2.7   The jumbo contingent of 161 persons to Beijing Olympic was an exercise of patronage by
         the Chairman as explained below.



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                          Fifth Report of HLC – Organizing Committee

25.2.8   No recommendations/nominations (except for delegation size and persons nominated for
         the Government officials) were obtained by OC before EMC's approval.

25.2.9   Number of OC officials of delegates of different categories/sub-committees varied from 01
         to 30. It is not understood as to why large contingent of delegates for OC officials (19),
         Government officials (12), photographers (06), publicity (07) protocol (08), non-category(16)
         were selected.

25.2.10 It is surprising that the delegation included several legal advisors, accountant and members
         of Corporate Affairs sub-committee which could not be conceivably gaining experience in
         conducting the games. This was a complete travesty of the propriety.

25.2.11 A large contingent of 19 officials of OC included the Secretary General, Consultant
         (Communication), OSD to Chairman, Directors (Chairman Secretariat), Project Officer, ADG
         (Finance & Accounts), Advisor (Finance & Accounts), Principal Advisor, Director (Admn), Jt.
         DG, (Coordination), etc. We were unable to find justification of sending such officials for
         observer programme.

25.2.12 We noted that 16 non-category members (listed below) included in the delegation as
         members of the OC, were not representing any sub-committee. It is not clear why they were
         included in the delegation.

         1 Sh. Zoliana Royte

         2 Sh. Durgadas Boro

         3 Sh. Dilshad Sheikh

         4 Sh. Bashir Ahmed Khan

         5 Sh. Binod Dash

         6 Sh. Kailash Sharma

         7 Sh. Mani Charanmei

         8 Sh. Sonjaay Chopra

         9 Sh. T.S.Dhillon


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                                Fifth Report of HLC – Organizing Committee

        10 Sh. Sekhar Dutt

        11 Sh. Rajesh Tomar

        12 Sh. Padi Richo

        13 Smt. Yashodara Raje Scindia

        14 Sh. B.Rocky Bul Hussain

        15 Sh. Sanjay Dutt

        16 Sh. Rajni Patil

25.2.13 Four Media persons/photographers from Pune were included in the delegation. Similarly
        four delegates from Pune belonging to Games Village sub-committee of Commonwealth
        Youth Games were included in the delegation. Inclusion of so many persons of these two
        categories from Pune was not justified.

        Report on the observer programme was of no practical use

25.2.14 The Report mentioned that the observes conducted in-depth study of various facets of
        Beijing Olympic Games like city infrastructure, construction of stadia and sports complex,
        media centers, security centers, transportation, etc. However, the delegation did not
        include persons who were technically qualified to conduct such study. For example, no
        delegate from CPWD, who were the main executing agency of the sport stadiums for CWG-
        2010, was included in the delegation.690

25.2.15 That the delegation was sent without any coordinated attempt to observe and create a
        knowledge base for CWG-2010 was evident from the fact that no specific report of various
        functional areas from the delegates was on record and a consolidated report was provided.
        Only the SDG (Ceremonies) prepared a separate report on experience and with suggestions.

        The Beijing Observer programme was a pleasure trip for most of the delegates

25.2.16 An advance of INR 74.20 lakh was given to IOA (between August 2007 and July 2008) for
        game tickets. Of which, an amount of INR 67.16 lakh was spent on purchasing of 3601


        690
              Ref. Annex 25.11: Tour Report of Beijing Visit by Jt. DG (C&C)


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                             Fifth Report of HLC – Organizing Committee

         tickets for the games and 140 tickets for opening and closing ceremonies of Beijing Olympic.
         The balance amount of INR 7.04 lac has not been recovered from IOA (March 2011).

25.2.17 The OC provided Games tickets to the delegates for opening and closing ceremonies and for
         various events to witness the sports of XXIX Olympic Games.

25.2.18 It is seen that on no day of the games duration the number of delegates for witnessing the
         events exceeded 37. As per information furnished by OC of the total 3601 tickets purchased
         for the games only 365 tickets were utilized for witnessing the game events.              The
         expenditure of INR 60.54 lac (on average basis) incurred on the 3236 unutilized tickets was a
         waste.

              Four meetings were reportedly held in hotels in Beijing on 10th, 13th, 19th and 21
               August, 2008 to discuss various issues relating to the games. It was revealed from the
               lists of participants of these meetings that 75 persons who were part of this delegation
               attended none of these meetings. It is thus clear that these delegates had gone to
               Beijing for a pleasure trip. The expenditure of these delegates amounted to INR 3.79
               crore (worked out proportionately).
              Of the six delegates belonging to Hockey game who had been included in the delegation,
               only two witnessed the hockey events for two days as only one ticket for hockey was
               provided for two days. None of them attended any of the four above mentioned
               meetings held in Beijing.
              Ms. Sunaina Kumari, President, Lawn Bowl Federation was included in the delegation.
               But no ticket was provided for event of Lawn Bowl. She had also not attended any of
               the four meetings held at Beijing. It appears that Ms. Sunaina Kumari daughter of Shri
               Randhir Singh, Vice President, OC, who was part of the EMC that approved the
               delegation.

         Expenditure on the delegation

25.2.19 A few main items of expenditure out of INR 8.15 crore were analysed as discussed below:

              Hotel accommodation as per following details was booked in Beijing at a cost of
               INR 4.71 crore.




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                                 Fifth Report of HLC – Organizing Committee

         Table 25.4:
          Sr. No.             Type of rooms                                               No. of rooms

          1.                  Standard Rooms                                              104

          2.                  Superior Rooms                                              16

          3.                  Single Rooms                                                10

          4.                  Delux Rooms                                                 06

          5.                  Common Rooms                                                12



               Room rent varied from one type of room to another type of room. It was stated that the hotel
                accommodation booked by OC was fully utilized. The details of rooms allotted to each
                delegate were, however, not made available to HLC to verify the fact that the hotel
                accommodation paid for by OC at Beijing was actually utilized by the delegates of OC.
               INR 26.16 lakh were incurred on a dinner hosted at Beijing on 11th August, 2008. The
                amount was remitted to China World Trade Centre on 7th August 2008. There was a
                minimum guarantee of 250 guests in the agreement entered into with the hotel
                management. The list of persons who attended the dinner was not made available.
               Mobile phone sim cards were provided to 22 delegates at a total expenditure of INR 8.11
                lac. Sim cards were provided to the persons some of whom were not the members of
                this delegation. Expenditure on telephones at Beijing for these persons by OC was not
                justified.

         Large number of jackets/T.shirts/blazers were not distributed

25.2.20 In a note dated 1st August, 2008691 put up by Director, Chairman Secretariat to the Director
         General asked for sanction for providing one jacket and two T-shirts to 300 delegates.
         According to another note dated 31st J692uly, 2008 put up by Director for expenditure
         sanction for purchase of blazers @ of INR 2200 per jacket for providing to the members of
         IOA family. The sanction was accorded by the Chairman, OC.

         691
               Ref. Annex 25.12: Note dated 1st August, 2008

         692
               Ref. Annex 25.13: Note dated 31st July, 2008


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                           Fifth Report of HLC – Organizing Committee

              Accordingly 300 jackets and 600 T-shirts were purchased from M/S Shiv Naresh Sports
               Pvt. Ltd. @ of INR 500 (per jacket) and INR 175 (per T-shirt) at a total cost of INR
               2,80,800 by obtaining three quotations.    The fact that 165 persons would visit Beijing
               was already known as approved by EMC in its meeting held on 22nd July, 2008. It is not
               understood as to why 300 sets of jackets and T-shirts were purchased.

25.2.21 Purchase of 139 extra sets of Jackets and T-shirts resulted in extra expenditure of INR 1.30
         lac.The Jackets and T-shirts were supplied by the supplier on 30.07.2008 and were noted as
         distributed in one day. It was stated that the remaining 139 sets of jackets and T-Shirts
         were distributed to other dignitaries at Beijing. The plea is not tenable as according to the
         note mentioned above these kits were purchased for the delegates only. Record showing
         distribution of these kits was not available with OC.

25.2.22 102 Blazers were purchased @ INR 2,000 per blazer at a total cost of INR 2.04 lac. It is not
         understood as to why the blazers were purchased by OC for providing to the members of
         IOA, which is a separate body. These were issued to most of the members of the delegation
         and the officials of OC Secretariat who were not the members of IOA. Some blazers were
         issued to the persons some of whom were not even members of the delegation sent to
         Beijing by OC. There appears to be no justification for issue of blazers when a kit of jacket
         and t-shirts was also issued to the delegates by OC.


25.3     Summary and Conclusions

25.3.1   The so called observer programme was an example of reckless exercise of patronage by the
         Chairman, who selected many persons unrelated to sports management for a trip to Beijing.
         The programme for most of the delegates was mainly a pleasure trip at government
         expense.

25.3.2   Out of the total expenditure of INR 8.15 crore, INR 5.06 crore was wasted on sending 111
         additional delegates beyond budgeted figures to Beijing. Even the utility of the remaining
         expenditure was doubtful as many of the delegates did not witness the games or attend
         official meetings.




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                         Fifth Report of HLC – Organizing Committee

25.3.3   The delegates included Accountants, Legal advisors, OC Secretariat staff, political
         functionaries, photographers from Pune, members of communication,               Broadcasting,
         Corporate Affairs, etc. sub committees. There was no justification for their selection.

25.3.4   Large amount (INR 67.16 lac) was spent on purchase of games tickets. But only negligible
         number (one to 37) of delegates witnessed the games each day. Some sportspersons or
         officials of Sport Federations did not even once witness the game which they were
         representing.

25.3.5   List of persons approved by EMC for Beijing Observer Programme (persons at serial
         no.9,132,133 and 137 did not appear to have travelled. The name of Shri Gurmit Singh
         Sodhi appear twice in the list)




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                                Fifth Report of HLC – Organizing Committee

26 Chapter 26: Other Instances of Adverse
         Procurement
          Several instances of procurement involving conflict of interest and falsification of
          documents were noted in the review. The adverse findings started from the Chairman’s
          secretariat, where a conflict of interest was identified which cast a shadow on the
          organization. The apparent ease with which incorrect documentation was approved
          indicates a significant breakdown of financial oversight and controls. There was no
          evidence that in these cases concerned OC functionaries attempted to identify
          appropriate vendors to meet the interest of the organization. Given the disregard for
          system of control, this resulted in misconduct on part of some OC employees who
          created paperwork and obtained “rubber stamp” approvals. Looking at the message
          emanating from the top, it is not surprising that such irregularities were noticed in
          several cases.



26.1     Background

26.1.1   Apart from the significant procurement in some of the main games related contracts, a
         sample of general and administrative expenses incurred and paid by the OC were also
         reviewed. It was noted that such smaller and routine procurements showed evidence of
         misconduct such as vendor favoritism and falsification of documents to provide legitimacy
         to the purchase decision. In certain instances, strong indication of issues such as conflict of
         interest and single tender sourcing were also observed.


26.2     Conflict of interest- OSD in Chairman’s Secretariat


         Purchase of air tickets for chairman and other from a company owned by OSD to Chairman

26.2.1   It was noted that Mr. Ashok Sahota, OSD to the Chairman, Mr. Suresh Kalmadi, is a Director
         of the Alisha Travels Private Limited693 from which the OC made purchases.


         693
               Refer Form 32 and Form 23AC filed with ROC on 2 September 2009 – Annexure 26.1


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                                 Fifth Report of HLC – Organizing Committee

               The OC has made purchases of approximately INR 0.38 crores from Alisha Travels Private
                Limited OC till date694.

               These tickets were mainly purchased for the Chairman of the OC, Mr. Suresh Kalmadi.

               Review of the journal vouchers and note sheets prepared by the OC, reveal that tickets
                have been purchased directly by the Chairman’s Secretariat or by Coordination FA from
                Alisha Travels Private Limited, instead of requesting Office Administration FA to
                purchase tickets, as per OC policy.

               In these cases, no comparative quotations were obtained from the empanelled travel
                agents i.e. M/s Balmer Lawrie and M/s Ashok Travels Private Limited prior to purchase of
                air tickets from Alisha Travels Private Limited in some of the cases.


         Travel for CGF General Assembly – Gambia – November 2008

26.2.2   As per the Budget estimate prepared, 19 air tickets were to be purchased from either M/s
         Balmer Lawrie or M/s Ashok Travels Private Limited, both of which are Government of India
         enterprises at the below mentioned price:

               Business class ticket: INR 207,687 per ticket
               Economy class ticket: INR 144,357 per ticket695

26.2.3   However, 2 air tickets i.e. for Mr. Suresh Kalmadi and Ms. Sangeeta Welinkar have been
         purchased from Alisha Travels Private Limited at the below mentioned prices:

               Business class ticket: INR 214,332 per ticket
               Economy class ticket: INR 148,977 per ticket

26.2.4   These prices are higher than the price offered by M/s Ashok Travels Private Limited 696.

26.2.5   Further, it is surprising to note that the EAC (Chaired by Mr. Lalit Bhanot)      approved the
         payment to Alisha Travels Private Limited in their meeting on 16 December 2008 697, this

         694
               Refer Annexure 26.2: Ledger account of Alisha Travels

         695
               Refer Annexure 26.3: Budget estimate.

         696
             Refer Annexure 26.4: Journal voucher and invoices

         697
               Refer Annexure 26.5: Minutes of the meeting of EAC dated 16 December 2008



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                                Fifth Report of HLC – Organizing Committee

         decision of EAC is contradictory to their resolution in an earlier meeting (held on 1 October
         2008) which required all air tickets are to be purchased from M/s Balmer and Lawrie
         through Office Administration FA.

26.2.6   The reasons why only the tickets of Suresh Kalmadi and Sangeeta Wellinkar were purchased
         from Alisha Travels and not from Ashok Travels is not clear or documented.


         Travel to Ottawa for CGF Executive Board Meeting:

26.2.7   According to budget, tickets were to be purchased from M/s Balmer Lawrie or M/s Ashok
         Travels Private Limited. Accordingly, the OC has purchased tickets for all delegates from OC
         from M/s Ashok Travels Private Limited, other than the ticket for Suresh Kalmadi.

26.2.8   Suresh Kalmadi’s ticket has been purchased from Alisha Travels Private Limited at a cost of
         INR 653,564 for the sector Delhi/ Ottawa/ London/ Delhi. The payment has been approved
         by the EAC on 2 July 2008698.


         Advance paid to Alisha Travels Private Limited

26.2.9   An advance of INR 600,000 was paid to Alisha Travels Private Limited on the orders of the
         Chairman and Treasurer for tickets purchased for OC employees attending the Annual
         General Meeting held on 19 October 2008699. Giving advances to vendors for such expenses
         constitutes a complete departure from normal contracting terms. There are no instances
         where OC paid similar advances to Balmer Lawrie or Ashok Tours and Travels for purchase
         of tickets for Chairman. The payment of advance, a departure from the normal practice
         shows that Alisha Travels enjoyed a privileged position for some senior functionaries in the
         OC and they were awarded purchase orders for air tickets by subverting the procedures.




         698
           Refer Annexure 26.6: Internal Note for payment approval dated 2 July 2008

         699
               Refer Annexure 26.7: Internal Note for advance paid to Alisha Travels dated 5 November 2008



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                            Fifth Report of HLC – Organizing Committee

         Summary

26.2.10 The above case typifies the low ethical values and decay of governance in the OC that not
         only allowed a conflict of interest in the high office of the Chairman but also permitted such
         conflict to be used for incurring expenditure related to the Chairman himself.


26.3     Falsification of procurement documents

26.3.1   Some apparent inconsistencies were observed in documentation in a number of individual
         procurements made by the OC. On a closer review, a certain pattern/trend was noted in
         respect of such procurements. These primarily included the following.

              There was no indication of how OC selected vendors from whom quotations were
               sought especially as in many of these cases an ‘open tender’ was not issued. Quotations
               were instead obtained by the OC from sources that have not been documented or
               explained in accompanying documents.
              On a review of the comparative quotations, certain apparent inconsistencies and
               mistakes in addresses, contact information, common addresses etc were noted which
               indicate that these could be falsified.
              Site visits to some of the ‘competing’ vendors indicated that these were non-existent or
               their addresses could not be located. In some cases, the addresses themselves were
               incorrect and in some cases vendors appeared to be operating from residential areas
               with no signs of commercial activity. It is extraordinary that the OC somehow managed
               to identify and locate such vendors and obtain quotations from them.

26.3.2   These instances indicate that such procurements were not done in a fair and transparent
         manner and that employees may have engaged in misconduct in awarding orders for such
         procurement. There was clear disregard by OC employees to norms of propriety and it is
         clear that they obtained comparative quotations only as a formality. It is also evident that
         multiple layers of financial oversight mechanisms and approval procedures seemed to work
         to approve all these payments without raising any flags and concerns. It should be noted
         that these cases presented below are sample only and based on a limited review of
         documents and vouchers at the OC.




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                                Fifth Report of HLC – Organizing Committee

         Procurement of Automatic Binding Machine (FA: Venue Development & Overlays, Value
         INR 1.8 lakhs)

26.3.3   The quotations for supply of automatic binding machine were submitted by the following
         three vendors:

                   Technocrats Alliance Engg Pvt. Ltd.

                   First Choice Enterprises Pvt. Ltd.

                   Bharat IT Services Ltd.

26.3.4   It was noted that the contract was awarded to Technocrats Alliance Engg Pvt Ltd. In
         reviewing the comparative quotations of the other vendors, the following issues were
         noted.

               The address and fax number on the letter heads of both competing vendors (First Choice
                and Bharat IT) were the same as shown below




               A site visit to the address mentioned above revealed that First Choice Enterprise and
                Bharat IT are sister concerns but have since moved from the stated premises 700.

26.3.5   It is very clear that the comparative quotes obtained from Bharat IT and First Choice are in
         reality from the same company (given the common addresses) and hence do not constitute
         valid quotations. Hence comparative quotations in such cases are a sham. Moreover, binder
         cartridges worth INR 45,000 were also procured from the same supplier.

26.3.6   The OC employees who are responsible for this procurement are i) Karan Arora –
         Procurement & Overlays; ii) Nikesh Jain – Director (Venue Development & Overlays); iii) A K
         Saxena – Jt. D.G. (Venue Development & Overlays)



         700
               Refer Annexure 26.8: Payment voucher for purchase of automatic binder


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                            Fifth Report of HLC – Organizing Committee

         Civil and Electrical Work from M/s Salwan Furnishers (FA: Administration, Amount: INR
         3.67 Lakhs)

26.3.7   The OC obtained quotations for supply of Civil and Electrical work from the three vendors.

                  Salwan Furnishing Co.

                  Perfect Maintainance Corporation

                  R.S. Builders Engineers and Contractors

26.3.8   We noted that the contract was awarded to Salwan Furnishing.             On reviewing the
         comparative quotations, we noted the following.

              The address of Perfect Maintenance Corporation and R.S. Builders was the same.




              Additionally we noted that there was an attempt made (by putting white fluid) to
               disguise the address of Perfect Maintenance and show that it was different from RS
               Builders.




              On a physical visit to the addresses above, it was noted that Perfect Maintenance
               Corporation and R.S. Builders do not exist at the addresses mentioned in their letter
               heads.




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                                 Fifth Report of HLC – Organizing Committee

                                                                           Address    of:   Perfect   Maintenance
                                                                           Corporation

                                                                           Located at: 144 Phase 1 Gurgaon

                                                                           Findings

                                                                           The premises was under construction.
                                                                           Inquiries did not reveal existence of
                                                                           the vendor at this address



                                                                           Address    of:   Perfect   Maintenance
                                                                           Corporation and R.S Builders

                                                                           Located at: 5935/4, Hardhian Singh
                                                                           Road, Dev Nagar, Karol Bagh, New
                                                                           Delhi

                                                                           Findings

                                                                           There was no signboard of RS Builders
                                                                           or Perfect Maintenance at this address




26.3.9   From the above, it is apparent that the comparative quotations were obtained from the
         same company whose actual existence at the stated address at that time could not be
         established. Further, it is evident that an attempt was made to falsify quotations by hiding
         the house number that linked the two vendors701.

26.3.10 The OC employee responsible for this procurement was Lt. Col. P. Padmakaran – Director
         (Administration). After the work was executed, he took post-facto approvals from DG and
         Treasurer.


         701
               Refer Annexure 26.9: Payment voucher for civil and electrical work


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                          Fifth Report of HLC – Organizing Committee

        Procurement of Synthetic Carpets for ceremony at JLN stadium (FA: Ceremonies, Amount
        INR 1.25 lakhs)

26.3.11 The quotations for supply of synthetic carpets were submitted by the following three
        vendors.

                 Awesome Brand Products

                 Peshawar Carpets

                 G.L. Gobind Pershad

26.3.12 We noted that the while contract was awarded to Awesome Brand Products there were
        certain obvious inconsistencies in documentation.

             The payment was made to Awesome Brand towards supply of the carpets on 20 Aug
              2010 whereas the quotations from the other two parties were received on 21 Aug 2010.
              The very fact that comparative quotations were received after the payment to the
              vendor was made indicates misconduct on the part of employees involved.

             The extract below shows the invoice of Awesome Brand Products dated 20 August




             The extract below shows the quotation from Peshawar Carpets dated August 20, 2010




             The extract below shows the quotation from DL Gobin Pershad dated 21 August 2010


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                  Fifth Report of HLC – Organizing Committee




     It was also noted that the Delivery Challan was dated 21 Aug 2010 whereas the payment
      was made a day before on 20 August 2010. This was contrary to the approval from the
      legal FA where it was clearly mentioned that payment would be made only post delivery
      of goods.




     The cheque to the vendor was dated 20 August 2010, i.e. before comparative quotations
      were obtained.




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                  Fifth Report of HLC – Organizing Committee




     On a physical visit to the addresses of the competing vendors , it was noted that one of
      the competing vendors Peshawar Carpets did not exist at the stated address.

1891 Chandni Chowk, Delhi                         Address of: Peshawar Carpets




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                                Fifth Report of HLC – Organizing Committee

                                                                         Located at: 1890/91 Chandni Chowk,
                                                                         Delhi

                                                                         Findings

                                                                         1890 and 1891 are two different
                                                                         properties adjacent to each other.

                                                                         1890 is a Central Baptist Church
                                                                         Primary School whereas 1891 is a
                                                                         Commercial Complex
         1890 Chandni Chowk, Delhi
                                                                         Inquiries with the occupants of 1891
                                                                         revealed that there is no such office of
                                                                         Peshawar       Carpets      at    the   above
                                                                         mentioned address.




26.3.13 It is apparent from the above that ‘comparative’ quotations after already paying the vendor
         were added to complete the formality and to provide legitimacy to a purchase order that
         had already been executed. The apparent non-existence of a competing vendor or the
         incorrect address clearly indicates misconduct on part of employees in obtaining falsified
         quotations702.

26.3.14 The employees involved with this are i) Gunjan Khare – PO (Ceremonies); ii) Sujata Ayer –
         Director (Ceremonies); iii) Indu Anand – DDG (Ceremonies).

26.3.15 Additionally we noted that the same vendor, Awesome Brand Products, was also awarded
         another contract for same type of procurement. The value of that procurement was INR
         12.05 lakhs.

         702
               Refer Annexure 26.10: Payment voucher for Procurement of synthetic carpets for ceremony at JNS


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                            Fifth Report of HLC – Organizing Committee

         Procurement of T Shirts, Caps and Ties (FA: Coordination, Amount INR 6.89 Lakhs)

26.3.16 The procurement was related to the supply of Tshirts, caps and ties for distribution to Indian
         mission abroad, participants in meetings and various cultural gatherings. The quotations
         were submitted by the following three vendors.

                  Regimental Care

                  Krishnan International

                  Shubham International

26.3.17 The contract was awarded to Regimental Care. In reviewing the documents, we noted the
         following that ‘Vikas Kumar’ appears as the contact person on quotations submitted by both
         Regimental Care and Krishnan International.




              The existence of the selected vendor Regimental Care at its stated place of business
               could not be verified.


                                                          Address of: Regimental Care

                                                          Located at: C-6/6485, Vasant Kunj,
                                                          New Delhi - 110070

                                                          Findings

                                                          The address is located at a residential
                                                          colony. The existence of the vendor at
                                                          the premises is not evident due to the
                                                          absence of any signboard, etc.




26.3.18 In view of the above, it is likely that Regimental Care and Krishan International may be
         related in view of the common name of the contact person. Further, the address of


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                                Fifth Report of HLC – Organizing Committee

         Regimental Care is in a residential colony with the absence of any apparent signs of
         commercial activity at the stated premises. It is not clear how the OC managed to track
         down a vendor located in a residential area without any signs of existence of a business and
         manage to obtain a quotation from them. This clearly shows that such contracts were on an
         ‘invitation only’ basis at the sole discretion of the OC and that these indicate likely
         misconduct703.

26.3.19 Additionally we noted that the same vendor, Regimental Care, was also awarded a contract
         for purchase of Choreographic Bib where again the competing vendors were Krishan
         International and Shubham. The value of that procurement was INR 8.71 lakhs. Employees
         involved in the award of this contract were i) Shikha Chaudhary – APO (Ceremonies); ii)
         Sujata Ayer – Director (Ceremonies); iii) Indu Anand – DDG (Ceremonies); iv) Purnima
         Pendse – ADG (C&C); v) Shovana Narayan – Special DG (C&C).


         Quotations invited for Publicity Material (FA: Technical, Amount: INR 10.66 lakhs)

26.3.20 The quotations for supply of Publicity Material and the quotations were submitted by the
         following three vendors.

                    BillBoard India

                    24*7 Executionists

                    Sign Plus India Pvt Ltd

26.3.21 The contract was awarded to Billboard India. In reviewing the accompanying documents,
         the following issues were noted.

               The quotation of 24*7 Executionists was handwritten.




         703
               Refer Annexure 26.11: Payment Voucher for procurement of T-shirts, caps and ties


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                                 Fifth Report of HLC – Organizing Committee

               Site visits to the stated addresses of 24x7 did not reveal any apparent signs of their
                existence at the address.




         Pradhan Market, Mamura, Noida                                    Address of: 24x7 Executionists

                                                                          Located at: Main Road, Pradhan
                                                                          Market, Mamura, Sector - 66, Opp Flex
                                                                          Industries, Noida-201301

                                                                          Findings

                                                                          The survey number/ shop number is
                                                                          not mentioned along with the address
                                                                          and hence the place of business could
                                                                          not be located. Local enquiries also
                                                                          did not indicate the existence of the
                                                                          vendor.




26.3.22 We have further comments on general procurements made from Billboard that is referred
         to in earlier paragraphs.

26.3.23 From the above, it is extraordinary that OC got handwritten quotations from a vendor
         located away from the main commercial areas on a ‘selective’ basis. It is not apparent how
         the OC managed to track such a vendor and even obtain a quotation from them in this
         fashion704.

26.3.24 The employees involved with this procurement were i) ASV Prasad – ADG (Technical); ii) Lt.
         Col. P. Padmakaran – Director (Administration); iii) Amrit Mathur – Executive Secretary.




         704
               Refer Annexure 26.12: Payment voucher for supply of publicity material


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         Quotations invited for Branding of Vehicles for Chairman’s Press Conference held on 31
         July 2008 (FA: QBR, Amount: INR 4.78 Lakhs)

26.3.25 The OC for supply of branding TATA vehicles was submitted by the following three vendors.

                    Positive Images

                    SS Graphics

                    Signtific Solutions

26.3.26 It was noted that the contract was awarded to Positive Images.                  In respect of the
         procurement, the following inconsistencies were observed.

               The note sheet prepared on 28 July 2008 stated the contract was provided to Positive
                Images. However, the quotation received from the other vendor, ‘Signtific Solutions’ was
                on 30 July 2008.




               The quotation from Signtific Solutions was obtained via email and it does not mention
                any address or phone number of the company.

26.3.27 Consequently, receiving a quotation after the procurement was made indicates that the
         entire process was invalid and the purpose of obtaining a comparative quote defeated705.

26.3.28 The employees involved in this procurement were i) Capt. Rakesh Singh – Director
         (Logistics); ii) Jason Dwyer – Director (QBR).




         705
               Refer Annexure 26.13: Payment voucher for branding of vehicles for YBR


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         Procurement of Workstation Tables and Fixtures Work (FA: Administration, Amount: INR
         1.05 lakhs)

26.3.29 The quotations for supply of workstation tables and fixtures work was submitted by the
         following four vendors.

                  Dream Interiors (who were awarded the work)

                  Sunrise Projects and Interiors

                  R.G. Builders

                  Aditya Constructions

26.3.30 The following observations were made in respect of site visits conducted at the stated
         places of these vendors.




                                                         Address of: Dream Interiors

                                                         Located at: E-599, DDA Flats, Pkt - III,
                                                         Bindapur, Dwarka, New delhi – 110059

                                                         Findings

                                                         A DDA flat with no signs of any active
                                                         existence of any business at the
                                                         premises

                                                         Address of: Aditya Constructions

                                                         Located at: 28/A, Jia Sarai, New Delhi

                                                         Findings

                                                         Private residence with no signs of any
                                                         commercial activity




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                                 Fifth Report of HLC – Organizing Committee

                                                                          Address of: RG Builder

                                                                          Located     at:   29,    Tarun   Vihar
                                                                          Apartments, Plot No. 3, Sector – 13,
                                                                          Rohini, Delhi

                                                                          Findings

                                                                          Residential apartment complex




                                                                          Address of: Sunrise Projects

                                                                          Located at: 17 - WP-477, 1st Floor,
                                                                          Shiv Market, Wazirpur Village, Ashok
                                                                          Vihar

                                                                          Findings

                                                                          Vendor not located at the stated
                                                                          address at the time of visit




26.3.31 It is not evident how OC managed to track such vendors and obtain comparative quotations
         when these are located mostly in obscure residential areas with no signs of commercial
         activity706.

26.3.32 The employees involved with this procurement were i) Arun Kumar Gupta – Resident
         Engineer; ii) N.P. Singh – ADG (Admin and Workforce).


         Electrical and Data Cable Work (FA: Administration, Amount: INR 15.79 Lakhs)

26.3.33 The quotations for Electrical and Data Cable Work were submitted by the following vendors:

               Salasar Decorators (who were awarded the scope of work)


         706
               Refer Annexure 26.14: Payment voucher for fixing workstation tables.


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                              Fifth Report of HLC – Organizing Committee

                   Shree Kusumakar Decoraters

                   DVS Engineers & Builders

                   Om Engineers & Decorators


          Observations on field visits:

26.3.34 Site visits to the stated place of business of these vendors indicated the following.

                 Salasar Decorators shares the address with another entity named ‘Baba Constructions’,
                  also a vendor of OC and these two vendors do not exist at the given address.


                                                              Address of: Salasar Decorators/Baba
                                                              Constructions

                                                              Located at: R-69, Model Town III, Delhi
                                                              -110009

                                                              Findings

                                                              The existence of vendors could not be
                                                              verified at this address. The location
                                                              of this address is in a residential area
                                                              with no signs of commercial activity.




                 Shree Kusumakar Decoraters and DVS Engineers & Builders do not exist at the
                  addresses mentioned in their letter heads


                                                              Address of: Kusumakar Decorators

                                                              Located at: A-38, Ground Floor,
                                                              Southend Floors, Sec - 49, Gurgaon

                                                              Findings

                                                              Located in a residential area with no
                                                              signs of business activity at the


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                                                                           premises




                                                                           Address of: DVS Engineers

                                                                           Located at: 1783, Maruti Kunj, Sohna
                                                                           Road, Bhondsi, Gurgaon

                                                                           Findings

                                                                           Private residence with no signs of any
                                                                           commercial activity




26.3.35 It is not evident how that OC managed to track such vendors and obtain quotations when
          these are located mostly in obscure residential areas with no signs of commercial activity 707.

26.3.36 The employees involved with this procurement were i) Arun Kumar Gupta – Resident
          Engineer); ii) Capt. KUK Reddy – ADG (F&A).


          Procurement of Office Furniture (FA: Administration Amount: INR 1.13 Lakhs)

26.3.37 The quotations for supply of office furniture were submitted by the following three vendors.

                     Baba Constructions (who were the selected vendors)

                     SRS Decorators

                     SS Engineers & Decorators

26.3.38 Site visits to the stated place of business of these vendors indicated the following.


          707
                Refer Annexure 26.15: Payment voucher for electrical and data cable work


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     Baba Decorators shares the address with another entity named ‘Salasar Constructions’,
      also a vendor of OC and the existence of these two vendors could not established at the
      stated address.




                                                 Address of: Salasar Decorators/Baba
                                                 Constructions

                                                 Located at: R-69, Model Town III, Delhi
                                                 -110009

                                                 Findings

                                                 The existence of vendors could not be
                                                 verified at this address. The location
                                                 of this address is in a residential area
                                                 with no signs of commercial activity.




     The existence of SRS Decorators and SS Engineers & Decorators could not be verified at
      the addresses mentioned on their letter heads which were located again in residential
      areas.




                                                 Address of: SRS Decorators

                                                 Located at: House No. 2313, Sector -
                                                 9, Faridabad

                                                 Findings

                                                 Located in a residential area with no
                                                 signs of business activity at the
                                                 premises




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                                Fifth Report of HLC – Organizing Committee

                                                                        Address of: SS Engineers

                                                                        Located at: RZK 107, Sagarpur, Delhi

                                                                        Findings

                                                                        Private residence with no signs of any
                                                                        commercial activity




26.3.39 The basis on which the OC managed to identify and engage with such vendors is again not
         apparent as they do not have any signs of commercial activity at their stated place of
         business which happens to be mostly located in commercial areas. Whether these entities
         exist or were in fact shell companies/entities needs to be examined. However, the lack of
         diligence on the part of the OC to make efforts to source such goods/services in an
         appropriate manner is clearly evident708.

26.3.40 It is likely that this could have been the result of misconduct ranging from vendor favoritism
         to bribery, corruption and even fictitious supply as apparently no safeguards were put into
         place to control/regulate such sourcing while there was no definition of an eligible vendor
         base.

26.3.41 The employees involved with this procurement were i) Arun Kumar Gupta – Resident
         Engineer); ii) Capt. KUK Reddy – ADG (F&A).




         708
               Refer Annexure 26.16: Payment voucher for procurement of office furniture


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         Procurement of Blackberry Handset (FA: Technology; Amount: INR 24, 290)


         Background:

26.3.42 Even for something as low value as a purchase of a mobile phone, we noted existence of
         potential fake quotations from comparative vendors.                            This again clearly shows the
         preoccupation of OC employees with paperwork as against actual diligence done in
         obtaining the right products at market prices.

26.3.43 In this case quotations were received from the following three vendors:

                   Chirag Tel (who supplied the phone)

                   M/s BT Agencies

                   M/s Vaishno Electronics

26.3.44 The letter heads of competing bidders appear falsified.




26.3.45 The postal code for M/s Vaishno Electronics and M/s B T Agencies is same whereas the
         actual addresses mentioned are in different parts of Delhi and have different postal codes.
         None of these business addresses could be traced indicating that the entire procurement
         was based on fake documentation709.

26.3.46 The employees of the OC involved in this procurement were i) Lolita Lulla – APO
         (Technology); ii) Sujit Panigrahi – ADG (Technology).




         709
               Refer to Annexure 26.17: Payment voucher for procurement of Blackberry handset


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26.4     Lack of an eligible vendor base

26.4.1   It was noted that OC has made several payments to two parties namely; Critique
         Communications Private Limited and Billboard India Private Limited. These payments
         amounted to INR 0.31 crores and INR 1.63 Crores respectively as per the books of account
         of OC as provided to us. Billboard has been engaged for a number of activates related to
         signage and other such branding related expenditure. Critique has been engaged for
         procurements related to printing, press advertisements and publicity material.

26.4.2   A review of the Articles of Association of Billboard India Private Limited reveals Critique
         Communications to be one of the shareholders of Billboard India Private Limited. This
         shareholding is through Sanjiv Gulati (Director) in Critique Communications Private
         Limited710.

26.4.3   From the above, it is evident that companies having common shareholding/ownership were
         hired as vendors by the OC. It is surprising that even for such relatively small procurements
         OC appeared to have ‘favored’ vendors rather than doing an actual and transparent exercise
         to identify an appropriate vendor base.


26.5     Vendor Favoritism- Salwan Furnishers

26.5.1   Apart from an instance explained earlier where we noted that comparative quotations were
         falsified to award a contract to Salwan Furnishers, we came across another instance where
         it was evident that they were the ‘preferred’ vendors of the OC.

26.5.2   It may be mentioned that Salwan Furnishers are associated with Inder Dutt Salwan (who
         appears to be related (as they share the same address as per the Website of the Salwan
         Education Trust) to Sushil Dutt Salwan associated with the OC as legal advisor and member,
         OC). They both are also associated with the Salwan Trust from which the OC also rented
         premises for the stay of consultants at a monthly fee of INR 55,000 per apartment.

26.5.3   A meeting of the Sub-Committee (furniture/interiors and allied works) held on 8 August
         2005 to review the progress of the work awarded to M/s Salwan Furnishing Co for supply of
         fixtures etc. In that meeting, it was noted that the work of Salwan Furnishing was not on
         710
            Refer Annexure 26.18: Articles of Association of Billboard India Private Limited as shown on Ministry of Corporate
         Affairs database


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                          Fifth Report of HLC – Organizing Committee

         track. The representative of Salwan Furnishing explained to the committee members that
         due to the civil/electrical work not being done at the site, Salwan Furnishers were not in a
         position to complete its work.

26.5.4   Salwan Furnishers then placed the scope of work for the respective civil and electrical work
         and after an internal discussion by the committee members, sealed quotations were invited
         from contractors including Salwan. It is not clear itself how Salwan were allowed to provide
         both the scope of work and simultaneously bid for the contract.

26.5.5   Two of the bids received from M/s Singh Electricals, M/s Economic Construction were
         rejected as both these vendors did not possess a valid Tax Identification Number.

26.5.6   The details of the other bids are as follows.

         Table 26.1: Electrical Work


          S.no       Name of vendor                      Commercials


          1          Amar Electricals                    INR 117,127 + 12.5% VAT (50% advance, work
                                                         to be completed in 2 months)


          2          Salwan Engineering                  INR 130,000 + 12.5% VAT (50% advance, work
                                                         to be completed in 1 month)


         Table 26.2: Civil Work


          S.no     Name of vendor                        Commercials


          1        R.S. Builders                         INR 479,318 + 12.5% VAT+ 10% Service Tax
                                                         (50% advance, work to be completed in 2
                                                         months)


          2        Salwan Engineering                    INR 517,000 + 12.5% VAT (25% advance,
                                                         work to be completed in 2 months)


26.5.7   The bids of both vendors namely Amar Electricals and R.S. Builders (L1 vendors) were found
         to be lower than Salwan Furnishing. The Committee should have straight way selected the L-
         1 Instead the evaluation committee requested vendors to provide an item wise costing.
         Both RS and Amar declined to provide such information. The committee thereafter asked

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                                Fifth Report of HLC – Organizing Committee

         Salwan to carry out the scope of work and requested them to take these works up at the
         cost quoted by the L1 vendors in their bids. Salwan Furnishers accepted the same but in
         turn sub-contracted Amar Electricals for both supply of labour for Electrical work711.

26.5.8   Contracting in such a fashion was extremely convoluted and indicates that transactions may
         not have been above board. It is surprising how Salwan Engineering were allowed to
         establish the scope of work and then bid for the very same scope of work with conflicting
         interests. It is further surprising that the L1 vendors on one hand refused to provide details
         and on the other hand worked for Salwan Engineering on the same contract. This indicates
         that the L1 vendor could perhaps be a front company for the Salwan Furnishers. The OC
         employees involved with this procurement include the following i) Mr.A.K. Mattoo –
         Treasure, OC; ii) Mr. R.K. Sancheti – ADG (Coordination); iii) Col. P. Padmakaran – Director
         (Administration); iv) Mr. Dogra – Director, Athletics Federation of India.


26.6     Lease rent- residential premises

26.6.1   The OC had entered into agreements with owners of 38 flats on lease for the various
         periods from 2008 to 2010 for accommodating foreign occupants. The review of the
         agreements indicates the following:

                   In two rental agreements, the notarized stamp date was before the date of lease
                    agreement which indicates inconsistencies in documentation712.

                   In six rental agreements, the names and signatures of the witnesses are missing and
                    in one case, the lessee has also signed in place of the witness713.

                   In two rental agreements, the date of agreement is before the date of purchase of
                    stamp paper714.

26.6.2   In one rental agreement715, rent was paid to Salwan Education Trust for renting 5 flats
         starting from November 2009 whereas the actual accommodation was handed over in April

         711                                                                   th
               Refer Annexure 26.19: Minutes of Sub-Committee Meeting held on 11 August, 2005

         712
               Copy of Rental Agreements – Annexure 26.20

         713
               Copy of Rental Agreements – Annexure 26.21

         714
               Copy of Rental Agreements – Annexure 26.22


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                                 Fifth Report of HLC – Organizing Committee

         2010. Further, upon enquiring, we were informed that two of the occupants vacated the
         flats as they were not in a good condition and one occupant resigned and hence vacated the
         flat. However, the rent was paid to Salwan for 5 flats instead of 2 remaining flats. The
         monthly rental per flat was INR 55,000.


26.7     Payment towards email and website hosting

26.7.1   The email and website hosting services for the CWG, Delhi was provided to OC by a PODC
         Internet Solutions (‘Vendor’), a vendor based out of Pune. Certain discrepancies in the
         purchase order and payments made to the vendor were noted that are detailed below.

               The Purchase order was issued approximately one year after the services were awarded
                to the vendor. Further, the domain name, registration, website hosting charges and
                email hosting charges were paid on 3 May 2007 and 1 January 2008 respectively. Also,
                the purchase order pertains to only part of the total payment made to the vendor.716

               It was also noted that there was no explicit contract between the vendor and OC for
                supply of these services. However, the payments were made by OC on the basis of the
                invoices submitted by the vendor.717

               The details of the purchase order issued by the OC and issues noted are as follows.

                    Web Hosting charges (1GB): INR 20,000 per year

                    Email Hosting charges (20 GB): INR 340,000 per year

                    The PO did not contain any provision for applicable rates in case of increased email
                     space or towards a rate for 1 GB space.

                    The PO was raised after receiving the first invoice and the technical committee also
                     raised objections on the rates quoted by the vendor. However, it appears that the
                     evaluation and recommendations of the technical committee were not considered.




         715
               Refer to copy of agreement between Salwan Education Trust and OC dated 6 November 2009 - Annexure 26.23

         716
               Refer to copy of purchase order given to PODC internet solutions- Annexure 26.24.

         717
               It is pertinent to note that only one purchase order was issued by OC for a payment of INR 3,78,000.


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                                Fifth Report of HLC – Organizing Committee

26.7.2   The vendor has been paid a total sum of INR 2,965,320718 from the period 3 May 2007 to
         23 August 2010. These payments were based on the computation as under:

                    The cost for 1 GB was determined as INR 17,000 per year (INR 340,000/20). Further,
                     since the capacity of the email server was increased to 88 GB from 2009, the
                     payment to the vendor increased in the same proportion.

                    The note-sheet dated 25th February, 2010 clearly states that OC needs to verify the
                     contract/agreement, rate and the work done before payment is released to the
                     vendor. However, it appears that only one of these three requirements (Work
                     done/Usage) was fulfilled as vendor provided usage report to OC.

26.7.3   An email communication dated 6 May 2008 between Vinesh Atma (Representative of the
         vendor) and Vijay Gautam (COO-OC) was discovered during forensic analysis wherein Vinesh
         requested Vijay Gautam for urgent processing of the invoice dated 8 April 2008 amounting
         to INR 641,334 towards web and email hosting and domain registration719. This email
         exchange requesting payment was thus before the purchase order was placed.

26.7.4   Further, forensic analysis of several emails720 also revealed communications between the OC
         and the vendor trying to ascertain the details of the actual services rendered. It was noted
         that on 6 September 2008, there was an email communication between Sanjay Chopra
         (office of COO-OC) and Sujith Panigrahi wherein a cost comparison of web & email service
         providers was shared. The cost comparative states the rates quoted by the vendor to be
         extraordinarily high721.

               The comparison noted that the rates paid by the OC for email hosting were much higher
                than the market rates for similar service.




         718
               Refer to payment made to PODC internet solutions- Annexure 26.25.

         719
               Refer to email communication between Technology FA OC and PODC internet solutions-Annexure 26.26.

         720
               Refer to Annexure 26.26.

         721
               The vendor quoted INR 1,440,000 for 250 mail accounts compared to INR 228,399 for 1000 email accounts.


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                       Fifth Report of HLC – Organizing Committee

      The comparative prepared by the OC concluded that the rates quoted by PODC appear
       to be very high722. It is also pertinent to note that the cost of email hosting is not directly
       proportional to the capacity required. The details of the comparative are as under:

Table 26.3:

    Particulars                                                         Amount (in INR)


    First Invoice of PODC dated 8/4/2010723                             6,41,334


    Rates Comparison performed by OC for 20GB email
    hosting (per email dated 6/9/2008)


    Net4domains (in India)                                              2,28,399


    Impus webhosting VSNL server in India                               2,80,000


    PODC                                                                1,440,000


    Purchase Order


    Purchase Order for 20GB email hosting in favor of PODC 340,000
    (dated 6/10/2008)


    Total Payment to PODC as on 23/8/2010 (primarily 2,965,230
    includes charges for emails usage for approximately 500
    GB, 2000 email ids.)


    Market rates obtained from multiple vendors


    Vendor 1: www.net4.in (Market Rates Obtained for 856,500
    Business Email hosting service (1000 GB, 1000 Emails) for
    five years)


    Vendor 2: Mantra Tech Ventures Private Limited 7,000 per month* 60 months =
    (Market Rates Obtained for Business Email hosting

722
      Refer to comparative statement prepared by OC-Annexure 26.27.

723
      Per the email dated 6/5/2008 from Vinesh Athma (PODC) to Mr Vijay Gautam (COO)


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                                 Fifth Report of HLC – Organizing Committee

          Particulars                                                               Amount (in INR)

          service (2000 GB, unlimited Email ids) for five years)                    420,000




26.7.5   Further technical information was requested by the OC from the vendor which was provided
         to OC. There is no evidence to suggest that the same was independently verified by the OC
         before making payments to the vendor724.

26.7.6   The above clearly indicates that the rates paid to the vendor were much above market rates
         as per the OC’s own computation. However, the work was still awarded to the vendor and
         payments made even without basic documentation such as purchase order.


26.8     Potentially false expense claim

26.8.1   Cash Advance was provided to Gp. Capt K.U.K. Reddy, Director (Finance) to meet petty
         expenses while on official trip to Melbourne, Australia in March, 2006. An expense of AU$
         178 was incurred on 25th March, 2006 and claimed on account of purchase of phone card.
         However, on analyzing the supporting documents, it appears that the amount was actually
         spent on purchase of a mobile phone (make: Nokia 3120)725.




         724
               Refer Annexure 26.26.

         725
               Refer to copy of office note dated 31 March 2006 and invoice- Annexure 26.28.


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26.9     Purchase of air tickets

26.9.1   A proposal for reimbursement of Air tickets for INR 218,211 towards travel of 11 individuals
         to Pune, India was approved by Director General and Secretary General. However, the
         requirement for submission of the air tickets was waived off without documenting reason
         for such waiver. Further, payments have been made to these respective 11 individuals. The
         ticket cost for Prof V.K. Malhotra towards travel to Pune is INR 54,970 which appears to be
         excessive considering the total cost for 11 individuals is INR 218,211. It is not apparent why
         cash was paid to these individuals instead of account payee cheques or bank transfers in
         their individual accounts.


26.10    Conflict of interest- Payments to IOA


         Background

26.10.1 We noted that a number of payments were made by the OC to the IOA aggregating to
         INR 12.62 Crores726 which included the following.

               Payment towards the Joint marketing agreement grant of property right – INR 8.75
                Crores
               Out of pocket expenses paid to the Indian Contingent at the Games Village – INR 2.09
                Crores
               Renovation of IOA building amounting to INR 4.08 Crores
               Rent and maintenance charges amounting to INR 3.33 Crores
               Fixed assets purchased and left behind in IOA building amounting to INR 1.95 Crores


         Potential conflict of Interest- employment of IOA functionaries

26.10.2 It has been observed that the OC and IOA had common office bearers at senior positions.
         Some of the key functionaries along with their designations at both the OC and IOA have
         been set out in the table below:




         726
               Copy of Ledger Account sheet for Indian Olympic Association – Annexure 26.29


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                             Fifth Report of HLC – Organizing Committee

         Table 26.4: Common office bearers at OC and IOA

             S. No.   Name of office bearer   Designation – OC               Designation – IOA

             1        Mr. Suresh Kalmadi      Chairman                       President

             2        Raja Randhir Singh      Vice Chairman                  Secretary General

             3        Dr. Lalit K Bhanot      Secretary General              Joint Secretary

             4        Mr. Anil Khanna         Treasurer                      IOA, Finance Commission

             5        Mr. VD Nanavati         Executive Board Member         Vice President

             6        Mr. VK Verma            Director General               Associate Vice President

             7        Mr. Ashok Sahota        OSD, Chairman’s Secretariat    Associate Joint Secretary

             8        Mr. Mohd. Aslam Khan    JDG,   CGA      Relations   & Associate Vice President
                                              Protocol




26.10.3 The above overlap in top management between the organization was a case of conflict of
         interest particularly as apart from the IOA the OC also paid INR 1.75 Crore as Interest free
         loan to Indian Weightlifting Federation (which has relationships/dealings with the IOA).


         Payments under Joint Marketing agreement

26.10.4 According to clause 26 of the Host City Contract, a joint marketing programme for the
         commercial exploitation by the OC, of the rights granted by the CGF will be developed by
         the IOA, the OC and the Host City subject to the approval of the CGF. The parties to the
         Joint Marketing Agreement are as under:

                Commonwealth Games Federation
                Indian Olympic Association
                OC, Commonwealth Games Delhi 2010
                Government of NCT of Delhi




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                                 Fifth Report of HLC – Organizing Committee

26.10.5 In the Joint Marketing agreement approved by the Executive Board in the 15th meeting held
         on 10 September 2009, the OC agreed to pay compensation to the CGA (i.e. IOA) of INR 25
         crores, in consideration of the rights granted to the OC and obligations undertaken by the
         CGA. Further, INR 5 crores was to be paid to Government of NCT of Delhi also.

26.10.6 During the Executive Board meeting, Mrs. V Ramachandran, Addl. Secretary, Ministry of
         Finance, mentioned that the Government of India was already providing funds to the
         various National Sports Federations and athletes for training and other facilities. Therefore,
         payment of INR 25727 crores to CGA arising out of the Joint Marketing Agreement may result
         in overlapping.

26.10.7 It was explained that the “participating team of CGA (IOA) is the property of the IOA and OC
         will get sponsorship on their account also, therefore, the amount mentioned above is only to
         compensate their loss”. Further, it must be noted that the minutes of meeting do not
         provide any basis of arriving at a compensation of INR 25 crores. Considering, that the key
         functionaries of the IOA and OC.

26.10.8 As per the revalidated budget prepared, the above mentioned compensation fee did not
         form part of the budget as “The OC D2010 and the IOA are in the process of finalising a Joint
         Marketing Programme. The value of the same is yet to be finalised and hence has not been
         included in the budget of the Organising Committee at this stage”. However, the payment
         for INR 25 crores has been approved in the 15 th Executive Board Meeting on 10 September
         2009.

26.10.9 It must be noted that the OC was required to pay IOA the entire amount by 31 October 2010
         under the agreement. However, the OC has only made a payment of 35% of the total
         compensation amounting to INR 8.75 crores.


         Out of pocket expenses reimbursed

26.10.10 The OC received a letter from the Treasurer, IOA, dated 20 September 2010 requesting
         remittance of INR 2.09 crore for disbursement of pocket allowances to the Indian
         Contingent staying at the Games Village during the period 23 September 2010 to 15 October
         2010 as decided by Dr. Lalit K Bhanot, Secretary General, OC CWG 2010. According to this
         727
               Rationale for INR 25 crores not provided.


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                           Fifth Report of HLC – Organizing Committee

         letter, the amount had been computed at the rate of INR 1,500 per day per person. Further,
         this amount would be paid on the basis of actual stay of the Indian Contingent.

26.10.11 The above mentioned letter was addressed to Mr. AK Mattoo, Treasurer, OC. This letter
         was then forwarded for approval to Mr. M Jeychandran, ADG, Finance and Accounts so that
         payment to IOA could be processed. As per the notings on letter, Mr. M Jeychandran has
         returned the letter to Dr. Lalit K Bhanot, on 21 September 2010, with a query as that “Do we
         process what has been agreed so – kindly advise – I was not in the meeting held on 10/9-”.

26.10.12 To the above query, Dr. Lalit K Bhanot, Secretary General, OC, responded:“As OC has taken
         the rights of Indian Team. So all expenses involved become OC responsibility. The issue can
         be further discussed and resolved”.         Subsequently, on 22 September 2010, Mr. M
         Jeychandran, ADG, Finance and Accounts, approves the payment and states that the
         amount should be debited to the Joint Marketing Programme Head.

26.10.13 The response from Dr. Lalit K Bhanot, Secretary General, OC, is in contradiction of the
         explanation provided to Mrs. V Ramachandran, Addl. Secretary, Ministry of Finance at the
         time of requesting approval for finalization of the Joint Marketing Programme Agreement.
         It was explained at that time that the “participating team of CGA (IOA) is the property of the
         IOA and OC will get sponsorship on their account also, therefore, the amount mentioned
         above is only to compensate their loss”. Thus, it construes that no further reimbursement of
         costs to IOA was warranted under the Joint Marketing Programme Agreement.

26.10.14 On 24 September 2010, the payment proposal was submitted for CEO approval. However,
         the proposal was returned with a note from CEO office i.e. “CEO has not seen this proposal
         at any stage. He may kindly peruse before taking action on it”.

              On 25 September 2010, Mr. Jarnail Singh, CEO, OC, has questioned the basis of such
               payment through his note “This expenditure cannot be from OC, but should be either
               from Govt or IOA. Needs further clarity”
              Dr. Lalit K Bhanot, Secretary General, OC, responded “OC to pay at this stage. The issue
               can be discussed later. But the team rights are with OC – so we have to pay this also”.

26.10.15 Subsequently, Mr. Jarnail Singh, CEO, OC, relented and gave his assent to process the
         payment but stated that this is a “policy issue, needs to be decided properly. We should
         discuss this matter and decide in file. This money to be taken out of and deducted from joint

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                                Fifth Report of HLC – Organizing Committee

         Marketing right file payable to IOA and Account branch to note. Since we cannot deny or
         delay this, this expense can be paid”. The above note sheet has also been signed off by SDG
         and ADG, Finance and Accounts and by Mr. Suresh Kalmadi, Chairman, OC.

26.10.16 Based on the above approval, the OC paid IOA INR 2.09 crores. Out of the total amount
         INR 1.56 crores was disbursed to the Indian Contingent via cheques to individual sports
         personnel. Balance INR 0.53 crores has been returned to the OC in December 2010.


         Renovation of IOA building

26.10.17 An expenditure of INR 4.08 crores was incurred by OC during January –May 2008 on
         undertaking civil/ electrical works and purchase of furniture for IOA building.            M/s
         Renaissance Furniture Pvt. Ltd. was awarded the contract in December 2007 for carrying out
         Civil (INR 0.97 crores) and Electrical (INR 0.23 crores) works and supply of furniture (INR 1.69
         crores) in IOA building at a total cost of INR 2.89 crores inclusive of taxes and duties. After
         the works/ supply was completed, the contractor claimed payment of INR 5.28 crores on the
         grounds that it had carried out excess quantities of works and supplied additional items of
         furniture on the basis of verbal directions of OC management.

26.10.18 A three member committee of OC employees was constituted in March 2009 to examine
         these claims of the contractor. On the basis of report submitted by this committee, EMC
         approved728 release of additional amount of INR 1.19 Crores to the contractor. Thus a total
         payment of INR 4.08 Crores was made to the contractor against INT 2.89 Crores as per
         contract. This adhoc approach and disregard of rules and contractual terms and conditions
         was one of the examples of the blatant and brazen favours extended to a number of parties
         and contractors.


         Rent and maintenance charges for the Olympic Bhavan

26.10.19 We noted that rent, maintenance and electricity, water and other charges were paid for the
         Olympic Bhawan for the period 1 January 2008 to 31 October 2009729 as the OC had rented



         728
               Annexure 26.30 – Minutes of the EMC meeting.

         729
               Refer Annexure 26.31.


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                                  Fifth Report of HLC – Organizing Committee

         space in these premises730. These aggregate to INR 3.33 Crores731. Additionally the OC
         spent a significant amount of money renovating the IOA Bhawan which resulted in no
         benefit accruing to the OC. Such expenditure included furniture and fittings.


         Fixed assets purchased and left behind in IOA building

26.10.20 As per the MOU signed, IOA was to reimburse to OC fair value of all furniture and other
         equipment left behind by OC. Value of fixed assets amounting to INR 1.95 Crores 732 left
         with IOA were neither claimed for adjustment nor adjusted against rent. Besides, OC
         shifted to IOA Bhavan on 24th May 2008 but rent was paid for the period January-May 2008
         when the building was under renovation.


         Summary

26.10.21 It is evident to the above that the payments to the IOA accrued mainly on account of the
         relationship of functionaries with the OC. The OC was not obligated to reimburse the
         expenditure of INR 1.56 Crores which was clearly an IOA obligation. Further, it is not
         evident why the OC not only chose to rent premises from the IOA but also incur substantial
         expenditure of renovation etc for premises constituting a long term benefit on the IOA.


26.11    Summary and conclusions

26.11.1 The most significant observation that came out of the review of the sample transactions was
         the widespread disregard for propriety in the OC. The quality of the tone at the top can be
         seen from the fact that individuals in the Chairman’s secretariat itself were involved in
         giving business to their own companies disregarding the established procedures. Seen in the
         context of irregularities in major contracts where senior OC functionaries, who were
         perceived to be close the Chairman, were directly involved, these above noted deficiencies
         indicate a major affliction in many areas of the organization. Such examples of unethical


         730
            Refer Annexure 26.32 for minutes of EMC meeting confirming the terms and conditions of the MOU entered into with
         IOA.

         731
               INR 3.33 Crores has been computed in accordance with the terms and conditions of the MOU entered into with IOA.

         732
               Refer Annexure 26.33 for list of fixed assets as per stock register of Adminitration FA in use by OC Staff.


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                          Fifth Report of HLC – Organizing Committee

          business practice and conflict of interest cases no doubt affected the work culture and
          governance framework of the OC.

26.11.2 It seemed to be an acceptable practice in OC to falsify documentation to provide legitimacy
          to decisions to award contracts to specific contractors. The apparent ease within which
          such documentation was moved and approved within the organization without raising red
          flags indicates the breakdown of financial oversight and controls. It is extraordinary that
          comparative quotations were obtained from nonexistent sources in some cases, after
          payments/orders were made and this clearly shows the degeneration of controls
          throughout the OC.

26.11.3 How the OC ended up obtaining quotations from vendors who did not have any signs of
          commercial activity at their stated place of business is surprising, especially as in many cases
          open tenders were not issued and the OC made efforts to obtain such quotations from the
          “market”. This indicates the utter disrespect and override of the system of control in the OC
          which was indicative of likely misconduct on part of OC employees associated with such
          procurements.

26.11.4   In functioning in this way, the OC employees and functionaries appeared to work in manner
          detrimental to the interests of the organization unmindful of their accountability to spend
          public funds with due regard to canons of financial propriety.




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                                Fifth Report of HLC – Organizing Committee

27 Chapter 27: Recruitment

           The study undertaken clearly indicates that established policies and procedures related
           to recruitment were routinely flouted and many a time this happened at the behest of
           the senior functionaries of the OC including its Chairman. It appears that the primary
           criteria for recruitment in many cases were other than merit of the candidate.
           Instances such as nepotism, favoritism, undue influence in recruitment etc. came up in
           the sample cases reviewed. Criteria other than performance were used to compensate
           and promote employees at the OC. In some cases, individuals who had faced or were
           facing investigation into their acts were recruited for various senior positions.


27.1     Background

27.1.1   The Games Secretariat in the OC had 34 functional areas/ departments to support the day
         to day operations. The staffing requirement for these functional areas was prepared by a
         workforce consultant (i.e. Ernst & Young and EKS consortium). Each FA had a functional
         area head and the staff size had to be relevant to the size and nature of work of the
         functional area. The workforce consultant made the initial estimate of the scale of activity
         and the staff size. However, quite often these estimates were disregarded while appointing
         staff.

27.1.2   The OC recruited staff directly (‘direct recruits’) and through deputation from government
         organizations (‘deputation staff’). The OC began with 17 employees in 2005 and had a
         maximum of 2,095733 regular staff employees in 2010 during the games. Besides, there
         were a large number of short term employees. In April 2010, the Chairman, OC has
         approved a policy for part time employment734. A committee comprising Secretary General,
         CEO and JDG, Administration and Workforce was constituted to consider the cases of part
         time employees.



         733
               Please refer to Headcount Data provided by the OC: Annexure 27.1

         734
               Please refer to the Part-time Employment Policy: Annexure 27.2


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                                 Fifth Report of HLC – Organizing Committee

27.1.3   The recruitment manual of OC described the recruitment process and procedures. A
         ‘Selection/ Search Committee’ used to be set up735 to identify and assess the competency of
         the candidates, and to recommend the pay level and allowances for them. Before the
         recruitment manual was in place, several staff appointments at senior positions were made
         by the Chairman directly736.

27.1.4   The Chairman was vested with power of appointing all categories of staff in games
         secretariat737.         The Secretary General was the authority to appoint staff up to PO level and
         the Chairman from Director and above. The power of recruitment was not delegated by the
         Chairman even after the CEO was appointed by the GOI.                                          Several questionable
         appointments were made possible due to the unregulated power of recruitment of the
         Chairman.


27.2     Unplanned growth in personnel (regular employees)

27.2.1   General Organizational Plan (‘GOP’) prepared by the work force consultants projected the
         staffing for the OC. The GOP was first approved in August 2007. Compared to the planned
         headcount of 1,316738 as approved in 2007, the actual number of staff swelled to 1897739 in
         September 2010.

27.2.2   The following graph shows how the actual number of employees grew as compared with the
         projected head count in the GOP, over a period of 3 years commencing May 2007.




         735
               Please refer to Section C.2 of the Recruitment & Selection Manual: Annexure 27.3

         736
               Please refer to discussion at the First Meeting of the Executive Board held on 22 March 2005: Annexure 27.4

         737
               Rule 7 of the Rules & Regulations of the OC, attached to the MOA of the OC: Annexure 5

         738
               As per data provided by Vivek Raja: Annexure 27.6A

         739
               As per payroll data for September 2010: Annexure 27.6B


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                                                Fifth Report of HLC – Organizing Committee
         Figure 27.1: Comparison with the initial GOP projection on headcount with actual employees
         recruited as per MIS data provided by HR


                                                          Projected Cumulative Head Count - As per GOP (Excludes Sports)
                                                          Actual Head Count -Cumulative (Excluding Sports)
           2500


           2000


           1500


           1000


               500


                 0
                                       Sep-07




                                                                                              Sep-08




                                                                                                                                                    Sep-09




                                                                                                                                                                                                          Sep-10
                                                Nov-07




                                                                                                       Nov-08




                                                                                                                                                             Nov-09
                     May-07




                                                                  Mar-08
                                                                           May-08




                                                                                                                         Mar-09
                                                                                                                                  May-09




                                                                                                                                                                               Mar-10
                                                                                                                                                                                        May-10
                              Jul-07




                                                         Jan-08




                                                                                    Jul-08




                                                                                                                Jan-09




                                                                                                                                           Jul-09




                                                                                                                                                                      Jan-10




                                                                                                                                                                                                 Jul-10
         Numbers exclude Sports FA since this FA did not take part in the Projection Exercise. Actual Recruitment in the Sports FA
                                                                                        740
         was 167 between May 2007 and Sep 2010                                               .


         Non adherence of the ‘Recruitment plan’ as initially suggested in GOP

27.2.3   The actual head count of the OC was lower than the GOP estimates up to November 2009.
         This indicates that estimates /recruitments were not in line with the planned activity level
         which led to pressure to fill up vacancies in the later stage. From November 2009 onwards,
         the head count increased exponentially way above the number that was originally planned.
         Non-adherence to the GOP resulted in pressure building up on the OC to recruit employees
         as deadlines for various activities were consistently missed. This led to recruitment of
         employees with various issues related to the quality, competence and on-boarding as have
         been discussed in the ensuing sections of this report.

27.2.4   Recruitment beyond the approved GOP level needed approval of EB.                                                                                                                                          There was no
         evidence that the matter was presented in a comprehensive way before the Executive
         Broad for their approval741.



         740
               Please refer to email received from Vivek Raja: Annexure 27.7

         741
               No reference to this has been found in the Minutes of Meetings of the Executive Board


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                              Fifth Report of HLC – Organizing Committee

         GOP frequently revised to reflect higher level of work force

27.2.5   The GOP was initially prepared and approved in August 2007. Subsequently, the GOP was
         revalidated/ revised at short intervals of time i.e. November 2009, January 2010 and May
         2010. These changes, as explained in the figure below, were significant in terms of numbers
         and were perhaps indicative of a failure to do proper planning and/or lack of adherence to
         plan by the OC.

         Table 27.1: Comparison of changes in headcount between various GOP validations and work force
         reviews


             Particulars               GOP                               Work Force Review           Actual
                                                                                                     Employees


                                       Approved       Revalidated        January        May          September
                                       2007           Nov 2009           2010           2010         2010 – Payroll
                                                                                                     sheet

             No. of employees742       1,316          1,412              2,886          2,046*       1,897

             % increase since GOP
                                       -              7.29%              119.30%        55.47%       44.15%
             Approved 2007

             % increase since GOP
                                       -              -                  104.39%        77.83%       36.58%
             Revalidated 2009


         *2,511-465 (temporary staff) = 2,046

27.2.6   The recruitment plan in the initial GOP did not include important functional areas. For
         example;

              The OC did not plan for any staff in the venue administration functional area until the
               workforce review in May 2010 i.e. 5 months before the games. However, as per the
               Payroll sheet for the month of September 2010, 17 employees were paid salary under
               this FA.



         742
           Source: Data provided by Vivek Raja except September Payroll which has been taken from Tally: Please refer to
         Annexure 27.8


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                                Fifth Report of HLC – Organizing Committee

               The OC did not have a plan to recruit staff under the sports functional area in any of the
                reviews. However, as per the Payroll sheet for the month of September 2010, 148
                employees were paid salary under the sports FA.

27.2.7   In some of the following functional areas there was significant difference between the
         actual number of employees and number projected per workforce review of May 2010:

         Table 27.2: Differences between actual and projected employees under workforce reviews743


             Functional area                              Number of employees


                                                          Workforce        Actual per payroll Increase
                                                          review      (May sheet   (September
                                                          2010)            2010)


             Office Administration                        38               148                  110


             Venue Development & Overlays 186                              263                  77
             and Venue Operations



27.3     Overview of personnel files reviewed

27.3.1   350 personal files were reviewed (approx 17 percent of total staff of 2095) on the basis of the
         official HR records provided by the OC to assess if the approved policies and procedures were
         followed in respect of recruitment practices by the OC. In nearly 39.14% of these cases (137 files)
         there was evidence of irregular practices of various kinds raising question about the fairness and
         transparency in the overall recruitments made by OC. The observations summarized in this section
         are based on information on irregularities that was prima facie available in the files or which could
         be ascertained through basic research and information gathering. It is clarified that in no way should
         this be construed to mean that the rest of the files were free from irregularities or that the
         underlying appointments were regular.

27.3.2   A summary of issues identified is set out in the figure below with further details in the
         ensuing sections.

         Table 27.3: Summary of issues identified in employee file reviews

         743
               Please refer to comparison in Annexure 8


         400
                               Fifth Report of HLC – Organizing Committee


          S.no.       Issues                                                                           No of Cases

          1           Favoritism in appointment of candidates                                          40

          2           Appointment of tainted employees                                                 4

          3           Rules bent to recruit employees with a questionable
                      background                                                                       1

          4           No Evidence of Work Performed by Director on rolls for 21
                      months                                                                           1

          5           Undue influence in appointment of candidates                                     7

          6           Mismatch in work experience and educational qualifications                       15

          7           Improper selection process                                                       40

          8           Extraordinary increments in remuneration                                         4

          9           Unjustified/ad hoc promotions                                                    25

                      Total                                                                            137



27.4     Favoritism in appointment of candidates

27.4.1   In 40 cases there was high potential for favoritism in selection/ appointment of candidates
         due to following reasons:

              Employee was related to officials in the OC

              Employee was related to other ‘influential people’ outside of the OC744.

              Known “close” associations of the employees with officials of the OC

27.4.2   Some of the cases observed are illustrated in the figure below745.



         744
             It may be mentioned that, the review is limited to personal files and apparent relations between employees and others.
         It cannot be determined whether the influence was unjustly used to secure an advantage to the employee by people
         outside the OC


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                      Fifth Report of HLC – Organizing Committee

Table 27.4:

 Name       of     the Designation/               Type               of Remarks
 employee                 Functional Area         favoritism

                                                                              Appointed on 1 May 2010.
 Uddhav Waman Administrative                      Employee        was
 Welinkar                 Assistant,              related            to       Son of Sangeeta Welinker ADG,

                          Workforce               officials in the             Image and Look.

                                                  OC                          Educational qualification at the
                          Salary:         INR
                                                                               time of appointment was:
                          27,000 p.m
                                                                               -    Higher secondary school
                          Qualification:                                            and
                          HSC;      Pursuing                                   -    Pursing graduation from
                          Graduation                                                Pune.
                                                                               -    Worked in OC only for 3
                                                                                    months and drew a salary
                                                                                    of INR 27,000 per month.



                                                                              Appointed on 18 May 2010.
 Pallavi Mohla            Administrative          Employee        was
                          Assistant,              related            to       Daughter of Wing Cdr Rajiv

                          Technology              officials in the             Mohla,        DDG         Chairman’s

                                                  OC                           Secretariat.
                          Salary:         INR
                                                                              Selected via walk in interview
                          27,000 p.m
                                                                               after       one        month         of
                          Qualification: B.                                    appointment of her father in
                          Tech                                                 the OC.
                                                                              She was the only candidate
                                                                               who appeared for the walk in
                                                                               interview and was selected.



                                                                              Daughters of Bhoop Singh
 Rajni Singh and Administrative                   Employee        was

745
  For Details of all 40 cases of favouritism, please refer to Annexure 27.9 and relevant extracts from the personal files in
Annexures 27.10 – 27.49


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                        Fifth Report of HLC – Organizing Committee

 Name          of    the Designation/              Type              of Remarks
 employee                   Functional Area        favoritism

 Rachna Singh               Assistant,             related to other           Private Secretary in
                            Technology             ‘influential               the Cabinet Secretariat.
                                                   people’ outside           They were selected for the
                            Salary:         INR
                                                   of the OC                  same         post        via     walk     in
                            27,000 p.m
                                                                              interview746 on the same date,
                            Qualification:
                                                                              conducted by same search
                            M.Sc              in
                                                                              committee            in        the    same
                            Computer
                                                                              functional area
                            Science

                            Salary:
                            INR27,000 p.m

                            Qualification:
                            B.Tech

                                                                             Appointed           as     PO        on   10
 Vivek Raja                 Director,              Employee       was
                                                                              February 2009 at a core salary
                            Workforce              related to other
                                                                              of INR 45,000 per month and
                                                   ‘influential
                            Salary:         INR
                                                                              promoted as Director within 7
                                                   people’ outside
                            45,000 p.m.
                                                                              months at a core salary of
                                                   of the OC
                            Qualification: B.                                 INR 45,000 per month only.
                            Tech                                             Son     of     P     K     Murlidharan,
                                                                              Secretary General of Boxing
                                                                              Federation of India.
                                                                             Known to the following officials
                                                                              in OC as per the employee file.
                                                                               - Leena Jha, Director, Work
                                                                                  Force and
                                                                               - Lt.Col Shalinder Benjamin




746
      Please refer to Annexure 50 for Process and Guidelines for Walk-in Interviews as per Recruitment & Selection Manual


403
                Fifth Report of HLC – Organizing Committee

Name    of     the Designation/       Type            of Remarks
employee           Functional Area    favoritism

                                                               Father is Mr. Ashok Lavasa,
Avny Lavasa        PO, QBR            Employee       was
                                                                Principal                   Secretary,
                                      related to other
                   Salary:      INR
                                                                Government of Haryana.
                                      ‘influential
                   25,000       p.m
                                      people’ outside          As per minutes of meeting of
                   (core)
                                      of the OC                 the       Selection      Committee,
                   Qualification:                               applications had been invited
                   B.A (Hons)                                   for the post of ADG and
                                                                Director                       through
                                                                advertisements            in       the
                                                                newspaper and hence the post
                                                                of PO was not advertised.
                                                               After the selection of only one
                                                                candidate out of 15 candidates,
                                                                as a Director, the selection
                                                                committee        after         “several
                                                                inquiries”     also      interviewed
                                                                Avny Lavasa and selected her
                                                                for the position of Project
                                                                Officer
                                                               Subsequent             to          her
                                                                employment with the OC, her
                                                                brother, Abir Lavasa was also
                                                                appointed      as     APO,      Venue
                                                                Operations.
                                                               The last drawn core salary of
                                                                Avny Lavasa was INR 35,000
                                                                per month and for her brother
                                                                was INR 25,000 per month.


                                                               On    11      June     2010,       the
Shipra Verma       Part-time          Known       “close”
                                                                committee       for      part     time
                   Director,          associations    of


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                 Fifth Report of HLC – Organizing Committee

Name   of   the Designation/             Type            of Remarks
employee           Functional Area       favoritism

                   Ceremonies            the    employees         employment          recommended
                                         with officials of        that Shipra may be appointed
                   Salary:       INR
                                         the OC                   as Director, Ceremonies on a
                   40,000 p.m
                                                                  “part time basis”.       They also
                                         Employee       was
                   Qualification:
                                                                  took cognisance of the fact that
                                         related         to
                   Masters          in
                                                                  she    worked       as     Director,
                                         officials in the
                   Physical
                                                                  Chairman’s Secretariat from 2
                                         OC
                   Education
                                                                  March 2007 to 31 August 2008.
                                                                 On    22     June       2010,   the
                                                                  Chairman,      wrote       to   the
                                                                  Principal of Matreyi College,
                                                                  requesting an approval to let
                                                                  Shipra work on a part time
                                                                  basis with OC.             Approval
                                                                  subsequently received on 30
                                                                  June 2010.
                                                                 Shipra’s sister, Shikha Verma
                                                                  was working with the OC as
                                                                  Project      Officer,      Creative
                                                                  Cultural Events since June 2009
                                                                 Appointed on 13 August 2008
Lt. Gen (Retd) ADG,                      Known     “close”
                                                                  per direct appointment made
Ashok Vasudeva     Chairman's            associations    of
                                                                  by    Chairman,      Mr.     Suresh
                   Secretariat           the    employees
                                                                  Kalmadi.
                                         with officials of
                   Salary:
                                         the OC                  Position of ADG was created
                   INR89,375 p.m
                                                                  against the specification of the
                   (core)
                                                                  General     Organisational Plan
                   Qualification:                                 (‘GOP’) as per order received
                   Not stated                                     from the Chairman, Mr. Suresh
                                                                  Kalmadi. Consequently, there
                                                                  was no open position on the



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                Fifth Report of HLC – Organizing Committee

Name      of   the Designation/        Type           of Remarks
employee           Functional Area     favoritism

                                                               day    the    appointment       was
                                                               made.



                                                              Mr. Shekhar M Deorukhar was
Shekhar         M OSD               to Known     “close”
                                                               a “Senior Goods Guard, in
Deorukhar          Chairman            associations   of
                                                               Mumbai        Division,    Central
                                       the    employees
                   Salary:
                                                               Railways” prior to his joining
                                       with officials of
                   INR22,400 p.m
                                                               OC.
                                       the OC
                   Qualification:                             Appointed as Officer on Special
                   Not stated                                  Duty (‘OSD’) to Chairman in
                                                               October 2006 on deputation
                                                               with extra allowances of INR
                                                               18,000 per month.
                                                              In February 2011, Mr. Shekhar
                                                               M Deorukhar was arrested by
                                                               the     CBI   for   his    alleged
                                                               involvement in the ‘overlays
                                                               scam’.
                                                              The      Chairman       wrote    to
                                                               Chairman, Railway Board for
                                                               the release of “Mr. Shekhar
                                                               Deorukhar from the Railway
                                                               service on deputation to CWG
                                                               Secretariat till year 2010” as
                                                               “his     contribution     in    the
                                                               Secretariat would be an asset
                                                               and would contribute towards
                                                               the successful conduct of the
                                                               Games”
                                                              In September 2009, on expiry
                                                               of deputation, the Chairman,


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                         Fifth Report of HLC – Organizing Committee

          Name    of   the Designation/        Type         of Remarks
          employee           Functional Area   favoritism

                                                                   Mr. Suresh Kalmadi again sent
                                                                   requests      to     the     Railway
                                                                   Minister,          Ms.          Mamta
                                                                   Bannerjee       and        Chairman,
                                                                   Railway Board for extension of
                                                                   deputation period as “he has
                                                                   come to occupy a very crucial
                                                                   position in my Office and his
                                                                   departure at this stage would
                                                                   impact adversely”.
                                                                  On 15 December 2010, the
                                                                   Chairman, again wrote to the
                                                                   Railway Minister for extension
                                                                   of time up to 30 June 2011 as
                                                                   “Mr. Shekhar M Deorukhar has
                                                                   been assisting me for last more
                                                                   than four years and has been
                                                                   playing a very important role in
                                                                   the discharge of my official
                                                                   functions as Chairman, OC” and
                                                                   “his departure at this stage
                                                                   would      seriously     affect    the
                                                                   assignments        which    I     have
                                                                   tasked him to complete”.


27.5     Appointment of “tainted” employees

27.5.1   In at least 3 instances, noted by us the Chairman appointed ex-employees from
         government/PSU’s at senior positions in disregard of adverse antecedents of such persons.
         The adverse information of these persons was available in the public domain. A summary of
         these cases is set out in the table below.



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                        Fifth Report of HLC – Organizing Committee




Table 27.5:

 Name          of     the Designation/               Remarks
 employee                    Functional Area

                                                        Appointed on 7 July 2008 as DG based on
 V K Verma                   DG,              OC
                                                         recommendations         of      search         committee
                             Secretariat
                                                         comprising Randhir Singh, A K Mattoo and V D
                                                         Nanavati747. It may be mentioned that Randhir
                                                         Singh and VD Nanavati were colleagues of VK
                                                         Verma in the IOA748
                                                        VK Verma was also an EB member since the 8th EB
                                                         meeting held on 21 May 2007, along with all the
                                                         members of the search committee749. However
                                                         this pertinent fact has not been mentioned in the
                                                         search committee minutes.
                                                        Accounting records of the OC also show evidence
                                                         of reimbursement to VK Verma as Board Member
                                                         and Chairman of the Committee of Games
                                                         Planning and management as early as 15
                                                         September 2007.750 Even this association was not
                                                         mentioned in the search committee minutes.
                                                        Serious allegations questioning the integrity of V K
                                                         Verma during his employment with Air India
                                                         remained unresolved. The cases pending against




747
      Please refer to Annexure 27.51 for Minutes of the Search Committee Meeting held on 21 June 2008

748
   Source: Indian Olympic Association website: Randhir Singh and VD Nanvati are colleagues of VK Verma at the Indian
Olympic Association. Annexure 27.52

749                                                          th
      Please refer to Annexure 27.53 for attendees of the 8 Meeting of the EB held on 21 May 2007

750
      Please refer to extract from Tally in Annexure 27.54


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                        Fifth Report of HLC – Organizing Committee

 Name           of    the Designation/                Remarks
 employee                    Functional Area

                                                          V K Verma related to procurement fraud and
                                                          producing fake medical certificates751.



                                                         Appointed on 4 December 2009 based on the
 R P Gupta                   ADG,         Venue
                                                          recommendations            of     search    committee
                             Operations
                                                          comprising Randhir Singh, A K Mattoo and V D
                             Salary:            INR
                                                          Nanavati.752
                             98,500p.m
                                                         R P Gupta had ongoing vigilance cases against him
                             Qualification:               in the Indian Railways753.
                             B.Sc
                             Engineering

                                                         Appointed on 23 July 2009 and subsequently
 Nachiketa                   DDG, Protocol
                                                          promoted to DDG within 7 months in February
 Kapur754
                             Salary:
                                                          2010.
                             INR60,000 p.m
                                                         According to the note sheet dated 1 February
                             Qualification:               2010, promotion has been awarded:
                             MBA                and       - After his performance has been found to be
                             Diploma             in          commendable            as    “reviewed   by   Senior
                             Psychological                   Authorities”.
                             Counseling                   - Further, “in recognition of his outstanding
                                                             performance, Senior Authorities have decided
                                                             to promote him to the post of DDG, Protocol
                                                             and Media Relations”.
                                                         Nachiketa Kapur submitted his resignation on 28
                                                          April 2010 and requested for release of duties wef


751
      Refer attached news article from Indian Express, dated 10 March 2003 in Annexure 27.55

752
      Please refer to Minutes of the Search Committee Meeting in Annexure 56

753
      Please refer to Annexure 57 for details

754
      Please refer to extracts from Personal File of Nachiketa Kapur: Annexure 58


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                                 Fifth Report of HLC – Organizing Committee

          Name          of     the Designation/              Remarks
          employee                    Functional Area

                                                                   30 April 2010 citing personal reasons. According
                                                                   to the note sheet, “Mr. Nachiketa Kapur joined the
                                                                   OC on 23 July 2009 and has not been confirmed as
                                                                           755
                                                                   yet”.         The Chairman’s approval for accepting
                                                                   resignation wef 30 April 2010 has been solicited
                                                                   and received756.
                                                                  The Appointments Committee of Cabinet (ACC)
                                                                   issued a memorandum not only disapproving his
                                                                   previous appointment, but adding that the person
                                                                   in question “should not be considered for any
                                                                   appointment of a sensitive nature”757.


27.6     Rules bent to recruit employees with a questionable background

27.6.1   Recruitment rules were comprehensively disregarded by senior officers of OC to recruit a
         female employee for Chairman’s Secretariat against a nonexistent post. Further, the
         concerned employee engaged in probable improper conduct involving potential violation of
         the laws of the land (potential bribery and corruption though not related to the OC) when
         working in the Chairman’s Secretariat.

27.6.2   This case came to notice when computer forensics revealed a significantly inappropriate
         email communication made through two official computers used by the two employees of
         the OC. This email date 2 February 2010 from Ms Malaika Miranda, PO in the Secretariat of
         Chairman to Praveen Grover, Director- Treasurers office discussed about 6 construction




         755
           In response to a clarification sought from OC management, as to how promotion was awarded to an employee whose
         appointment was not confirmed, Shri NP Singh stated that the senior authorities found his performance to be
         commendable and he was promoted in recognition of the same. Please refer to NP Singh’s response in Annexure 27.59.

         756
           In a response to a query by the High Level Committee, NP Singh stated that the confirmation process of direct recruit
         employees of the OC was discontinued based on verbal instructions from Dr. Bhanot. Annexure 27.60

         757
               A copy of the order is attached in Annexure 27.61


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                                 Fifth Report of HLC – Organizing Committee

         projects across India and the percentage of commission to be paid to government officers
         and to the company of the author of the email758.

27.6.3   Investigation          revealed       that     the    email      ID    used        for   this   communication          i.e.
         malaikamiranda21@gmail.com is the official ID of a company by the name of MAA
         Corporation. The company’s website (http://maa-c.com/index.php) shows Malaika Miranda
         as the principal consultant of the company759.

27.6.4   Further inquiry by the committee indicated that Malaika Miranda (alias Luen Miranda) was
         hired by OC in October 2009 as Project Officer in the Chairman’s Secretariat. There was no
         such approved post in the GOP. The address and mobile number of Malaika as per
         employment records exactly matches with the details on the website of MAA Corporation. It
         appears that this person was engaged in another business or occupation while employed by
         the OC which is contrary to the terms of appointment.

27.6.5   Review of employee file revealed several discrepancies.

               Workforce records show that Maliaka was interviewed on 1st October 2009 by a
                committee of three senior officials of OC (Principal Advisor, ADG (Admin& Work Force) ,
                ADG Chairman’s Secretariat) and selected for a position at OC. The minutes of the
                meeting mention that only Malaika Miranda appeared for an interview as a walk in
                candidate and was selected by the committee760.

               Malaika’s application letter to OC dated 1st September 2009, states that as per her
                understanding there is a vacancy for a PO in Chairman’s Secretariat761. However, as per
                the OC’s workforce records no such position existed at the time of her interview 762.




         758
            Please refer to Annexure 27.62 for a copy of the email. The email was sent to Praveen Grover, Director in the Treasurers
         Secretariat.

         759
               Please refer to screenshot of the website of MAA Corporation in Annexure 27.63

         760
               Please refer to Annexure 27.64 for Minutes of the Selection Committee Meeting

         761
               Please refer to application received from Malaika Miranda: Annexure 27.65

         762
               Please refer to Annexure 27.66 for Note Sheet from Malaika’s Personal File


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                                 Fifth Report of HLC – Organizing Committee

               At the time of her appointment, Malaika gave a declaration to submit the copies of her
                education certificates by December 2009763 however the workforce records do not have
                any copies of her past education certificates.

               Several inconsistencies noted in various letters issued to her at the time of her
                appointment suggest creation of documents post-event. For example, her offer letter
                was issued after the date of appointment and joining letters. She was issued the
                appointment and joining letters on the same day as her interview even though there was
                no open position per the GOP.

         Table 27.6:

             Letter Type                                           Letter Date                  Date    of       candidates
                                                                                                Signature
                           764
             Offer Letter                                          19 October 2009              21 September 2009

             Appointment Letter765                                 1 October 2009               29 September 2009

             Joining Letter766                                     1 October 2009               1 October 2009

             Interview Assessment Form767                          1 October 2009               Not Applicable



27.7     No Evidence of Work Performed by Director on rolls for 21 months

27.7.1   Lt. Col. (Retd.) Ashok Sharma (Director, Ceremonies) was appointed on 6 February 2008 as
         Director, Ceremonies at a core salary of INR 35,000 per month768. He was interviewed by a
         Search committee comprising AK Mattoo, Atul Chaturvedi and BS Ojha (Director General) on
         4 February 2008. The rationale for selection as per the minutes of the Search Committee
         was shortage of staff in Ceremonies functional areas leading to requirement of a middle

         763
               Please refer to the declaration by Malaika Miranda in Annexure 27.67

         764
               Please refer to Annexure 27.68 for Offer Letter given to Malaika Miranda

         765
               Please refer to Appointment Letter Issued to Malaika Miranda in Annexure 27.69

         766
               Please refer to Joining Letter Issued to Malaika Miranda in Annexure 27.70

         767
               Please refer to Annexure 27.71 for Interview Assessment Form

         768
               Please refer to Order dated 6 February 2008: Annexure 27.72


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                                 Fifth Report of HLC – Organizing Committee

         level officer769. The following observations were made on further review of the personal
         file, raising doubts about the legitimacy of Ashok Sharma’s appointment as an employee of
         the OC:

               Review of the personal file of Lt. Col (Retd) Ashok Sharma revealed that Shovana
                Narayan, JDG, Ceremonies had complained to ADG (Administration), vide note dated 6
                November 2009, that she was unaware of the existence of Ashok Sharma 770. Further,
                she requested ADG, Administration to make the necessary rectifications in the
                Ceremonies expenditure budget head by crediting back the salary cost attributable to
                Ashok Sharma under the Ceremonies functional area.

               Further, a leave application dated 3 June 2008, contained the following comments from
                Randhir Singh, Vice Chairman, OC “As Col Ashok Sharma of OC, is attached to the
                Olympic Bhavan the IOA has no objection for his leave application”771.

27.7.2   Clarifications were sought from Mr. NP Singh, JDG, Administration and Workforce with
         respect to the above mentioned observations. The response received failed to remove the
         shroud of illegitimacy from the observations. Instead it has raised further doubts about the
         authenticity of the employment of Ashok Sharma. Some of the appalling responses have
         been discussed in the paragraphs below772:

               Response received with respect to the appointment of Ashok Sharma states that, “Shri
                AK Mattoo, Treasurer (the only member of the Selection Committee available) has shown
                his inability to comment upon about the formation of the Selection Committee”. Further,
                “The Treasurer has informed that since the Ceremonies functionality was in infancy
                stage at that point of time and yet to be fully operational, the services of Lt. Col.
                (Retd.) Ashok Sharma were temporarily utilized as an interface between the OC and
                the IOA”. The response received is in contradiction to the reason provided by the Search
                Committee at the time of his appointment as stated in Para 1.7.1 above.


         769
               Please refer to Note Sheet from Personal File of Ashok Sharma dated 4 Feb 2008: Annexure 27.73

         770
               Please refer to Annexure 74 for Note from Shovana Narayanan dated 6 November 2009

         771
               Please refer to leave application dated 3 June 2008 in Annexure 75

         772
               Please refer Annexure 76 for the full contents of the response to clarifications sought by the HLC.


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                                 Fifth Report of HLC – Organizing Committee

               Response received with respect to the work done by Ashok Sharma at the OC reads as,
                “Lt. Col. (Retd.) Ashok Sharma was working under the control of Vice Chairman. Lt. Gen.
                (Retd.) Ashok Vasudeva, ADG (Vice Chairman’s Secretariat) has telephonically clarified
                that no desktop or laptop was issued to Lt. Col. (Retd.) Ashok Sharma by OC”. “OC was
                shifted to NDCC – II building in July 2009 and there is nothing on record to establish that
                Lt. Col. (Retd.) Ashok Sharma was allotted any specific work area in NDCC Tower – II.
                However, as informed by Lt. Gen. (Retd.) Ashok Vasudeva, ADG (VC Secretariat),
                telephonically and also by Shri AK Mattoo, Treasurer, he used to sit in the basement of
                Indian Olympic Bhavan”.               “The Treasurer has informed that Lt. Col. (Retd.) Ashok
                Sharma, Director was given the work relating to the renovation in progress at Olympic
                Bhavan”.

27.7.3   It is worth mentioning at this stage that the OC took possession of the Olympic Bhavan on 1
         January 2008 and shifted after completion of renovation in May 2008 773. Therefore it is
         plausible that Lt. Col. (Retd.) Ashok Sharma was working towards the renovation of the
         Olympic Bhavan from February 2008 (i.e. date of appointment) till May 2008. However,
         there is no record of work performed/ delivered by him subsequent to May 2008 till
         November 2009.

27.7.4   Further, OC shifted out of the IOA building in October 2009774. However, per response
         received from Mr. NP Singh, Lt. Col. (Retd.) Ashok Sharma, used to sit in the basement of the
         Olympic Bhavan. There is no explanation given about his whereabouts after OC shifted out
         of the Olympic Bhavan.


27.8     Undue influence in appointment of candidates

27.8.1   In violation of the principle of fairness and transparency in recruitment, senior officials of OC
         including its Vice Chairman participated in the recruitment process for candidates for whom
         they issued reference letters. The following issues were noted in such cases:

               The OC official referring the candidate was also part of the panel interviewing the
                candidate (this defeats the objective of a fair evaluation); and

         773
               Source: Information as provided by Mr. Amar Singh, Director Administration.

         774
               Source: Information as provided by Mr. Amar Singh, Director Administration.


         414
                                 Fifth Report of HLC – Organizing Committee

               In most cases the referred candidate was only one candidate who appeared for the
                interview in the ‘walk in process’ (which suggests that the entire process may be stage-
                managed to provide legitimacy to the recruitment).

27.8.2   A few examples have been enumerated in the table below775.



         Table 27.7:

             A.1Name of the            A.2Referred by/ Closely associated A.3Remarks
                                       to OC employee


             A.4Candidate              A.5Name              A.6Designation           A.7

                                                                                          Mr. Randhir Singh provided
             A.8 K.       Tejinder A.12Randhir              A.14Vice
                                                                                           Letter of recommendation for
             Singh                     Singh                Chairman, OC
                                                                                           the selection of K Tejinder Singh
             A.9 Project Officer       A.13
                                                                                           in OC.
                                                                                          Randhir Singh was Chairman of
             A.10Salary:        INR                                                        the Interview panel.
             35,000 p.m (core)                                                            K Tejinder Singh was appointed

             A.11Qualification:                                                            as   Project    Officer    in    CGA

             B.Sc                                                                          Relations FA having a little more
                                                                                           than one years work experience
                                                                                           as a customer care executive.
                                                                                           This work experience is not
                                                                                           related to the functional area in
                                                                                           which he was appointed.
                                                                                          An article in “Indian Express”
                                                                                           refers to K Tejinder Singh as
                                                                                           Randhir Singh’s nephew.

                                                                                     A.15

                                                                                          VK Verma and Ashok Sahota
             A.16Ashok Sahota          A.19V.K Verma        A.20DG


         775
               For the complete list please refer to Annexure 27.77 and Relevant Pages from Personal Files in Annexures 27.78-27.84


         415
                         Fifth Report of HLC – Organizing Committee

 A.1Name of the                 A.2Referred by/ Closely associated A.3Remarks
                                to OC employee


 A.4Candidate                   A.5Name                A.6Designation            A.7

 Sahota                         Verma                                                  were colleagues at the Indian
                                                                                       Olympic Association (‘IOA’). Mr.
 A.17Salary:            INR
                                                                                       Suresh Kalmadi is the President
 1,31,000 p.m
                                                                                       of the IOA.
 A.18Qualification:
                                                                                      Search        committee      which
 B.A (Hons)
                                                                                       recommended the appointment
                                                                                       of Ashok Sahota as Officer on
                                                                                       Special      Duty    in   Chairman
                                                                                       Secretariat consisted of Mr. V K
                                                                                       Verma, NP Singh and Lalit
                                                                                       Bhanot.
                                                                                      Mr. Ashok Sahota is also the
                                                                                       Managing Director of Alisha
                                                                                       Travels Private Limited, which is
                                                                                       in violation of the terms of the
                                                                                       employment contract776.
                                                                                      It may be mentioned that the
                                                                                       OC has conducted business
                                                                                       dealings      with    M/s    Alisha
                                                                                       Travels777 which also constitutes
                                                                                       a clear conflict of interest in his
                                                                                       conduct.
                                                                                 A.21
                                                                                      NP Singh referred SK Tomar per
 A.22S.K. Tomar                 A.26N P Singh          A.27JDG,
                                                                                       application form.
                                                       Administration
 A.23Project Officer
                                                                                      NP Singh also part of interview


776
   Source: Employment contract – Para on Conflict of Interest: “You shall not, during the term of your employment, except
with the written permission of the OC, engage directly or indirectly in any other business, occupation or activity…..”

777
      Details of the case of Alisha Travels are discussed in the section on other irregularities.


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                                 Fifth Report of HLC – Organizing Committee

             A.1Name of the            A.2Referred by/ Closely associated A.3Remarks
                                       to OC employee


             A.4Candidate              A.5Name               A.6Designation           A.7

             Officer                                                                        panel which interviewed SK
                                                                                            Tomar.
             A.24Salary:        INR
                                                                                           Only SK Tomar appeared for the
             46,500 p.m
                                                                                            walk in interview and was
             A.25Qualification:
                                                                                            selected as Project Officer.
             B.A

                                                                                           Brig N B Singh referred Y.P.
             A.28Y.P. Bhatia           A.32Brig N B A.33Venue
                                                                                            Bhatia per application form.
                                       Singh                 Administrator
             A.29Project Officer
                                                                                           Brig N B Singh also part of
                                                                                            interview         panel        which
             A.30Salary:                                                                    interviewed Y.P. Bhatia.
             INR46,500 p.m                                                                 Only Y.P. Bhatia appeared for

             A.31Qualification:                                                             the walk in interview and was

             M.A (English)                                                                  selected as Project Officer.



27.9     Mismatched work experience and educational qualification

27.9.1   In 15 cases, the selected candidates did not possess the functional skills or expertise for
         which they were recruited. This assessment has been based on the following criteria:

               Criteria A: Mismatch between educational qualification/ experience of candidate and the
                Functional area for which candidate was selected.

               Criteria B: Higher ratings awarded in the interview assessment form to candidates having
                no/ inadequate work experience and/ or poor educational qualifications.

27.9.2   A few examples of cases observed are set out in the figure below778.

         Table 27.8:



         778
               For the complete list please refer to Annexure 85 Relevant extracts from personal files are given in Annexures 86-100


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             Fifth Report of HLC – Organizing Committee

A.34Name of A.35Recruited as / A.36Type             of A.37Remarks
the          Functional Area       Criteria
employee

                                                          Mechanical engineering graduate
A.38Uma      A.40Director,           A.43Criteria
                                                           with approximately 3 years work
Badve        Volunteer               A and B
                                                           experience as an engineering
             Programme
A.39
                                                           consultant, appointed as Director
             A.41Salary:     INR
                                                           in the Workforce Functional area.
             66,000 p.m
                                                          Out of the 3 years, she has 7
             A.42Qualification:                            months experience working for
             Mechanical                                    the    Commonwealth            Youth
             Engineering                                   Games, 2008, Pune as a Project
                                                           Officer, Recruitment/ Workforce.
                                                           However,         her        interview
                                                           assessment form read as follows,
                                                           “Due to her rich experience, she
                                                           may be paid INR 5,000 over and
                                                           above the base of the Directors
                                                           salary”. Thus for just 7 months
                                                           relevant work experience, she
                                                           was not only appointed as a
                                                           Director, but also awarded a
                                                           higher salary at the Director’s
                                                           grade at the time of appointment.
                                                          Referred to OC by Sangeeta
                                                           Welinkar, JDG, Image and Look,
                                                           per application form.
                                                          Per minutes of interview she was
                                                           selected via walk in interview in
                                                           September 2009.         However, as
                                                           per    minutes         of   Selection
                                                           committee held on 15 January
                                                           2009, the committee had agreed



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                Fifth Report of HLC – Organizing Committee

A.34Name of A.35Recruited as / A.36Type                 of A.37Remarks
the             Functional Area        Criteria
employee

                                                               to the recommendations of EY/
                                                               EKS workforce consultants for
                                                               appointment of Pune staff in OC,
                                                               which included Uma Badve, to be
                                                               appointed as Project Officer,
                                                               Administration       and   Volunteer
                                                               Centre.
                                                              Appointed as DDG in Chairman’s
A.44Ram         A.45DDG, Legal           A.48Criteria
                                                               Secretariat on 1 December 2007,
Mohan                                    A
                A.46Salary:      INR
                                                               he was also appointed as DDG,
                83,190 p.m (core)
                                                               Legal
                A.47Qualification:                             -   In    February    2008    and ,
                Post        Graduate                               promoted as ADG, Legal in
                Diploma           in                               June 2010 though he            does
                Personnel                                          not have any professional
                Management                                         qualifications in law
                                                              Educational qualifications are:
                                                               -Arts Graduate from University of
                                                               Delhi
                                                               -   Post Graduate Diploma in
                                                                   Personnel management
                                                               -
                                                              Elow     Loli   appeared     for    the
A.49Elow Loli   A.50Admin                A.53Criteria
                                                               interview along with 2 other
                Assistant       (AA)     B
                                                               candidates.
                CEO’s Office
                                                              He was given higher ratings in the
                A.51Salary:
                                                               interview assessment form as
                INR27,000 p.m
                                                               compared        to     the         other
                A.52Qualification:                             candidates, even though he had
                B.Com (Hons)                                   the least marks and no work



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                              Fifth Report of HLC – Organizing Committee

          A.34Name of A.35Recruited as / A.36Type                         of A.37Remarks
          the                 Functional Area           Criteria
          employee

                                                                                    experience as per application
                                                                                    form. The other 2 candidates had
                                                                                    minimum         one      years     work
                                                                                    experience as per their CV.


27.10    Improper selection process

27.10.1 From discussions with various OC employees and review of personnel records, it was
         observed that the most commonly followed methods of recruitment were ‘walk in’
         interviews. As explained in the course of such discussions, under this process, candidates
         with similar experience and credentials were bunched together and interviewed by a search
         committee. On the basis of ratings provided by the search committee some of the
         candidates would be selected and offers of appointment made to them.

27.10.2 It was observed, however, that in a number of cases, this process was not followed through.
         There were only one or two candidates who were ‘presented’ before the search committee
         and there was no benchmarking of these candidates against others. Of the sample files
         reviewed, 49 instances were noted where only one or two candidates were interviewed by
         the committee779 .

27.10.3 Based on the available records and review of significant number of recruitment cases, it
         appears that the terming of these interviews as “walk in” may have only been a formality to
         provide legitimacy to a recruitment decision that had already been made.


27.11    Creation of documents

27.11.1 Two instances were noted, where it appeared that search/selection committee documents
         appeared to have been ‘created’ to apparently ‘regularize’ appointments of candidates. The
         details of these cases are as follows:

         779
            Please refer to Annexure 27.101 for the details on these instances and Annexures 27.102 – 27.141 for relevant pages
         from Personal Files


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                                 Fifth Report of HLC – Organizing Committee

         Re-using selection committee minutes

27.11.2 The following observations were made in the case of Nachiketa Kapur

               The search committee minutes are titled “Minutes of the Selection Committee Meeting
                dated 8th December 2008780”




               The minutes list 5 candidates which do not include Nachiketa Kapur




               The minutes then say “in continuation of the above meeting the committee took another
                round of interviews on 16 July 2009…..” which is 7 months after the previous meeting.
                Mr. Nachiketa Kapur was recommended for selected in the meeting on 16 July 2009
                based on the evaluation of the search committee781.




         780
               Please refer to Annexure 27.142 for Minutes of the Search Committee Meeting Dated 8 December 2008

         781
               Please refer to Minutes of Meeting dated 16 July 2009 in Annexure 143


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27.11.3 In this regard, it is pertinent to note that as per the original meeting held in December 2008,
         Lt Col Shailendra Benjamin had already been recommended for appointment as Director
         Protocol.




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27.11.4 It this appears that the selection committee formed to evaluate Nachiketa Kapur was a
         sham as on that date, a previous appointment had already been made and paperwork was
         created to provide legitimacy to his recruitment by a new selection committee. Also please
         refer to paragraph 1.5.1 for discussions on the appointment of Mr. Nachiketa Kapur even in
         view of this “adverse background”

         Wrong benchmarks facilitating inconsistent comparisons

27.11.5 In the case of Avny Lavasa who was appointment as a Project Officer, the following were
         noted782.

               The selection committee was constituted under the approval of the “chairman”

               The Committee was formed to interview candidates for 6 posts including various
                Directors, ADG and DDG

               Of the 17 candidates invited to “appear before the committee” only 16 came for the
                interview

               It is mentioned that “additionally, in view of an urgent need to activate the functions
                related to the volunteer programme, the committee after several enquiries got an
                application of Ms Avny Lavasa who was also interviewed by the commitee….” The
                committee recommended her name for appointment of APO (Volunteer Programme).

27.11.6 It is not clear from the above how a committee formed to recruit Directors and above ended
         up evaluating the recruitment of an APO. Further, it is also not evident why this candidate
         was not evaluated against other APO candidates. It may be mentioned that as set out in
         paragraph 1.4.2, Ms Avny Lavasa was related to an “influential person” outside the OC and
         hence the possibility that documents were created to provide legitimacy to the recruitment,
         cannot be excluded.


27.12    Extraordinary increments in remuneration

27.12.1 Annual increments provided to employees were on average equivalent to 10% of the basic
         salary in line with the annual assessment by the Head of FAs.


         782
               Please refer to Annexure 27.144 for a copy of the Search Committee Meeting minutes


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27.12.2 In 4 instances out of the sample, it was noted that employees were granted a much higher
         increment without adequate supporting/ rationalization. Examples of instances noted are
         set out below783.

         Table 27.9:

          A.54Name         of     the A.55Designation/             A.56Remarks
          employee                       Functional Area

                                                                       Appointed as APO on 7 May 2007 in
          A.57Deepali Kapoor             A.58APO,
                                                                        Workforce functional area at a core salary
                                         Volunteer
                                                                        of INR 20,000 per month.
                                         Programme
                                         Training                      25% increment in core salary granted on 1
                                                                        February      2008      within      a    year     of
                                         A.59Salary:        INR
                                                                        appointment.
                                         34,375 p.m (core)
                                                                       Further, 25% increment granted in October
                                         A.60Qualification:             2008 bringing the core salary to INR 31,250
                                         MBA                            per    month.          Subsequently,       another
                                                                        increment of 10% on core salary was
                                                                        awarded in November 2009, taking the per
                                                                        month core salary to INR 34,375.
                                                                        A.61
                                                                       Appointed in OC on 4 January 2010 at a
          A.62Priya Singh Paul           A.63ADG,
                                                                        core salary of INR 75,000 per month.
                                         Communication
                                                                       66% increment in core salary awarded on
                                         A.64Salary:
                                                                        19 February 2010 taking the core salary to
                                         INR1,63,500 p.m
                                                                        INR 125,000 per month.
                                         A.65Qualification:            Interview assessment form, educational
                                         MA       in      Mass          qualifications, relieving letter from last
                                         Communication                  organization not found in personal file.
                                                                        A.66
                                                                       Appointed on 2 February 2009 at a core
          A.67Vikrant Bhuptani           A.68Director,
                                                                        salary of INR 48,750 per month. Increase

         783
           Please refer to Annexure 145 for the details on these instances and a quantification of these increments on their
         remuneration. Relevant Pages from the Personal Files are attached in Annexures 27.146 – 27.149


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                Fifth Report of HLC – Organizing Committee

A.54Name   of    the A.55Designation/       A.56Remarks
employee             Functional Area

                     Image and Look             in core salary awarded in December 2009
                                                taking core salary drawn to INR 58,750 per
                     A.69Salary:
                                                month.
                     INR64,375 p.m
                                               Part of the Commonwealth Youth Games
                     A.70Qualification:
                                                at Pune, where he has worked with
                     Post       Graduate
                                                Sangeeta Welinkar, JDG, Image and Look.
                     Diploma
                                               Sangeeta     Welinkar   has    written    a
                     A.71                       recommendation      letter    for   Vikrant
                                                suggesting an increment in core salary by
                                                at least INR 10,000 per month which is a
                                                20.5% increment over last salary drawn.
                                               It was also observed that there were no
                                                supporting documents in his personal file
                                                supporting his selection for appointment in
                                                OC.
                                                A.72
                                               Appointed as Project officer on 2 February
A.73Maneck Kotwal    A.74Project Officer
                                                2009 based on recommendation of search
                     and subsequently
                                                committee.
                     promoted          to
                     Director                  He was part of the Common Wealth Youth
                                                Games at Pune.
                                               He was given promotion to Director within
                     A.75Salary:     INR
                                                6 months of his joining the OC along with
                     56,250 p.m
                                                an increment of 29.41% per month core
                     A.76Qualification:         salary. Thus core salary increased from
                     Diploma           in       INR 42,500 to INR 55,000 per month.
                     Communication              A.78
                     Management

                     A.77




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27.13    Unjustified/ adhoc promotions

         Absence of a promotion policy under the Financial and administrative guidelines784

27.13.1 The Financial and administrative guidelines of the OC do not contain any provisions with
         respect to promotion policy for Staff on contract/ Direct recruits. The guidelines only:

              Provide for an annual performance assessment of such personnel by the Heads of
               Departments; and

              Such employees had to serve a probation period of 1 year (later revised to 6 months for
               confirmation) and their continuation with the OC would depend upon their “work,
               performance and conduct” as assessed by the Heads of Department.

         Promotions were pre-decided and was an instrument of rewarding selected few based on
         patronage

27.13.2 As informed, there were 67 cases (3.5% of total employees as on September 2010) where
         promotions were made during the tenure of the OC. The Financial and Administrative
         Guidelines of OC did not contain any provision of promotion or any formal promotion policy.
         A majority of the promotions (approximately 70%) were at the position of Director and
         above. A summary of promotions by designation is set out in the table below.

         Table 27.10:

             Designation                                                                   No. of Promotions

             Joint Director General                                                        6

             Additional Director General                                                   7

             Deputy Director General                                                       17

             Director                                                                      17

             Project Officer                                                               14

             Assistant Project Officer                                                     6



         784
           Source: OC, 2010, Financial and administrative guidelines with amendments as approved by the Executive board in its
         meeting held on 19 October 2008: Annexure 27.150


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            Total                                                                          67


27.13.3 All cases of promotions for Directors and above were approved by the Chairman. In
        absence of defined policy and procedure the promotion cases were processed in non
        transparent way and are indicative of patronage. Review of the promotion cases indicated
        the following785:

              11 of the 67 employees were not only confirmed within 3-6 months from their date of
               joining the OC but were also awarded promotions along with their confirmation 786.

              6 of the 67 employees have received more than one promotion during their tenure with
               the OC787. This is contrasting with the large number of staff who received no promotion
               at all.

              There were no records in the employee files showing the reason or justification for the
               promotions.          These include, for example, annual assessment reports or other
               performance reports in support of the proposal for promotions.

              A number of staff promoted in OC had previous or current associations with the
               Chairman or OC functionaries or other significant ‘influential’ relationships788. A few
               examples in relation to such promotions are set out in the table below.

        A.79Name of the A.80Designation/                       A.81Remarks
        employee                     Functional Area

                                                                  Appointed as DDG on 2nd February 2009at a core
        A.82Sangeeta                 A.83DDG,          Image
                                                                   salary of INR 68,750 per month.
        Welinker789                  and Look
                                                                  Promoted as ADG on completion of probation
                                     A.84Salary:


        785
          Please refer to Annexure 27.151 for 25 cases reviewed in detail and Annexure 27.152-27.180 for relevant pages of
        employee files

        786
              Please refer to Annexure 27.181 for details

        787
              Please refer to Annexure 27.182 for details

        788
           It may be mentioned that, the review is limited to personnel files and apparent relations between employees and
        others. It cannot be determined whether the influence was unjustly used to secure an advantage to the employee by
        people outside the OC

        789
              Relevant documents from employee file in Annexure 27.183


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A.79Name of the A.80Designation/                      A.81Remarks
employee                    Functional Area

                            INR90,375 p.m                 period of 3 months in June 2009.            Core salary
                                                          increased to INR 75,000 per month on account of
                            A.85Qualification:
                                                          promotion. No supporting documents like appraisal
                            Not Stated
                                                          found in the personal file to justify promotion.
                                                         Worked at the Common Wealth Youth Games,
                                                          2008, Pune as a Coordinator at a salary of INR
                                                          774,000 per annum.
                                                         45.9% increase in salary on appointment at OC at
                                                          DDG level.
                                                         Appointed in February 2009 as Director at a core
A.86Purnima                 A.87DDG,           and
                                                          salary of INR 56,250 per month.
Pendse790                   subsequently
                            promoted to ADG              Promoted to designation of DDG on completion of

                            Ceremonies                    probation period of 3 months at a core salary of INR
                                                          60,000 per month.
                            A.88Salary:
                                                         Associated with Chairman, Mr. Suresh Kalmadi as
                            INR75,000          p.m
                                                          her experience included:
                            (core)
                                                          - coordinator for the Rajya Sabha election
                            A.89Qualification:                   campaign for Mr. Suresh Kalmadi.
                            B.A      (Hons)      in       - worked as Director, Culture and Ceremonies for
                            Psychology                           the Common Wealth Youth Games 2008, Pune.

                                                         Appointed as Project Officer in August 2008 at a
A.90Indu Anand791           A.91DDG,
                                                          core salary of INR 25,000 per month.
                            Ceremonies
Anand791
                                                         Promoted to designation of Director in less than
                            A.92Salary:
                                                          one       year   and   subsequently       promoted   to
                            INR60,000          p.m
                                                          designation of DDG in June 2010. The impact of
                            (core)
                                                          such promotions on her base salary was an increase
                            A.93Qualification:            of INR 35,000 per month from her first role.
                            MCA                          Daughter of Joint Secretary in health services


790
      Relevant documents from employee file in Annexure 27.184

791
      Relevant documents from employee file in Annexure 27.185


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                       Fifth Report of HLC – Organizing Committee

A.79Name of the A.80Designation/                      A.81Remarks
employee                    Functional Area

                                                          department
                                                         Husband is an IAS officer at the post of
                                                          Commissioner in Ministry of HRD.
                                                         Mismatch between educational qualification (i.e.
                                                          MCA) and work area assigned (i.e. Ceremonies).
                                                         Appointed as ADG, Spectator Services on 11th
A.94Lt Gen S P S A.95JDG, Spectator
                                                          December 2009 based on the recommendation of
Dhillon792                  services
                                                          search committee.
                            A.96Salary:        INR
                                                         On 21st December 2009, re-designated as JDG vide
                            1,31,000p.m
                                                          an office order released by the Chairman, Mr.
                            A.97Qualification:            Suresh Kalmadi.
                            M.Phil                       His core salary increased by INR 32,500 per month
                                                          as a result of the promotion
                                                         As per application form, Lt Gen Dhillon has stated
                                                          that he knows Mr. Suresh Kalmadi at OC.
                                                         Appointed as Deputy Director (Accounts) in May
A.98P.K.Chawla793           A.99DDG,       Internal
                                                          2007 and promoted as Director (Internal Audit) in
                            Audit
                                                          December 2007 (in less than 6 months time).
                            A.100Salary:
                                                         In March 2009, Special DG (Internal audit) sent a
                            INR60,000          p.m
                                                          recommendation, for his promotion to DDG
                            (core)
                                                          (Internal Audit), to the Chairman and Treasurer.
                            A.101Qualification:          However, the Chairman handed over the approval
                            Graduate                      to the Treasurer on 13 August 2010.           Per note
                            (Commerce)                    written by the Treasurer (i.e. Mr. AK Mattoo), the
                                                          approval was granted retrospectively wef 1 April
                                                          2009.
                                                         The     ‘retrospective’   promotion   seems     unjust,
                                                          considering; Mr. PK Chawla did not perform his


792
      Relevant documents from employee file in Annexure 27.186

793
      Relevant documents from employee file in Annexure 27.187


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                        Fifth Report of HLC – Organizing Committee

         A.79Name of the A.80Designation/       A.81Remarks
         employee           Functional Area

                                                    duties in the capacity of a DDG during the period 1
                                                    April 2009 to 31 August 2010. However, he has
                                                    been monetarily rewarded for the duties in the
                                                    intervening period. On account of his promotion his
                                                    core salary was increased to INR 60,000 per month
                                                    with admissible allowances with effect from 1 April
                                                    2009. Prior to his promotion he was paid a core
                                                    salary of INR 45,000 per month.
                                                   Further, on 9 September 2010, Mr. Chawla wrote
                                                    to the JDG (Administration and Workforce) stating
                                                    that he has been promoted as DDG wef 1 April
                                                    2009, and that he had been using his personal
                                                    vehicle during this period (1 Apr 2009 – 31 August
                                                    2010). He stated that he had been incurring a
                                                    monthly expenditure of INR 26000 per month on
                                                    the same, and requested for reimbursement of the
                                                    same. This was passed on to the ADG (F&A) who
                                                    approved the same with a restriction on the
                                                    amount at INR 24,500 and submitted the same for
                                                    approval to SDG (F&A). GC Chaturvedi (SDG, F&A)
                                                    signed the same off with a comment “What are the
                                                    rules in this regard?” on 16 Spetember 2009.
                                                    However, this has been signed off by KUK Reddy
                                                    (ADG, F&A) on 19 Sep 2009 with the comment
                                                    ‘discussed’. Payment of INR 416,500 was made to
                                                    P.K Chawla in this regard on 22 October 2010,
                                                    apparently without the approval of the SDG (F&A).


27.14    Summary and Conclusions

27.14.1 The study undertaken clearly indicates that established policies and procedures related to
         recruitment were routinely flouted; and this often happened at the behest of the senior


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                  Fifth Report of HLC – Organizing Committee

functionaries of the OC including its Chairman. In this regard, the following key issues
emerge:

     Primary criteria for recruitment in many cases were other than merit of the candidate.
      This led to situations of nepotism, favoritism in employment, undue influence as evident
      from the examples