CAG finds fault with PPP model for ration cards

Inadmissible payments made to the partner, says the report

The Comptroller and Auditor General of India (CAG) has found several lapses in the public-private partnership agreement between the Food and Civil Supplies department and a private company for issuing digitised ration cards in 2006 which eventually led to suspension of card distribution across the State.

The CAG report, which was tabled in the Legislative Assembly on Friday, has made several remarks against the PPP model adopted by the government in 2006. The project of issuing the cards was awarded to a partner which did not fulfill the eligibility criteria.

The project was implemented by the partner without testing whether the system would work and the partner closed the operations prematurely in November 2010 after receiving a payment of Rs 54.23 crore  from the government.

Surprisingly, the report has not named the private firm which obtained the contract on a build operate and transfer (BoT) model. Official sources said that it was Comat Technologies, a Bangalore-based firm, which had drawn the agreement. The then vice president of the firm was Ravi Rangan and Sriram Raghavan was the president and co-founder.

The same firm had done data entry work for the Bhoomi project of the Revenue department in early 2000. Later it bagged the contract for issuing electoral photo identity cards (EPIC) from the office of the Chief Electoral Officer. There were several complaints from voters of Bangalore City regarding the poor quality of the card.

 The same firm was given maintenance of Nemmadi Kendras of the Revenue department. When there were several complaints by legislators regarding poor management of the Kendras, the government quietly transferred the work to a firm by name Myshore Technologies. Some of those who were with Comet were found to be with Myshore.

The Central Board of Second Education, Delhi, in 2007 had issued a circular stating that Comat Technologies was allotted the pre-examination data processing work of AEEE 2007.

From the day of assigning the work, the agency was not found doing satisfactory work. Not even a single admit card was issued within the scheduled time frame. The agency had not given any report required to verify the correction of data and accounts of fee.

Comat has proved to be a totally incumbent, irresponsible and mismanaged agency. Hence the firm has been blacklisted by the Board for allotment of all kind of jobs in future, the Board had stated.

The CAG report said that the government opted for the PPP mode for five and half years to issue computerised ration cards in 2006 without considering other alternatives. The decision was without diligence.

The qualifying procedures were flawed and it did not have capacity to deliver. It persistently bypassed the procedures and carried on with the work in a totally uncontrolled environment. This resulted in an abnormal increase in the number of ration cards including those for the families of BPL.

The report said that several inadmissible payments have been made by the department to the partner (meaning the firm). The partner closed the operations prematurely without transferring any of the assets except the database of ration cards.

The department had taken upon itself the responsibility of rectifying the mistakes in the database. As the rectification process was still in progress, the process of issue, modification and deletion of ration cards in the State had come to a standstill since November 2010.

In its recommendations, the CAG said that there was a compelling need to fix responsibility for various lapses, award of contract and implementation,  which caused huge losses to the exchequer.