09/11/2019 To The Commissioner Commissioner Building - Greater Chennai Corporation Ripon Building, Chennai 600003

Sir, Sub: Overpricing of BRR Tenders – Seeking corrigendum to change rates to current market rate

The Bus Route Roads Department has floated 68 tenders with reference numbers BRR.C.No.B1/3402/2019, BRR.C.No.B1/3403/2019, BRR.C.No.B1/3404/2019, BRR.C.No.B1/3669/2019 that are due to be closed on 11/11/2019. However, we have some serious concerns with the tenders. I am listing them below

The rate for concrete component (such as M 30, M20, M15 and M40) have been boosted in the schedule rate and this will result in crores of loss to the exchequer. For example, in Tender No BRR.C.No B1/3404/2019-4, schedule rate for item No 5 on supplying and placing of M 30 readymix concrete has been fixed at Rs 7873 per cum (exclusive of Tax). However for the same exact component, the building department last year had worked out and had given a market rate of Rs 6971.4 inclusive of GST (got through RTI). If you exclude GST, this rate comes to Rs 5716. It must be understood that this was the market rate worked for M30 component of BRR.C.No.B1/3812/2018-12 for the exact same component including all charges such vibrating, labour and all other charges. The base market price of M 30 has only come down from last year. I also got a market quote from a corporation approved plant which clearly shows that the base price of M 30 readymix has come down by Rs 200 per cum compared to last year’s Corporation’s calculation of market rate. Therefore, the corporation should have fixed the rate of Rs 5716 or even lesser excluding GST. However, fixing it at Rs 7873 excluding GST is to provide unjust enrichment to the contractor. Therefore, all the rates from M15 to M 40 has to be revised and a corrigendum must be issued immediately.

Similarly, Corporation has been in the practise of floating the BT roads tenders when the bitumen price is high and the roads are laid when the bitumen price drops by 25 to 30% from the current price. For such varying components, the corporation must have a variable pricing mechanism wherein it must be fixed with respect to market rate and if the price of bitumen is less when road is laid compared to now, proportionately the price of that component must be reduced in payment and if the bitumen rate increases during road laying compared to now, the contractor can be paid more proportionately. While this is the practice everywhere, Chennai Corporation has been continuously following this pattern of floating tenders when bitumen rates are high to provide undue favour to contractors. This must also be amended in the tender. It must be noted that the scheduled price of the bitumen is also on the higher side compared to the times when the road is actually laid.

There is no milling component in the cement concrete road tenders. This will raise the height of the road significantly. It must be noted that Corporation promised to not raise the height of the road in the subsequent tenders last time. Therefore milling must be included immediately. For roads, making it a package is a huge concern. Over the last 4 years, only select set of 20 to 30 contractors were allowed to participate. Even though the total amount of tender value has come down, still the prequalification work experience that they must have 50% value work experience in the last 3 years can only be fulfilled by the same cartel of contractors since they were the only ones who have that experience. Only if you open up the tenders for all class 1 and other contractors, you will see real competition and quality work. There is a huge concern that tenders are prefixed in Corporation. Therefore, it is important that the package system is taken out and all tenders may be broken up worth less than Rs 2 crores and Corporation allows significant competition.

The promise of EMD payment to be brought online has still not been fulfilled and must be done immediately to avoid physical contact with Engineers.

I am attaching the RTI copy that shows the working sheet of the Corporation last year. I kindly request you to immediately extend the tender timeline and issue corrigendum to make the above changes. Otherwise, this will result in a huge loss to the exchequer.

Sincerely Jayaram Venkatesan Convener – Arappor Iyakkam