Vigilance wing pulls up Kochi Metro Rail Limited over lapses in auctioning commercial spaces

The metro agency’s Vigilance wing observed that the auction of commercial spaces at the stations was conducted without advertisements and in a “less transparent” manner.

The Vigilance wing of Kochi Metro Rail Limited (KMRL) has pulled up the agency for a slew of alleged omissions in the leasing of commercial spaces at the 22 metro stations along the Aluva-M.G. Road-Thripunithura phase-one corridor, which resulted in substantial revenue loss over the past few years.

The metro agency’s Vigilance wing observed that the auction of commercial spaces at the stations was conducted without advertisements and in a “less transparent” manner. The auctions were conducted outside the scope of the procurement manual, and the basic principles of transparency, competition, fairness and elimination of discretion were not followed in letter and spirit. Base rates were not fixed on the basis of objective data. Instead, a trial-and-error method was adopted.

Changes in rates and other conditions, such as the earnest money deposit (EMD), resulted in prospective bidders adopting a wait-and-see approach, while creating a sense of differential treatment among existing vendors. A level playing field was missing. Moreover, e-auction or forward auction through the Government e-Marketplace (GeM) was not considered. In most cases, there was only a single bidder. The absence of a standard operating procedure for conducting auctions led to ad hoc practices and subjectivity in the process, further reflecting the lack of transparency.

The Vigilance wing also took note of the absence of a finance member in the auction committee, in contravention of the provisions of the procurement manual. There were also several corrections, overwritings and omissions in the registration forms and the auction register. Adding to the concerns, the terms and conditions of the auction were relaxed midway through the process without public notice. The EMD amount kept changing from one auction to another, and it was eventually decided not to collect it at all.

In view of these findings, the Vigilance wing recommended that base rates be fixed on the basis of objective data. It also called for a consistent policy on the auction of spaces for hiring or advertising to avoid the trial-and-error approach to fixing base rates, ambiguity in deciding the mode of auction and confusion over the auction procedure.

In this regard, a forward auction module of GeM or its e-auction module should be considered, after due preparation, instead of outdated and less transparent methods such as physical or hybrid auctions. Adequate publicity, including through the media, should be ensured to prevent ad hoc practices and subjectivity in conducting auctions. A standard operating procedure (SOP) for conducting auctions should be drawn up, and a finance member should be included in the auction committee. The mandatory declaration of ‘Conflict of Interest’ by auction committee members should also be ensured.

Other recommendations include continuous videographing or recording of the auction or tender process through CCTV and preparation of the minutes after the auction.