Above: (L-R) The NDMC headquarters in Delhi. (Photo: Bhavana Gaur); NDMC-311 App
A contract awarded to a Gujarat-based firm to develop a mobile application for the New Delhi Municipal Council faces allegations of corruption and awaits a demand for a CVC investigation.
By Sujit Bhar
On March 12, 2016, Delhi Chief Minister Arvind Kejriwal inaugurated an App—NDMC-311—at a function in Central Park. It seemed a noble effort in connecting Delhiites to the New Delhi Municipal Council (NDMC) system where they can see status of projects and file their complaints, as well as access all civic services. However, inside the app, there existed a complicated software enabling corruption. Installed to last five long years, it was programmed to yield up to Rs 21 crore in dubious payoffs.
The application—the NDMC-311 App—was developed by a Gujarat-based company, called Civic Solutions Pvt Ltd. It was (as per its website) incorporated on March 25, 2015 and registered in Ahmedabad with a paid-up capital of Rs 1 lakh. Its directors are Atit Tusharbhai Purani, Jasmine Rakesh Patel, Smital Kuldipakbhai Pandit and Pandit Vibhutiben Smitalbhai.
TENDERING AVOIDED
The firm to which an important App development was assigned by the NDMC was not even a year old when it bagged the contract. Also, the tendering process was avoided by breaking up the price of the software into several super high-priced components. This allowed the NDMC to give the contract to the company through the nomination process.
Allegations of corruption have been levelled against two top persons in the Council. While the allegations have certainly not yet been qualified with detailed documentation, a complaint letter from an advocate, PK Chaudhary, has been sent to the office of the Director of the Central Vigilance Commission.
According to the allegations, the NDMC made an outright purchase and was the owner of “The Software and Source Code” of the complaint handling and grievance redressal system. The complaint says that the “The NDMC had purchased the same by paying Rs 15.8 lakh” to the software firm. This was said to have been a deliberately reduced price to enable the NDMC chairman to clear the purchase and exercise the personal authority he commands of granting nomination for projects and purchases of up to Rs 20 lakh.
According to the complaint, what transpired after the tendering process was avoided was a violation of General Financial Rules and CVC guidelines. The approval of the non-tendered nomination was moved through the NDMC Council at a meeting where the presiding officer of the Council—a post held by the Chief Minister of Delhi (in this instant Arvind Kejriwal)—the designated MP of New Delhi area, the secretary of NDMC and all official members were not present.
DISSENT REPRESSED
The meeting mooted the idea that Rs 11 lakh should be paid annually to Civic Solutions Pvt Ltd as royalty, and an “unspecified amount” each year as maintenance charges. Many in the depleted council meeting objected, asking for a re-negotiation to bring down rates.
The objection failed to gain currency, says the complaint, and a “fresh proposal was prepared” with the royalty section going up to Rs 24 lakh, while the maintenance charges were upped to Rs 50 lakh per year. The company was also given an assurance that five of its employees would be associated with the project 24×7 and each would be paid at the rate of Rs 790 per employee per hour. Interestingly, the US Federal Minimum wage as of May 1, 2017 is $9.20 per hour which, as per the current exchange rate of Rs 64.33, comes to Rs 592. It has been said that some mid-level officials at NDMC had objected and refused to be party to the arrangement. The complaint alleges that the Director IT was changed three times presumably be-cause each of them had their reservations about the contract.
An Intriguing Web
It is rather intriguing that one of the directors of Civic Solutions Pvt Ltd, Atit Tusharbhai Purani, is also director of at least four other clone-like firms. They all operate from the same address: Abhishree Adroit, Mansi Cross Roads, Judges Bunglow Road, Vastrapur, Ahmedabad, Gujarat 380015.
Each of these firms, including Civic Solutions, during their incorporation listed their activities as: “…computer related activities (for example maintenance of websites of other firms/creation of multimedia presentations for other firms etc.)”
All these firms started out with a paid up capital of Rs 1 lakh (exactly like Civic Solutions) from the same address—Abhishree Adroit—although from different rooms in the same building. The firms are: Space-O Infoweb Private Limited (incorporated on August 30, 2012), Room Nos. 1005, 1007, 1008; Space-O Digicom Private Limited (incorporated on September 17, 2012), Room No. 1006; Upsquare Solutions Private Limited (incorporated on June 24, 2017), Room No. 1201 and Spaxi Solutions Private Limited (Incorporated on May 22, 2017), Room No 1001. Civic Solutions Private Limited occupies Room No. 1002 at the same address.
In India there is a tendency to maintain multiple companies with similar functions to beat the tendering game through multiple over-quoted false tenders. However, that purpose is defeated if either the names of the directors are the same, or if the companies are at the same address. Hence this multiple identity existence remains a mystery.
COST INEFFECTIVE
But the app, nevertheless, was installed and launched with much fanfare. The pay-out from NDMC is seemingly a good deal for Civic Solutions. But there is a big question mark on whether NDMC was paying too much for the mobile application. Here is a breakdown of the costs put into perspective:
- The NDMC is paying an annual royalty of Rs 24 lakh for a software that it has bought and owns rights to. A royalty is paid for commercial use, but that is generally discontinued after a year. The NDMC has a royalty payout life of five years, as per the complaint. Even the purchase price (Rs 15.8 lakh) was way lower than the royalty paid.
- As general Annual Maintenance Contract (AMC)—a pre-requisite for any government contract executed—the company is being paid a hefty Rs 50 lakh.
- While earlier NDMC contractual staff was doing similar work for Rs 25,000 per month, even for staff with higher educational levels, Rs 790 per hour seems high. Five such employees will be employed by Civic Solutions.
- As per the contract, if the company’s staff claims 8 hours work per day for 25 working days, his or her salary would be Rs 1,58,000 per month. But should the company claim that a worker attends his/her work 24×7, that figure jumps to Rs 5,68,800 per month. This is too high an amount for any level of appointment with the government. For five persons, for a year, this works out to Rs 3,41,28,000.
Considering the 24×7 deal is through, the following are the amounts to be paid (not considering the Rs 15.8 lakh paid in purchasing the software in the first place) to Civic Solutions Pvt. Ltd:
- Royalty—Rs 24 lakh per annum = (in 5 years) Rs 1.20 crore
- AMC—Rs 50 lakh per annum = Rs 2.5 crore
- Payment to workers = Rs 17.30 crore. Total = Rs 21 crore.
The allegation is that a large amount of money has changed hands. However, who are the beneficiaries is not clear yet. Meanwhile, an e-mail sent by India Legal to Civic Solutions Pvt Ltd director Atit Tusharbhai Purani for the company’s response remained unanswered till the time of filing this report.