The Public Works Department (PWD) has issued fresh arbitration guidelines under which lapses by erring officers will be identified and responsibility fixed, in any projects where cost escalates, according to the standard operating procedure.
Earlier this year, the department removed the arbitration clause from its contracts and tenders, which means in case of any dispute between the PWD and a private contractor, the matter will be dealt with only in the courts. However, it continues to deal with claims arising from old agreements.
“In all arbitration cases where awards of the arbitrator go against the department, detailed reasons and lapses, if any, on the part of concerned officials due to which the awards have gone against the department should be examined in detail by the chief engineer concerned,” the new SOP, released on October 31, stated. The chief engineer is required to send recommendations to the administrative secretary regarding fixing responsibility and initiating action against the erring officers if the amount of the arbitral award exceeds 10 per cent of the work cost, it added.
The PWD, which executes several infrastructure projects for client departments such as health, education, home, and judiciary, has to secure funds from the respective departments to pay arbitration awards, if any, decided against the Government.
The Government said in the Barapullah Phase 3 project, it lost Rs 300 crore because the PWD did not file an appeal against the arbitration order, allowing the private company to benefit.
The PWD has also directed its officials to ensure that client departments pay for arbitration awards in old cases. If they refuse, those departments should be made parties in court proceedings.
“In case the client department refuses to allocate a budget against the awarded amount, the court should be informed that PWD, being only a service department, utilises the budget allocated by the client department; therefore, it is not in a position to pay or deposit the award amount on its own,” the guidelines stated.
