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CAG says UIDAI extended favor to Wipro; both dismiss allegations


The UIDAI, which entered into a contract with Wipro in 2011 for supply, installation and commissioning of servers and storage systems, breached provision of the contract and extended favour to Wipro, incurring expenditure of Rs 4.92 crore for annual equipment maintenance, which was covered under free warranty,  the Controller and Auditor General of India (CAG) has alleged in a report.

A timeline of the events leading to this

May 2011: The UIDAI spent a total of Rs 134.28 crore on buying storage and server infrastructure along with free periodical maintenance from Wipro through a contractual agreement for its data centers in Bangalore and Delhi/NCR.

November 2011 – February 2012: The infrastructure was deployed to UIDAI, but the contract mandated that the servers and data storage devices be subject to an Acceptance Test or quality test before it could be put to use.

March 2012: UIDAI hired a third party to conduct necessary compliance tests; the third party reported back by October 2012 stating certain devices did not meet server uptime requirement as prescribed in the contract with Wipro.

November 2012: “However, on the request of vendor (Wipro), UIDAI reduced the component uptime requirement norm,” CAG said in the report.

January 2013: Another compliance test was run on the devices by the same third party , and it reported that all components met the standards specified in the updated contract.

February 2013: As per contract conditions, the date of acceptance of all equipment was fixed for the month of February 2013 by the third party tester. However, on being requested by Wipro, UIDAI decided to change the date of final commissioning of equipment back to February 2012, added CAG.

As a result, the previously agreed period of warranty of 12 months expired on 31 January 2013, a month before the acceptance date provide by the third party quality tester.

June 2013: Subsequently, UIDAI agreed to sign another maintenance contract with Wipro at a total cost of Rs 4.92 crore, and the new maintenance contract was valid between February 2013 to January 2014. This was a deviation from the earlier contract, and resulted in avoidable expenditure of Rs 4.92 crore on periodical maintenance, which was supposed to be covered under free maintenance as per original contract, the CAG said.  

What UIDAI and Wipro had to say about the alleged ‘avoidable payment’

UIDAI, in a reply to CAG, stated that the third party tester raised multiple issues with components and by that time valuable time had elapsed and systems were getting out of warranty. UIDAI then had to renew the maintenance/warranty contract with Wipro.“Therefore, as mentioned in the contract, the last date of commissioning (delivery) was taken as date of acceptance,” UIDAI told CAG. It added that the term ‘delivered’ and ‘commissioned’  mentioned in the contract, actually translates to acceptance of delivery of equipment.

In a statement to MediaNama, a spokesperson from Wipro said:

“Wipro maintains the highest standards of corporate governance and transparency. We respectfully disagree with the findings of the report that UIDAI extended undue favor to Wipro. We draw attention to the response provided by UIDAI in the CAG report that the acceptance of goods was given by the competent authority in UIDAI after the commissioning of the equipment. The annual maintenance contract was signed post the expiry of the warranty period.”

However the reply from UIDAI did not satisfy CAG’s findings:

“The reply of the department (UIDAI) that it had adequate assurance to satisfy itself about performance of equipment is inconsistent with its decision to engage STQC (third party tester) for carrying out AT (compliance testing). The final report of STQC (third party tester) about satisfactory performance of equipment was received in February 2013 and hence this should have been effective date for acceptance of goods. Clearly in the instant case, the action of the UIDAI was inconsistent with the provisions of the contract and led to avoidable payment of 4.92 crore towards AMC (maintenance contract).”

Image Credits: Wiki user RobH under CC BY-SA 3.0

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