CAG Report No. 11 of 2025 — Implementation of Smart City Mission, Government of Karnataka

Chapter-IV
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not carried out which rendered the project ineffective and unsafe during
flooding.
Recommendation 8: The SPVs should ensure that the works taken up under
the Mission conformed to the relevant standards and that the recommendations
of the technical experts are duly considered during their implementation.
C MONITORING
4.13 In-adequate representation of Urban Local Bodies in the Board of
Directors of SPVs
Paragraph 14.1 of Article of Association (AoA) of SPVs of Smart City
stipulated that the Board of Directors would comprise minimum seven and
maximum 15 Directors. As per the AoA, out of 15 members, one Director was
to be nominated by MoHUA, eight Directors by GoK and six Directors by ULB
including Commissioner of the ULB.
Audit observed that there is inadequate representation of ULB members (less
than six) in the Board of Directors of SPVs of Smart Cities. The inadequate
representation of ULBs in the Board of Directors carried the risk of insufficient
articulation of the city specific needs and aspirations in smart city planning apart
from inadequate support and oversight in their implementation and continued
maintenance of the infrastructure created.
The State Government accepted (April 2025) the audit comment and replied
that the reason for lack of representation was due to non-receipt of nominations
from the ULBs.
4.14 Non-appointment of Quality Supervision Consultant
Mission Guidelines prescribed that SPV should monitor and review quality
control matters and acted upon issues arising thereon. GoK also issued
(February 2005) instructions that third party inspection should be mandatory in
respect of all works contracts of estimated value more than ₹2.00 crore and all
goods and equipment contracts of estimated value of ₹25.00 lakh.
Audit observed that none of the SPVs had appointed Third Party Quality
Supervision Consultant as per the instructions/guidelines. SPVs were
completely dependent on the quality test reports submitted by the contractors
and there was no independent evaluation of the quality of the works executed
under the Mission.
The State Government replied (April 2025) that since PMCs were assigned with
the responsibility of third-party inspections, there was no necessity to appoint
separate third-party Quality Supervision Consultant. Reply cannot be accepted
as the scope of the PMC did not include periodic inspection of all the works,