The high power committee of the Andhra Pradesh government that evaluated the tender bidding process for the Indira Sagar Polavaram Project has blamed the state-level standing committee (SLSC) for the ongoing litigation against the tender process. The committee has noted serious irregularities in the bidding process for the mega dam.
The state government had constituted the committee, headed by the state chief secretary, in 2004 for making recommendations for finalising tenders for major works related to water resources. The Polavaram project on the Godavari river envisages to irrigate 291,778 hectares in four districts—East Godavari, West Godavari, Krishna and Visakhapatnam—and produce 960 MW power.
The construction work of the project was divided into 23 packages and each package was given to different contractors from October 2004 to August 2006. The work mainly consisted four components: 2,454 metre long earth-cum-rock fill (ECRF) dam; 1,128 metre long spillway; 241 km left main canal; and 174 km right main canal. Out of the 23 contract packages, two headworks packages—spillway and ECRF—were closed midway in August 2009 due to slow progress and changes were made in the scope of work.
After postponing the tender bidding process for the spillway, the headworks (structure at the diversion point of a waterway), the dam and excavation for the hydro electric power house 17 times since 2009, the state government reopened the process in June last year. The bidding was for this Rs 4,717 crore contract.
In response to the tender call, seven bidders participated in the bidding. The technical evaluation committee short-listed four companies for the next stage—price bidding. These consortia were: SEW-Patel-AMR (joint venture or JV), CGGC-SOMA (JV), L&T- Rithwick-Ramky (JV), IL&FS-UES (JV). Prices quoted by these four bidders were Rs 4,122 crore, Rs 4,147 crore, Rs 4,240 crore and Rs 4,480.50 crore respectively.
SLSC, headed by the engineer-in-chief of the irrigation department, proposed to award the contract to the SEW-led joint venture. CGGC-SOMA petitioned the Andhra Pradesh High Court, alleging irregularities in evaluating technical and financial qualifications of SEW-led JV. The high court dismissed the petition in October last year, expressing confidence that the high power committee would take appropriate decision.
The high power committee, in February this year, rejected SLSC’s proposal to give the contract to SEW-led JV since it failed to meet the stipulated qualifications. It also noted that some critical areas of the bid document for the Polavaram works were inadequately defined and lacked clarity. It then recommended revision of bid documents.
| Omissions and commissions
- The state-level standing committee (SLSC), headed by engineer-in-chief of the irrigation department, made significant amendments in the revised bid document on June 5
- These included relaxation in the eligibility criteria, reduction in the stipulated annual turnover for each member of the joint ventures taking part in the bidding process, from Rs 450 crore to Rs 200 crore, and increasing the period for minimum turnover from five years to ten years
- These changes, which significantly diluted the eligibility profile of the prospective bidders, were made without the approval of the government
- Some important financial requirements were classified as non-mandatory by SLSC
- The engineer-in-chief treated the applications of the bidders “differentially”
- SLSC allowed some to file documents after the last date of the bid; it did not give a chance to others to do so
- Some of the bidders were disqualified on the grounds which were classified even by SLSC as non-mandatory
- SLSC and the engineer-in-chief acted beyond their mandate by seeking clarifications on companies putting in higher bids. Only the government has powers to do so
The revised bid documents were approved by the state government on April 6 this year. Fresh tenders were called. The last date was fixed for June 6. This was later extended on request from bidders. Six bidders finally submitted their bids, including joint ventures led by SEW and SOMA and Transstroy India Limited. SLSC qualified these two joint ventures and disqualified the other four . This time SEW-led companies quoted Rs 4,653.99 crore and SOMA-led JV quoted Rs 4,599.99 crore.
The engineer-in-chief of the project sought clarifications from the bidders for quoting higher amounts the second time round, and SLSC was convinced by the reasons given by the firms. The reasons included foreign exchange fluctuations and construction cost escalation. SLSC declared SOMA-led companies, the lowest bidder, as the winner of the contract. The others moved court. The high court, in August, once again asked the high power committee to take appropriate decision.
SLSC diluted eligibility criteria
The high power committee held nine meetings for examining the bidding process and has noted that the SLSC has made significant amendments in the revised document on June 5, including relaxation in the eligibility criterion, reduction in the stipulated annual turnover for each member of the joint ventures taking part in the bidding process, from Rs 450 crore to Rs 200 crore, increasing the period for minimum turnover from five years to ten years.
“These changes, which significantly diluted the eligibility profile of the prospective bidders, were made without the approval of the government,” notes the minutes of the committee. Besides, the engineer-in-chief treated the applications of the bidders “ differentially”. While the engineer-in-chief held the application of CGGC in limbo, he rejected the applications of two other companies on the same day. According to the committee, this disparity has diluted the credibility of the engineer-in-chief and SLSC.
When it came to seeking clarifications from the bidders, the high power committee notes that the SLSC did not give equal opportunity to all those who participated in the bidding. While SLSC allowed some to file documents after the last date of the bid, it did not give a chance to others to do so. Documents filed by some bidders were rejected outright on the grounds that they had been submitted after the last date for the bid. Some of the bidders were disqualified on the grounds which were classified even by SLSC as non-mandatory. And as for higher prices quoted by the bidders, the high power committee notes that SLSC and the engineer-in-chief do not have the powers to seek clarifications from bidders. “Only the government has powers to initiate and both the engineer-in-chief and SLSC have acted outside their mandates, notes the committee. Further, some important financial requirements have been classified as non-mandatory by SLSC.
The high power committee has recommended disciplinary action against the engineer-in-chief (administration) and engineer-in-chief of Polavaram project, and also members of the SLSC. It has also recommended that SLSC be reconstituted, with at least two independent and qualified members outside the government, preferably from outside the state. It should be made mandatory that at least one of these outside-the- government members must particiapate in all the meetings and deliberations of the SLSC, concludes the high power committee.
After rejecting the proposals made by SLSC, the high power committee has recommended that Transstroy India Limited-led joint venture be awarded the contract. Transstroy is owned by Congress MP from Guntur, Rayapati Samba Siva Rao. The price bid quoted by Transstroy is Rs 4054 crore. The chief minister has approved this recommendation.