Driving at 110 kmph on the Jaipur-Ajmer highway is hardly the place to carp about the decisions of the almighty babus managing our national highways strategy. But apart from the smooth ride on some select highways, whim and nepotism is fast becoming the rule of the game.

So much so that the babus seem callous about the obsession of their boss, minister of road transport and highways Kamal Nath, to present a serious and transparent image of the government.

Just a few examples would suffice. Nath’s aides have issued addendum No.2 dated February 11, 2010 and addendum No.6 dated April 22, 2010, and addendum No.4 dated February 15, 2010, in the six-laning of the prestigious Delhi-Agra Section of NH-2 from 20.500 km to 200.00 on DBFOT (toll) basis under NHDP V. Here they have inserted a Clause 2.1.18 in the Request for Proposal. Now, why should a column such as this bother about an addendum! Because these addendums can ensure highways like Jaipur-Ajmer don’t come up in the future.

This is what one of the addendums actually states: “A bidder shall not be eligible for bidding hereunder if, as on bid due date, the bidder, its member or associate was either by itself or as member of a consortium, has been declared by the National Highways Authority of India as the selected bidder for undertaking three or more projects and the bidder is yet to achieve financial closure. A bidder shall be considered as declared selected bidder for the projects of NHAI, where the letter of awards has been issued.”

In another addendum, which further modifies Clause 2.1.18, it is stated that a bidder shall not be eligible for bidding, if:

“(i) For projects with TPC (total project cost) less than Rs 3,000 crore, as on bid due date, the bidder, its member or any associate, either by itself or as member of a consortium has been declared by the NHAI as a selected bidder for undertaking three such projects and the bidder is yet to achieve financial closure;

(ii) For projects with TPC in excess or equal to Rs 3,000 crore, a bidder shall not be eligible for bidding if, as on bid due date the bidder, its member or any associate, either by itself or as member of consortium has been declared by the NHAI as a selected bidder for undertaking two such projects and the bidder is yet to achieve financial closure.

Subject, however, with the provision that total number of projects under (i) & (ii) above for which the bidder is yet to achieve financial closure shall not exceed three.

A bidder shall be considered as a Selected Bidder for the projects of NHAI, where the LOA (licence of award) has been issued.”

These seemingly innocuous requirements have been justified as necessary to prevent bidders from overstretching themselves. But they have ended up creating an insurmountable roadblock for all serious players. Many of them have been boxed in three small projects and thereby excluded from bidding for the mega projects now up for grabs. So, instead of the biggies, unknown midgets and unmentionable cronies are having a field day. In one case, Nath’s aides refused to open a bid on the ground that the bidder had already been awarded her third project, a status the bidder vehemently denies!

In another case, a friendly company which already had two financial closures pending, was awarded three LOAs on a single day. This “coincidence” allowed the company to surge ahead of its rivals (and have five financial closures pending) without Clause 2.1.18 being flouted! The same company got itself disqualified in another bid, where it had accidentally over bid, this time benefiting from a technical interpretation of 2.1.18.

Unjustified restrictions midway of a tender process are a bad idea. Also, issuance of addendums is against international best practices. Furthermore, the fundamental right of bidders under Article 19 (1) (g) of the constitution of India guarantees them the freedom to carry on trade and business. These are being violated, as the implementation of addendums means that the serious bidders are barred from future tenders. The concept  of level playing field does not permit Nath’s aides to vary material conditions of a tender, taking away the very fairness and transparency of state action. Fairness in state action is the soul of good governance. Every action of the state where it infringes the constitutional mandate or is opposed to basic rule of law suffers from the infirmity of patent arbitrariness. So, much against their wishes, contractors might have to seek judicial intervention.

Ironically, Nath’s aides are ending up barring bidders with the resources and the expertise to take on more than three projects. The essence of a tender process is to get the best company in the market to execute projects of national importance. If the biggies are no longer in competition, the midgets and the cronies will have no incentive to lower their prices. Quality of execution will be the natural casualty.

It isn’t hard to guess that if a competent bidder is barred on grounds of discretion, it would invariably lead to compromising on standards of quality.
Some would argue that the government has the right to discretion. Well, discretion means sound discretion guided by law, governed by rule not by humour; it must not be arbitrary, vague and fanciful, but legal and regular. If the intention of Nath’s aides was to restrict the number of projects awarded to a selected bidder to three, the same could have been achieved for future projects. Legal certainty is an important element of law. Had the bidders known rules would be changed,  they would have picked  projects more selectively.

If a competent bidder has the resources, finances and the technical capability to execute more than three projects and is held to be the highest bidder in a competitive bidding, who should grudge her the victory?