ECONOMIC AND POLITICAL WEEKLY Untangling the Airport Mess The tendering process for the modernisation of Mumbai and Delhi airports has gone into a virtual tailspin ever since the technical advisor disqualified four of the six bidders in the evaluation. Two bidders for two airports amounted, in effect, to a preselection of bid contracts and carried the possibility of rendering redundant the element of competition in financial bidding. Whether the criterion of 80 per cent marks for technical qualification was too stringent or whether one qualifying bidder, Reliance ASA, was marked too liberally on qualitative parameters are questions that can only be answered by access to information not available in the public domain. However, going by the downgrading of Reliance in the reassessment by the E Sreedharanled panel of experts, which disqualified the consortium, it appears that the earlier suspicion of the group being liberally graded on qualitative variables might have been well-founded. Besides this, allegations about the financial and legal consultants of the government having business links with some of the bidders also led to some high-voltage walkouts in Parliament. Though a high-level government review committee in November, which conducted an appraisal to check if the evaluation was done in a fair manner, declared the process above board, its report brought to light the fact that the consultants did not independently verify the information provided by the bidders, but relied on the representations made by them. In the events that have unfolded since, the Sreedharan panel has at least been decisive in its evaluation and voiced some clear, if somewhat unpopular, views, while both the empowered group of ministers (EGoM) authorised to select the bidders and the inter-ministerial group (IMG) meant to assist it, have remained divided or have simply passed the buck. The EGoM is now scheduled to meet on January 24 and has asked the Sreedharan panel to rate all the six bidders again, though the panel is in favour of a
January 21, 2006
WEEKLYECONOMIC AND POLITICAL
Untangling the Airport Mess
T
he tendering process for the modernisation of insistence by various government agencies that the Mumbai and Delhi airports has gone into a virtual present process, marred though it has become, should tailspin ever since the technical advisor dis-not be disrupted. When something as large as the qualified four of the six bidders in the evaluation. Two modernisation of two major airports is set to take off, bidders for two airports amounted, in effect, to a pre-it is not surprising that the government would want to selection of bid contracts and carried the possibility of salvage what would be an important showpiece of its rendering redundant the element of competition in finan-time in office. But when this translates into pushing cial bidding. Whether the criterion of 80 per cent marks through an unsatisfactory tendering process or interfor technical qualification was too stringent or whether fering with the independence of the bodies assigned one qualifying bidder, Reliance ASA, was marked too the task of arriving at a contract, the hazards are liberally on qualitative parameters are questions that can certainly in evidence. only be answered by access to information not available in It is pertinent to note in this regard the prime minister’s the public domain. However, going by the downgrading clear enunciation to the EGoM about not “derailing” of Reliance in the reassessment by the E Sreedharan-the current process. What line the Planning Commisled panel of experts, which disqualified the consortium, sion, whose dissent note about the grading of technical it appears that the earlier suspicion of the group being bids in the IMG first sparked off the controversy, will liberally graded on qualitative variables might have been now take, remains to be seen. The finance ministry is well-founded. Besides this, allegations about the finan-known to be averse to any suggestion other than percial and legal consultants of the government having sisting with the existing bids and the civil aviation and business links with some of the bidders also led to some law ministries (whose ministers are all in the EGoM) high-voltage walkouts in Parliament. Though a high-level have in the past concurred. The finance ministry had government review committee in November, which earlier suggested that the IMG endorse the evaluation conducted an appraisal to check if the evaluation was done committee’s original view on “balance of convenience”– in a fair manner, declared the process above board, its as other options such as re-bidding or scrapping the report brought to light the fact that the consultants did tender were ostensiblyinconvenient. Haste or convenience, not independently verify the information provided by the as the case may be, would certainly be the wrong reasons bidders, but relied on the representations made by them. for pressing ahead.
In the events that have unfolded since, the Sreedharan Meanwhile, each likely course of action comes with panel has at least been decisive in its evaluation and its own set of problems and the route adopted must voiced some clear, if somewhat unpopular, views, while depend on whether it best conforms to the objective of both the empowered group of ministers (EGoM) the entire exercise – that of building modern and efficient authorised to select the bidders and the inter-ministerial airports competitively, with the least risk. Ranking of group (IMG) meant to assist it, have remained divided all the bidders by the Sreedharan panel and selection or have simply passed the buck. The EGoM is now of, say, the top three for the financial tendering process, scheduled to meet on January 24 and has asked the regardless of their ability or otherwise to attain the 80 per Sreedharan panel to rate all the six bidders again, though cent score, would mean the effective relaxation of the the panel is in favour of a “quick re-bid” by all eight criterion. Apart from inviting legal tangles, the lack of a consortia that had initially submitted expressions of minimum threshold could well mean that the consortium interest. What complicates matters is the repeated with the lowest financial bid, but one which is substantially
less competent in a technical sense, might win the contract, rather than a more able group that might have bid marginally higher. The other option, as suggested by the Sreedharan panel, of inviting fresh bids without a new request for proposals would make little sense, for the infirmities of the process might very likely be repeated. Restarting the entire process on the basis of a new set of conditions does cast a shadow on the credibility of the government’s bidding process, though it seems at this point to be the best option.
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