The Delhi Metro Rail Corporation (DMRC) has come under fire from the government for giving a Rs 4,000-crore contract for supply of coaches to South Korean major Hyundai Rotem without doing due diligence required for such a high-value tender. This, after it came to light that the company had allegedly concealed that it had been debarred/blacklisted by another government agency — a clear violation of the conditions of the tender.
The fate of the contract is now at stake as Union Urban Development Minister M Venkaiah Naidu — after ascertaining facts from “unofficial channels” — last week asked the Secretary, who is also the Chairman of Delhi Metro, to take a legal opinion from the Attorney General of India on whether the contract should be cancelled.
At an internal meeting, Naidu was of the view that the contract be cancelled immediately, but sources said that Secretary Shankar Aggarwal explained to him that cancelling the tender would delay the project by at least two years, which would reflect poorly on the government.
In April 2013, the DMRC awarded a contract of 486 coaches for the Phase-III of Delhi Metro to Hyundai Rotem. Production is currently going on and the first lot is to be delivered in 2015.
According to sources, DMRC Managing Director Mangu Singh communicated to the ministry in late November that he came to know of Hyundai Rotem allegedly concealing facts only on October 30 this year.
Rules of the tender as well as conditions laid down by the funding agency, Japan International Cooperation Agency (JICA), states that if at any stage it comes to light that a company had secured the contract by furnishing fraudulent information, the contract would be cancelled. However, in this case, the DMRC has held the view that cancelling the contract now would mean that large civil infrastructure for Phase-III would lie unutilised for want of trains. Following the board meeting, where the matter was discussed “out of agenda”, DMRC had decided to seek legal opinion from Additional Solicitor General Maninder Singh.
“The UD Minister came to know of it from unofficial channels. He took a grim view of it and advised Secretary, UD, to take legal opinion from the AG before the Board meeting is held to discuss the matter further,” said a statement from the minister’s office issued to The Indian Express.
In Delhi Metro’s Initial Filter Evaluation Criteria number six, the bidders were asked: “Has the applicant been debarred by JICA/Government of India/any state government in India/Central or state government undertaking as on the due date of submission of bid? (Bidder to furnish a specific undertaking to this effect).” Hyundai Rotem answered with “No”. Answering with a “Yes” would have made it ineligible to bid.
As per documents available with The Indian Express, the Airports Authority of India had blacklisted/debarred Hyundai Rotem in 2011 for a period of three years ending December 14, 2014 in a tender for aerobridges for airports in Kolkata, Chennai, Ahmedabad, Goa, Pune and Srinagar. Sources said the blacklisting happened because the company, at that time, too, had furnished misleading facts.
“Tenders for future works in AAI shall not be issued to the firm, as individual firm or any other firm, in any name and style for a period of three years starting 14.12.2011,” says an RTI reply from Airports Authority of India.
In response to a query from The Indian Express, a DMRC spokesperson said on Monday: “This has recently come to our notice that Hyundai Rotem Company has concealed the fact that their company has been debarred by a Government agency in their tender submission to DMRC. We have asked the company to submit a clarification in this regard. Suitable action will be taken against them keeping in mind the interest of DMRC and public at large.”
Hyundai Rotem did not respond to queries despite repeated reminders. “As far as we know, the contract is not held up by anyone,” said an official of the company over phone.