CVC to probe BSNL tender

State-owned BSNLs Rs 36,000-crore tender for 93-million GSM lines has come under the Central Vigilance Commissions scanner. In a rude jolt to the company,CVC has directed the central vigilance officer in BSNL to seize all documents related to the tenders immediately as the CVC has decided to investigate the charges of irregularities. In a letter dated December 29,a copy of which is with FE,CVC wrote to the company to take necessary action immediately and report to it. BSNL CMD Kuldeep Goyal confirmed the development to FE and said the company is furnishing the documents to the CVC.

State-owned BSNLs Rs 36,000-crore tender for 93-million GSM lines has come under the Central Vigilance Commissions scanner. In a rude jolt to the company,CVC has directed the central vigilance officer in BSNL to seize all documents related to the tenders immediately as the CVC has decided to investigate the charges of irregularities.

In a letter dated December 29,a copy of which is with FE,CVC wrote to the company to take necessary action immediately and report to it.

BSNL CMD Kuldeep Goyal confirmed the development to FE and said the company is furnishing the documents to the CVC. The development comes four days after FE reported that the government nominee on the BSNL board,J S Deepak,whos a joint secretary in the department of telecommunications,had submitted a dissent note,stating that the 93-million-line capacity be reduced by half and post-tender negotiations with the lowest bidder Ericsson not be held as it violates CVC guidelines.

This is the second major setback for communications amp; IT minister A Raja,under whose ministry BSNL falls. In October,following CVC directions,the CBI raided DoT offices for alleged irregularities in the allocation of spectrum and licences to eight firms in January 2008.

Recognising that post-tender price negotiations can be a potential source of corruption,CVC guidelines have forbidden such bargains but in exceptional cases. For instance,post-tender negotiations are allowed only when the supplier has a proprietary itemsince no one else can supply itor when cartel formation is suspected. But in Ericssons case,it was the sole L1 bidder for the north and east zones,though it later substantially reduced its price for BSNL. However,BSNL did not set any benchmark and left the field open to Ericsson. In his report,Deepak had noted that the CVC conditions of exemption did not apply in Ericssons case.

Deepak had suggested that the falling market share and revenue of BSNL did not warrant a tender of such magnitude,so,the company should go in for a short re-tender of a lower amount. To meet any contingency,the company could approach the earlier vendors.

The CVC guidelines also specify that if the rates quoted are unreasonable,but the requirements are urgent and a re-tender would delay the availability and jeopardise operations,the company may enter into negotiations with the bidder for supplying a bare minimum quantity.

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Surprisingly,BSNL,despite being aware that the Rs 1,000-crore gap between the price desired by it and the price offered by Ericsson attracted the CVC provisions,went ahead with the negotiations.

The DoT had written to BSNL highlighting these on October 23,and suggested that given the CVC guidelines,the company must procure only a bare minimum lot and not the entire 93 million lines. Also,BSNLs post-tender negotiations with Ericsson have lasted months,while the guidelines provide a 15-day time span.

The tender had earlier run into problems after three vendorsNokia Siemens,ZTE and Alcatel Lucent0were disqualified on technical reasons. This left only Ericsson and Chinese firm Huawei in the race. Nokia Siemens protested its disqualification and took the matter to court,Competition Commission of India and the CVC,but didnt get any relief.