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Indian company claims it secured railway tender, but SLR is yet to call for bids
An Indian State-owned manufacturing company has announced on its website that it has secured an order from Sri Lanka to supply 160 railway coaches even before the bid has been called by the Railway Department. Integral Coach Factory in Chennai says on its website that “ICF has bagged an export order for supply of 78 DEMUs [diesel electric multiple units] and 160 coaches”. But expressions of interest (EOI) for the coach tender only closed last month. And the Department of Railways in Sri Lanka has not even called for the bid, let alone evaluated any offers.
EOIs were called by the Ministry of Transport for the second time in one year for the purchase of 160 passenger coaches for Sri Lanka Railways under an Indian line of credit. The deadline closed on September 1 in New Delhi, as one condition of the loan is that only manufacturers and suppliers certified by the Indian Government may apply. Two companies submitted expressions of interest for pre-qualification to the Exim Bank of India. One is the private sector Titagarh Wagons Ltd while the other is a Government of India enterprise called M/s Rites Ltd of Gurgaon. M/s Rites is the legal sales arm of ICF.
This week, Titagarh Wagons was notified by the Exim Bank – which is tasked with recommending to Sri Lanka the parties eligible to take part in the tender – that it has not pre-qualified for bidding under a clause in the ‘specific experience criteria’. This leaves only Rites in the running. However, due process is that after the Exim Bank recommends eligible parties to the Transport Ministry through the Indian High Commission (IHC) in Sri Lanka the Ministry instructs the Railways Department to send the tender document to the shortlisted companies. This will have a closing date and the bid must be submitted to the Transport Ministry through the IHC. Evaluation by the Railways Department takes place only thereafter.
It was not immediately clear how ICF had received information that Rites had won the contract without even making a price offer. An expression of interest only gives information about a company’s past experience and financial capability. The first round of bidding for railway coaches under the Indian line of credit ended in controversy. It was cancelled earlier this year after Sri Lanka’s Procurement Appeals Board (PAB) – which hears complaints from unsuccessful applicants – found both bidders to be non-compliant with major tender conditions.
That contract had also been awarded to Rites Ltd, despite it soliciting exceedingly more than the price offered by the private sector’s M/s Texmaco Rail & Engineering Ltd of India. “As a percentage, price quoted by the bidder was higher by 118% than that of the lowest bidder,” the PAB said. It was also revealed that the Indian Exim Bank last year wrote to the Director General of External Resources in Sri Lanka’s Ministry of Finance stating that the Government must buy coaches from M/s Rites as it was the Indian Government’s official agent for such sales. But the declared policy of the Sri Lanka Government is to call for tenders.
Exim Bank rules published online also facilitate the soliciting of bids, provided they are from authorised Indian companies. “The lending Bank will invite Expression of Interest from Indian companies/entities and undertake a pre-qualification exercise for each project at its cost,” the operational guidelines state. “The list of pre-qualified companies/entities will be provided to the borrowing Government. Thereafter, the project will be put to bid under a competitive bidding process by the borrowing Government/agency.”
“Complete transparency and fairness in the award of contracts by borrowing Government to Indian companies under LoC [Lines of Credit] is extremely critical,” the document says. “Borrowing Governments and their nominated agencies are expected to conduct transparent and fair bidding process which should be clearly defined…”