The ‘favoured’ one cries foul

Anil Ambani's consortium was technically disqualified after its bid was re-evaluated by an experts group headed by Delhi Metro Rail Corporation chief E Sreedharan. In its report, the expert group said the initial evaluation, in which only Reliance-ASA and GMR-Fraport had been technically qualified, had indeed favoured the Ambani consortium. While Sreedharan's report validated the charges by several MPs and the Planning Commission about a conflict of interest between the evaluator, ABN-Amro, and the Ambani consortium, Reliance-ASA, the latter was still allowed to remain in the race. After its bid was rejected, Reliance-ASA consortium accused the aviation ministry and the empowered group of ministers of last-minute changes in tender conditions to favour some bidders. It has now moved the Delhi High Court. Meanwhile, even as the AAI Employees' Union has begun agitating, the civil aviation
minister said the empowered group’s decision was irreversible. says Shahid Faridi

It was Realpolitik newsmagazine that first broke the news that Anil Ambani's company was being favoured in the government's mega plan for the modernisation and restructuring of the Delhi and Mumbai airports. Realpolitik's expose triggered a calling attention motion in the Lok Sabha. Members of all four Left parties, the Samajwadi Party and the principal opposition party, the Bharatiya Janata Party (BJP), supported the motion.

While speaking on the motion, Communist Party of India (Marxist) Member of Parliament Mohammad Salim raised the question of ‘conflict of interest’ by producing in the House an advertisement given by ABN-Amro to one of India's leading business magazines: the ad said that ABN-Amro's client of primacy was Reliance Industries Limited, while the fifth in its client hierarchy was GMR. Both the companies, Salim said, were in the bidding process.

He also pointed out that the legal advisor in the airport restructuring and modernisation process was a firm called Amarchand Mangaldas, which had also been closely associated with the Reliance group. Salim then questioned the possibility-rather, the impossibility-of their remaining neutral in the selection process. Meanwhile, the Planning Commission, too, had raised the conflict of interest issue.

With the mercury rising about the selection of evaluators and advisors, the EGoM decided to set up a group of experts headed by the redoubtable Delhi Metro Rail Corporation chief, E Sreedharan, to take a fresh look at the evaluation of the technical bids. After doing his brief, the committee, comprising Sreedharan and two other experts, found "room to suspect that some of the bidders [read: the consortium headed by Anil Ambani's company] have been favoured". The report (see full text in the lower half) said, "We are of the opinion that qualifying bidder 'E' [the consortium headed by Anil Ambani's company] technically is not correct".

The committee said that the Request For Proposal (RFP), or tender document, had made it clear that earnings from non-aeronautical operations should not be less than 40 per cent. It said: "Though non-aeronautical earnings of bidder 'E' (Reliance-ASA) is only 37%, but they have been given 75% marks. This is considered to be in non-conformity to RFP. The explanation of EC [evaluation committee] that wording of the [relevant] clause [in the RFP] did not make the 40% mandatory is not convincing. In any case, since the non-aeronautical earnings of 'E' was less than the threshold limit of 40%, assigning a high score of 75% was not justified. This should have been of the order of 40% to 50%."

The Sreedharan Committee said, "We feel the marking of bidder 'E' has been on a liberal side" even though "bidder 'B' [GMR-Fraport] has better credentials for airport development and such vast difference in marks scored by bidder 'E' over bidder 'B' cannot be easily explained. We feel if a rational approach had been adopted, bidder 'E', who now gets qualified by 0.3 marks for Mumbai and by 1.1 marks for Delhi, would have been disqualified."

The report went on: "We have come to the conclusion that there have been certain flaws in the technical evaluation process." It then highlighted the flaws as it saw them: "…There are clear indications that a liberal attitude has been shown to bidder 'E' which has enabled them to get marks just above 80% marks [only those bidders who scored more than 80% were to be technically qualified] and thus get qualified. If a more logical and rational approach had been followed, our assessment is, they would score only 75.0 for Mumbai and 74.6 for Delhi under criterion - 4.1.1. Under criterion - 4.1.2 also, we feel they would score less than 80%. Thus they are clearly ineligible for pre-qualification.

"In our view, rectifying the flaws in assigning marks would neither have changed the status of 'B' materially nor would have disqualified them. At the same time none of the other bidders would have come up to the level of scoring more than 80%. Therefore, a fresh exercise to assign marks to bidders 'A', 'B', 'C' 'D' & F' is not considered necessary." Suggesting a way forward to the EGoM, the Sreedharan Committee said: "There is no need to take up the technical evaluation afresh nor to scrap the whole tender process and invite fresh bids. Tenderer 'B' should be declared as the
only bidder technically qualified and their financial bids should be opened for both [the] IGI Airport, Delhi, and Mumbai Airport. Based on the best advantage to the country, one of the two airports can then be considered for assigning to them. For the other airport, again following the process of re-bidding to select another consortium would involve considerable delays. As the re-structuring and modernisation of the second airport cannot brook any further delay, we would recommend that the airport which is not assigned to bidder 'B' should be taken up for modernisation and improvement through an agency of a Special Purpose Vehicle specially set up for this purpose on the lines of Delhi Metro Rail Corporation."

The earlier evaluators had technically qualified only two bidders-GMR-Fraport and Reliance-ASA. But after re-evaluaton, the Sreedharan Committee disqualified Reliance, leaving only GMR-Fraport in the fray. Reliance made desperate attempts to remain in the race, but the EGoM was left with no choice but to give one of the two airports to GMR-Fraport, which was the only party that technically qualified for financial bidding. Since the EGoM and the government decided to conclude the process, instead of going in for re-bidding which would have taken gobs of time, four top consortia, in terms of their technical ranking, were picked up for Delhi and Mumbai to participate in the financial bidding.

When the financial bids were opened, Reliance-ASA's offer to share 45.99 per cent of revenue with the airport Authority of India was found to be the best for Delhi airport. This was followed by GMR-Fraport's offer of 43.64 per cent. For Mumbai, GVK-South African Airport made an aggressive bid of 38.70 per cent, followed, again, by GMR-Fraport, which offered 33.03 per cent.
Since GMR-Fraport was ranked technically far superior to all others, it was asked to match the best bid made by Reliance-ASA. It did, and bagged the Delhi airport contract. GVK-South African Airport won the Mumbai contract.

The math is simple and incontrovertible. What is not is what went on behind the scenes-but with the curtains finally up, it's easy to see the ferocious financial shenanigans that had been counted upon by every consortium to grab the goods.