Meeting the ITS challenge in Delhi

Reasons companies stayed away from bids

The companies that stayed away from the bids cite very ‘strict and unreasonable’ conditions as the reasons for their lack of interest. The conditions they cited were:

Condition of Joint Venture: The applicant companies for the ITS contract had to have a Joint Venture (JV) with an Indian company with the latter holding more than 50% of the ownership, and the JV had to last ten years. A senior officer of a company that bowed out of the process after participating in the pre bid said, “Joint ventures are formed for large projects with several projects lined up in a series that guarantee a continuous revenue stream. This ITS project gives no scope for such revenue stream. Moreover, the Joint Venture constellation is very complex. The condition required us to have a JV with an Indian company having more than 50% ownership in the JV. And, the JV was to last for ten years. This did not suit us at all.” He commented, “The Delhi Traffic Police does not have much experience of implementing large projects. They have traditionally been dealing with small companies and even if they have been buying good equipment, it is more on procurement basis, and not on project basis. Hence, they have put in stringent and impractical conditions which have kept all the major players in the market away from the bids.”

Condition of taking clearances: The biggest issue that has kept the big companies away is that the companies have to take all the permissions like digging roads, laying pipelines, providing electricity, etc. from the civic authorities themselves. And still, complete the project in the stipulated 24 months assigned for it. A top management official of another company that had participated in the ‘pre-bid’ but stayed away later said, “We had requested the traffic police to get us the permissions as it is easy for a government officer to get the clearance for a government project from another government agency. But the police said it will not do so. Getting permissions in India is a Herculean task. And the clauses made it clear that if the delay in getting permissions delayed the project beyond 24 months, it would be at the cost of the companies themselves. It was impossible for any reasonable company to then go ahead and bid. Moreover, the foreign companies feared that if the Traffic Police could not get the permissions, they would not be able to get them at all.” A senior management representative of another ‘pre-bid’ company said, “When the government officers could get the clearances without wasting time and without any ‘under the table dealing’, why were we asked to get the clearances for which we have to approach the contractors to act as middlemen? It is very clear what happens when contractors enter the picture.”

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In the initial stages, Delhi Police had invited ITS tenders based on SCOOT (Split Cycle Offset Optimisation Technique) technology but since Siemens and PEAK are the only companies that use this technology, others objected. Hence, after the initial tender was scrapped, Delhi Police included SCATS (Sydney Coordinated Adaptive Traffic System) technology too in the tender. This enables all the companies to apply as these are the only two technologies available for ITS.

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Another company officer in-charge of the project added, “When 21 companies participated in the pre bid and paid Rs.25,000 as the entry fee, it cannot be said that they were not serious. At least 15 expats were present in that meeting. People flew in from all over the world. Telvent, Peak, BEL, CMS, HCL, Siemens, Keltron are all large companies and they would not participate if they weren’t serious. But this condition of getting clearances in the stipulated time was very difficult to manage. We were ready to pay the police for getting clearances but if we had to get them, it would only add to the cost as the cost would get added in the overheads but the police refused to see our point. All this posed a heavy risk on the companies which felt that there was no scope for mitigation for them at all.” Delhi Police reports to the Ministry of Home Affairs, and not to the Delhi government. “Had the police made the payment, the time consumed would have reduced drastically. It could have issued a circular to this effect which would do away with the scope for fraud too.”

One company officer said, “If we want to dig a place, we will never know what would be underneath. Hence, we requested that a GIS (Geographic Information System) diagram too must be made available to the company that bags the contract.”