Highway project bidding to be simplified: Nath

To meet his ambitious target of awarding 12,000 kilometres of new road projects by June 2010, road, transport & highway minister Kamal Nath on Wednesday said the conflict of interest clause in the bid documents for highway projects will be further simplified by clarifying the term ‘associate’. The ministry has also managed to get the Cabinet’s nod to change the terms of the request for proposal and request for qualifications for road projects on its own, going forward.
“We have spoken to the law ministry and are in the process of correcting the term ‘associate’. New bids will be invited with a refined conflict of interest clause,” he said at the Economic Editors’ Conference. The changes will come into effect within the next two weeks, he promised.
The conflict of interest clause in the request for qualification (RFQ) and the request for proposal (RFP) documents lists out certain conditions on grounds of which a company can be disqualified from the bidding process. Officials said the new norms would define the term associate and situations where it would be applicable.
At present, the RFQ and the RFP simply define an associate as, “Associate means, in relation to the Applicant or Consortium Member, a person who controls, is controlled by, or is under the common control with such Applicant or Consortium Member (the ‘Associate’). As used in this definition, the expression ‘control’ means, with respect to a person which is a company or corporation, the ownership, directly or indirectly, of more than 50% of the voting shares of such person, and with respect to a person which is not a company or corporation, the power to direct the management and policies of such person by operation of law.”
Based on the recommendations of the BK Chaturvedi committee, the Cabinet Committee on Infrastructure has already addressed the contentious issue of crossholding. Earlier crossholding of more than 0.5% was deemed to lead to conflict of interest. This has now been hiked to 25%.
“The Cabinet has already cleared this. We will be notifying it immediately,” Nath said.
Significantly, from now on the ministry of road transport and highways will not have to go to the Cabinet for changing norms in the RFP and RFQ. “The Cabinet has said all the clauses on RFQ and RFP and price bids will be settled by the NHAI Board. It doesn’t have to go to the Cabinet now,” Nath said.
SUDEEP SINGH
PGDM IIISEM
SEC-B