Large public contracts in India are often plagued by claims of favouritism, rigged specifications to suit a particular bidder, rigged evaluations, bid cancellations, vicious publicity campaigns by the protagonists and innumerable rebids. It is not uncommon for high profile complaints by a bidder after losing a bid to lead to a reversal of an award decision. The more high profile the complaint is and the closer in time a complaint is to an election, the more likely it is that a reversal of a decision can be achieved. The sales process in India does not end when a contract is awarded and any self-respecting sales manager does not stop until he has tried all available avenues to reverse an award decision which has gone against his bid. The primary avenues available are through approaches to politicians and the bureaucrats involved in the evaluation and award (and these approaches are not always without the appropriate lubricating flows of money). For politicians, the bureaucrats are both the potential scapegoats and the potential justification for reversals of decisions. For good and bad, the Indian Civil Service is modeled on the British Civil Service and the interactions between politicians and bureaucrats in India today have their roots in the methods of the British Raj. Bidding flaws and reversals of contract awards are usually a good indicator for the presence of corruption.
Phases of approval reversals
This story in the UK where high profile complaints from Richard Branson and Virgin Rail has led to the reversal of a decision to award a contract to a competitor could be a story lifted directly from an Indian newspaper. I note that in this case the politicians who have reversed their decision are using bureaucrats as their scapegoat. Who else? And when they make a new award they will surely justify their new decision on the pronouncements of other, more senior bureaucrats. It would seem that the methods of UK politicians and bureaucrats even today are not so different from those of their Indian counterparts. In India though, the opportunities afforded to bureaucrats and politicians by the bidding process have been raised to a much higher level.
Government cancels West Coast Mainline contract due to ‘flaws’ in bidding process
FirstGroup’s contract to run the West Coast Mainline has been cancelled by the Government due to “significant technical flaws” in the bidding process, which will be re-run. Transport Secretary Patrick McLoughlin said that the flaws “stem from the way the level of risk in the bids was evaluated”.
“Mistakes were made in the way in which inflation and passenger numbers were taken into account, and how much money bidders were then asked to guarantee as a result.”
Virgin Trains, which lost out to First Group’s £5.5bn bid, initially voiced fears that the amount its rival paid will have made the contract unprofitable. ………
…. Mr McLoughlin added that members of staff at the Department for Transport (DfT) will be suspended over the flaws. DfT permanent secretary Philip Rutnam called the errors “deeply concerning”. The Transport Secretary said: “I have had to cancel the competition for the running of the West Coast franchise because of deeply regrettable and completely unacceptable mistakes made by my department in the way it managed the process,”
“A detailed examination by my officials into what happened has revealed these flaws and means it is no longer possible to award a new franchise on the basis of the competition that was held. ……..
….. In a blog entitled “Virgin Trains back on track”, Sir Richard Branson wrote that he “appreciates the DfT publicly acknowledging these errors”.
“I am pleased to say that the DfT has looked at all of the facts and found significant flaws in the way it’s officials handled the process. They have basically acknowledged that what we had been saying is correct. The same procedures were not followed and “deeply regrettable and completely unacceptable mistakes” were made by the Department.
“We also appreciate the DfT publicly acknowledging these errors, and are hopeful they will now accept that Virgin Trains should carry on running the West Coast Main Line and ensure that passengers continue receiving our team’s award-winning service.”
Tags: bidding process, Civil service, contract reversal, FirstGroup, India, Richard Branson, UK, Virgin Trains, West Coast Main Line
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