Railways’ Trainset Project Hits Red Flag Over Tender Criteria

Mandating that bidders have "prior experience in supply to G8 countries" would almost certainly favour "a restricted number of global players", the department has said.

This is the second time the procurement process for train sets has gone awry. Credit: PTI

This is the second time the procurement process for train sets has gone awry. Credit: PTI

New Delhi: The department of industrial policy and promotion (DIPP) has raised red flags over the tender process of the Indian Railways’ Rs 2,700 crore trainset project –  which has resulted in a single bidder outcome –  and has sought clarification from the state-run transport on alleged deviations from the Modi government’s public procurement policy.

A trainset is a set of coaches coupled mechanically and electrically with driving cabins at both ends and distributed traction power across the train.The acceleration and deceleration is faster in a trainset as compared to other trains hauled by locomotives.

In a letter to Railway Board chairman Ashwani Lohani, DIPP Secretary Ramesh Abhishek has observed that the eligibility conditions set in the trainset tender “prima facie seem to be non-compliant to the public procurement (preference to make in India) order.”

Formulated by the finance ministry, the policy aims to ensure that the tender conditions are strictly in sync with the public procurement order and take into account taking into account the interest of Indian manufacturers.

Equipped with improved passenger comforts, automatic door system and 160 km per hour maximum speed, the trainsets with both seating and sleeper berths are expected to run on Rajdhani routes.

The global bidding for the Rs 2,700 crore project, which involves manufacturing 291 aluminium-bodied coaches at the integrated coach factory (ICF) near Chennai, drew only one consortium on the last day of the tender submission on February 6, 2018 due to certain pre-bidding conditions.

Among others, one of the pre-conditions was that potential manufacturers should have an existing make-in-India facility for bidding and five years experience of supplying to G-8 countries.

Though the pre-bid meetings had attracted around seven global players and the last date of the bid submission was extended from January 29 to February 6, the Stradler-Medha consortium emerged the only bidder after the final submission.

After the last date of submission, a leading Indian rolling stock manufacturer complained to the DIPP, drawing attention to the alleged violation of the public procurement order which resulted in the elimination of other players.

Taking note of the complaint, the DIPP pointed out “The stipulated requirement that the bidder should have an prior experience in supplying to G8 countries in the last five years would most certainly go against the domestic manufacturers and in favour of a restricted number of global players – there is no justification for taking supply to G8 countries as a condition.”

According to the tender’s conditions, the first train set of 20 coaches shall be manufactured complete in all respects at the successful bidder’s premises and shall be dispatched to the ICF.

From the second trainset onwards, the successful bidder “shall supply the components, electrics, furnishing material etc. sourced from themselves or their vendors to ICF and assembly of the trainset car body, bogie, painting and furnishing shall be carried out at ICF”.

There is an option to manufacture up to 10 trainsets at the successful bidder’s premises and ship these to the ICF. However, the last four trainsets and spare coaches should be assembled at the ICF.

Seeking a closer examination of the issue, the DIPP secretary has sought an action-taken report from the Railways.

“I would therefore request you to examine the grievance and take appropriate action for compliance of PPP-MII order. This department may please be informed of the comments/action taken in this regard,” the secretary’s letter to the CRB concluded.

Sources said the concerned officials are currently examining the issue and will respond to the DIPP’s query.

The Railways will now have to take a call on whether to go ahead with the only consortium or opt for retendering with revised conditions, said a senior railway official with knowledge of the matter. 

To be manufactured at the ICF, the project known as Train-20, envisages rolling out 15 light weight aluminium-bodied trainsets, a first for Indian Railways.   

Flawed bidding processes

The railway ministry’s attempts at procuring modern trainsets has had a unfruitful past. In June 2015, the-then railway minister Suresh Prabhu announced a global tender for “procurement-cum-maintenance and manufacture of 15 train sets with 315 coaches”.

However, by May 2016, none of the five short-listed bidders decided to submit quotes. According to media reports from the time, all the companies asked for an increase in “the quantum of work under the tender”.

This tender was in 2017 split into two different procurement processes (called the Train-18 and Train-20 projects).

Arun Kumar Das is a senior journalist and can be contacted at [email protected]

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