On Saturday (July 10), a three-member committee constituted by the Lt Governor of Delhi directed the Delhi Transport Corporation (DTC) to scrap the Annual Maintenance Contract (AMC) awarded for low-floor buses due to ‘procedural lapses’. The committee was constituted by Lt. Governor Anil Baijal on June 16 to probe the alleged scam in the procurement and AMCs of the new fleet of buses.
The DTC had floated separate tenders for the purchase and AMC for the buses. Although the initial plan was to award a ₹4265 crore contract for AMC for 1250 buses, the number was reduced to 1000 buses. The maintenance contract of ₹3412 crores was kept for 1000 buses for a 12-year period. While the purchase order was given to JBM auto and Tata Motors on a 7:3 ratio, it was expected that a large number of companies will bid for maintenance contracts. However, the committee found that the tender conditions ensured that there were not many bidders for the AMC contract.
The committee noted, “While separate bids for purchase and AMC can be justified with a view to get greater competition and a larger number of bids, the efforts made to get more bids is not apparent.” In its report, the committee said that the tender for AMC was ‘too restrictive’ and the rates were ‘far higher’ than the previous contracts floated by the Delhi Transport Corporation. Due to the restrictive nature of the eligibility criteria for AMC, the objective behind splitting the tender failed. The report added, “The process of discounting for a longer duration contract was not undertaken and only a total cost evaluation was done.”
Committee found eligibility criteria for AMC as restrictive, and rates as high
The committee highlighted that DTC could only procure low-floor CNG buses due to the orders of the Judiciary. It added that there are a few manufacturers of such buses in the market. The committee emphasised, “If these deviations had become necessary, DTC should have ensured that they did some kind of reasonableness test of the rates for AMC, especially since the rates were far higher than what they had in earlier contracts. To say that they did not have the expertise is not a good enough response.”
The report concluded, “The committee, prima facie, did not come across any material to impute criminal misconduct attributable to any public official. There were only procedural lapses apparently arising out of a bonafide decision-making process. However, a greater effort for understanding the market and a greater degree of due diligence in assessing the reasonableness of bids was required compared to what seems to have been demonstrated.” The committee comprises IAS OP Agarwal, Principal Secretary (Vigilance) KR Meena, and Principal Secretary (Transport) Ashish Kundra.
AMC kicks in before 3-year warranty’s expiry
The DTC had proposed in a meeting on November 27 last year that the AMC would kick in, just before the expiry of the 3-year-warranty period. As per the minutes of the meeting, the warranty period will expire on completion of 3 years or 2.10 lac kms (whichever is the earliest). Accordingly, it was made clear that the AMC rates of the bidders covered only major/ sub-major assemblies and not the cost of consumables required for day-to-day maintenance. However, for the first 3 years, the company would be responsible for any replacement/repair of failed equipment free of charge.
It must be pointed out that the 3-member committee found no ‘major infirmity’ in the procurement part of the tendering process for 1000 buses. Following the purchase, the total fleet of DTC buses will reach up to 4,760 from 3760.