Multi-crore Defence Project: Did BSNL, Army Officials Bend Tender to Favour HFCL?

Less than a month before the Narendra Modi government went lame duck, a controversial telecom company’s Rs 2,818-crore bid for the supply of hi-tech equipment that would go toward installing and commissioning of the Indian Army’s sensitive communication network was reportedly accepted by Bharat Sanchar Nigam Ltd (BSNL), the tendering agency, although it had previously been rejected for a similar project almost two years ago.

Investigations by Newsclick have revealed that Delhi-based Himachal Futuristic Company Ltd (HFCL) “won” the bid (to be L1) after several tender clauses were said to have been diluted or circumvented by BSNL. The technical specifications submitted by HFCL for its original equipment manufacturer (OEM), US-based Mavenir Systems Private Ltd, did not meet the eligibility criteria, as called for in relevant sections of the request for proposal (RFP), the basic requirement for the bidder to qualify.

This is not the first time HFCL has been found to have been favoured over other competent bidders. It was reported last year that BSNL tweaked several clauses in a tender for procurement of high-grade data transmission equipment for the “critical” Dense Wave Division Multiplexing (DWDM) project, worth Rs 935 crore. Media reports last year said that “In November 2017, the first purchase order (PO) was issued despite several ‘inconsistencies’ in the (DWDM) tender, including tweaking at least two vital clauses in the tender evaluation and contract awarding process…in ways that helped the HFCL become the lowest (L-1) bidder”. According to one report, when aligned with optical fibres, the DWDM forms “the critical backbone for the armed forces’ Network for Spectrum (NFS) project”.

BSNL sources claimed that a similar illegal process “brushing under the carpet approach” was adopted for the award of the NFS Microwave Radio tender and the beneficiary was HFCL.

The BSNL tender (No. CA/NFS/IP-MPLS/T-620/2018) of April 27, 2018, for the “procurement, supply, implementation, installation, commissioning, testing, optimisation, training, documentation and maintenance of converged nationwide IP-MPLS backbone and integrated IMS-based communication solution” for the Army is part of the wider Rs 24,000 crore NFS project for the country’s defence forces.

The IMS (Internet Protocol Multimedia System), according to industry sources, is the ultra-critical part—“the heartbeat”—for all next generation networks which support multimedia services (including voice, video and data) and that 4G and other future services would not work without it. What makes the IMS critical, especially when it will be part of the Indian Army’s communication network (during peacetime and in the event of war), is that it has components that seamlessly integrate the 4G with the cable-based networks, as also the erstwhile 2G-(CDMA) based networks of our defence forces.

Simply speaking, the IMS is a concept for an integrated network of telecom carriers that facilitate the use of IP (Internet Protocol) for packet communications in all known forms over wireless or landlines. Examples of such communications include traditional telephony, fax, e-mail, internet access, Web services, Voice over IP (VoIP), instant messaging (IM), video on demand (VoD) and video conferencing.

Sources close to the development said the commercial bids for this tender were hurriedly opened on February 15 so as to bury voices of protests against the procedural violations committed during the technical evaluation. It was found that HFCL only provided “OEM self-undertakings” and while having non compliances, it was allegedly unduly favoured by BSNL and Army authorities by technically qualifying their bid based on “certificates of compliance” accepted during the technical evaluation. This is a violation of the tendering process where, under no circumstance, changes to original bid compliances and eligibility conditions can be substituted after bidding.

Even as BSNL’s Committee for Evaluation of Tender (CET) reportedly tried to verify Mavenir’s “self-undertakings” for experience eligibility, the national telecom major did not receive any response. In this context, BSNL sources said both HFCL and Mavenir should have been “disqualified” and “blacklisted” for “wrong representations”, in accordance with two specific clauses of the tender. However, BSNL reportedly gave the companies a series of waivers and qualified them for commercial bid opening. Sources said even the routers offered by HFCL were believed to have issues, which were, however, brushed under the carpet by BSNL.

“IMS is a proven technology, but the one that Mavenir pitched is not because not all its components are complete for the Army project. Besides, it has no experience in implementing a wireline IMS solution. This will severely impede the Army’s communications capabilities,” an Army source said.

On the other side, BSNL sources said “once a tender is issued and bids submitted, no one has the power to dilute clauses or provide waivers”, which, in this case, appears to have been done by a few senior officials in the telecom PSU’s hierarchy. HFCL won the bid by quoting Rs 2,818 crore, while the L2, Larsen and Toubro, lost out at Rs 2,989 crore, sources said.

At least three other competitors, including Bharat Electronic Ltd, a public sector undertaking of the Ministry of Defence, ITI Ltd, a Department of Telecommunications PSU, and Sterlite are learnt to have shot off letters to BSNL bosses, citing “major violations” of tender clauses in the e-bid. Representations and mails were also sent to the Army’s Signals-officer-in-Chief at the Directorate General of Signals for their intervention as the evaluation process was grossly violated.

Writing to the BSNL, a PSU official said, “The criticality of these violations with respect to the IMS Core are not only that entire Voice, Data and Video services (Triple Play Services) are dependent on this system for the NFS project but will adversely affect other networks of the Indian Army…The effect will worsen in the future as the tactical networks will come up on LTE sort of technology wherein interworking with the IMS Core will be critical for seamless interworking with the NFS network”.

Pointing out that two different OEMs were used in violation of a particular tender clause, this official pleaded in his letter, which was also emailed to the DoS, that “We request the Indian Army that the bids with M/s Mavenir’s IMS solution be thoroughly checked and rejected in case the attached facts highlighted are found to be correct”. The “attached facts” are a series of cautions that PSUs raised, questioning Mavenir’s ineligibility and failure on critical technical compliances. However, the BSNL and the Army authorities seem to have disregarded “several” representations made by the three companies, giving them no opportunity for a “hearing”.

Documents in the possession of Newclick reveal that Mavenir was disqualified in 2016 by BSNL [for “IP Multimedia Sub-System (IMS)-based NGN core equipment for 2.4 million subscriber base”] for failing to “meet the provenness criteria for IMS (Call Servers and Database/HSS)”.

According to BSNL’s techno-commercial evaluation report, the “CET is of the opinion that this bid (of Mavenir) does not conform to all terms and conditions of the tender (No. CA/NWP-CFA/NGN/T-546/2016, issued on April 21, 2016), and so the bid of M/s Mavenir Systems Private Ltd is substantively non-responsive”. The report was signed by three BSNL officers – Senior General Manager (NWP-CFA) Nizamul Haq, General Manager (MM-CFA) Shobhit Kumar and General Manager (PF) Sunil Kumar.

BSNL sources said Haq recused himself from the techno-commercial evaluation while expressing disagreement and protest over the manner in which HFCL-Mavenir were cleared in the technical bid stage for Tender No. CA/NFS/IP-MPLS/T-620/2018.

Defence sources familiar with the Army’s communications needs and requirements warned that should the “authorities go ahead with awarding HFCL the contract, it will adversely impact the larger NFS project”.

Questionnaires sent out to BSNL Chairman and Managing Director, Anupam Srivastava, the Army's Directorate of Signals and the Army PRO went without any response.

The writer is an independent journalist.