In its Aid Memoire-Country Portfolio Performance Review Mission report, submitted recently to the Department of Economic Affairs (DEA), ADB has charged Powergrid of carrying out price negotiations with successful bidders after receiving its approval for award of contract in 31 cases out of the 38 contracts reviewed by the bank. Under ADB norms, Powergird cannot negotiate contract price with the bidders.

DEA, sources said, has forwarded these objections raised by ADB to the nodal ministry, which has, in turn, written to Powergrid, asking the corporation to furnish factual details in this regard.

Yet another charge put by ADB says, "Powergrid has sought at least one extension of bid validity in all of the 38 contracts and in 20 contracts, the bid validity has been extended four or more times. In one case, the validity was extended 16 times."

Reacting strongly against these charges, senior Powergrid officials said, "As per ADB's guidelines, prior permission should have been taken from the bank for these 14 cases, but price negotiations were carried in the financial interest of the company without, in any way, affecting the fairness of the procurement process."

According to Powergrid officials, as against the 31 cases mentioned by ADB, price negotiations were held only in 14 cases.

Moreover, Powergrid officials said price negotiations were held in the cases where the quoted price of responsive L1 bidder was higher than the cost estimate. Such price negotiations were held as per the directive of the competent authority (chairman in this case) and in most cases by the board of directors, they said.

"In line with the practice being followed by the corporation in case of domestic funded packages, considerable gap between the estimated cost and quoted price of L1 responsive bidder could not be overlooked while deciding the awarding of a contract and therefore necessitated negotiations," they said.

In cases other than these 14 cases mentioned by ADB, the variations in the actual award price with respect to the recommended award price of ADB have been attributed by the corporation to the marginal variation in the tendered and awarded quantities in various items of supply.

Justifying its stand, Powergrid officials said that as a normal practice, voluntary discounts are offered by certain firms, as a gesture of good will, during the post bid discussions.

"The variations can also be on account of adjustment in prices due to successful resolution of technical or commercial or both in respect of deviations taken by the successful bidder, during the post bid discussions.

Moreover, the recommended award price in all the contracts was subject to satisfactory resolution of technical and commercial deviations taken by the bidders."

In respect of extension of validity of bids, ADB has observed that in 20 contracts, the bid validity was extended 16 times. Powergrid has refuted this charge by saying that prior approval was obtained for extension of bid validity.

"The reason for extension for 16 times was due to the fact that the formalities in respect of tendering were fulfilled but award could not be placed in absence of government's approval, necessitating bid validity extension," as per Powergrid officials.