To, The Director, Directorate of Vigilance and Anti-Corruption, No 293, MKN Road, Alandur, Chennai 600016
Sub: Seeking registration of FIR against Minister Mr. R.B Udayakumar, Mr.Hans Raj Verma IAS, Mr. D Ravichandran IAS, other public servants and firms responsible for unlawful and corrupt activities in the TANFINET BharatNet tenders
Arappor Iyakkam is a people’s movement working towards Transparency and Accountability in Governance. Tamil Nadu FibreNet Corporation Limited (TANFINET) floated BharatNet tenders worth nearly Rs 2000 crores for laying fiber optic internet connectivity to all Village Panchayats in Tamil Nadu in December 2019. However, a brazen attempt was made to favour specific companies by passing a huge illegality in the name of a corrigendum on 15/04/2020. The changes through the Corrigendum were completely arbitrary, restrictive, discriminatory, and with malafide intent. In spite of several representations to the Chief Minister and Chief Secretary, TANFINET pursued the tender with restrictive clauses favouring specific firms. Arappor Iyakkam made complaints on 20/04/2020, 29/04/2020, 14/05/2020 and 12/06/2020 to Chief Secretary, Chief Minister - TN, CVC, Department for Promotion of Industry and Internal Trade (DPIIT), Competition Commission of India, Dept of Telecomm. Based on Arappor’s complaint and that of an aggrieved bidder, Department for Promotion of Industry and Internal Trade (DPIIT) after due enquiry, sent a letter to the Chief Secretary to cancel all the four BharatNet tenders clearly stating that the conditions in the tenders were ‘restrictive and discriminatory’, and issue fresh tenders that were not restrictive.
With primafacie appearance of cognizable offence made out, this complaint to DVAC seeks action against Minister of Information Technology and Chairman of TANFINET Mr. R. B. Udayakumar, Additional Chief Secretary to Government- Information technology Dept and Board Member of TANFINET Mr. Hans Raj Verma, IAS and Managing Director of TANFINET Mr D. Ravichandran, IAS and other public officials for deliberately modifying the TANFINET tender conditions to favour two major corporates.
Overview of the Project
The purpose of the BharatNet project is to provide internet connectivity to 12,524 Gram Panchayats through Optical Fibre Cable (OFC) in Aerial/Underground mode and through Radio. This will enable the Government to provide e-service and e-applications across the state. The scope of work has been divided into four tender packages. Package A deals with Electronics component and Package B, C and D are fiber optic laying tenders. These tenders were floated on December 5 2019, and scheduled to be open in January 2020. Dr Santhosh Babu IAS was the Secretary to IT and Mr M.S.Shanmugam IAS was the Managing Director of TANFINET when the tender was floated. The 4 packages of Bharatnet tender floated by TANFINET were NIT/TANFINET/001/PACKAGE-A with tender value of Rs 350 crores, NIT/TANFINET/001/PACKAGE-B with tender value of Rs 550 crores, NIT/TANFINET/001/PACKAGE-C with tender value of Rs 550 crores and NIT/TANFINET/001/PACKAGE-D with tender value of Rs 500 crores.
Transfer of Honest Officer who Tried to Stop the Favouritism
In January 2020, Dr. Santhosh Babu IAS and Mr M.S.Shanmugam IAS were transferred out around the same time. It was reliably learnt that these two officials were transferred out because they refused to yield to the pressure to make changes to the tender conditions favouring 2 specific companies. Because the IT Secretary seems to have disagreed to the changes and stood for fair tender practices, he was prematurely transferred without any valid reason to the Handicrafts Department even before his term ended. It is learnt that he even tendered VRS. Arappor Iyakkam raised this issue and sent a representation dated 28/01/2020 (Annexure - 1) to Mr. K. Shanmugam, IAS, the Chief Secretary, to revoke the transfer of Mr. Santosh Babu, IAS, as this transfer was a punishment posting to an honest IAS officer for standing up against corruption. However, no action was taken.
Mr Hans Raj Verma IAS was given additional charge as Additional Chief Secretary to IT Department. The Managing Director of TANFINET was also transferred and Mr. D Ravichandran, IAS was brought in. The last date of submission and tender opening was postponed extending it every month. On April 15, 2020, TANFINET further extended the deadline to May 2020 and released a Corrigendum making major changes to the tender.
Corrigendum changing Major Aspects of the Tender leading to Favouritism
When the entire country is focused on fighting the pandemic, the TANFINET Chairman, Managing Director, and IT Secretary took undue advantage of the situation, and made massive changes to the tender via Corrigendum which were completely irrational and arbitrary with malafide intent. These changes were primarily done with the sole intention to limit competition for favouring two specific companies as Original Equipment Manufacturers in the bidding process, and it is reliably learnt that these companies were Huawei group of companies for Package A and Sterlite Technology solutions for package B, C and D. This tender, if allowed to continue would have resulted in unjust enrichment of a few and created loss to the exchequer.
The summary of changes includes:
1) Drastic Increase in Turnover Requirements:The basic eligibility criteria of cumulative turnover requirement for the last 3 financial years was changed to average annual turnover for the last 3 financial years in all the four packages. This is a major anti-competitive clause as the required turnover has been increased 300%. This has resulted in turnover requirement to increase from almost 40% of the tender value to 120% of the tender value per annum. In addition, there are several gross changes such as demanding average turnover of 120% of the tender value for Original Equipment Manufacturers as well. All these clauses are aimed at eliminating most prospective bidders and make only very large players to participate.
Minister of Information Technology has mentioned in his press release on 21/04/2020 that the Central Government had communicated to the State Government on 04/03/2020 that the implementation of BharatNet must be over before 31/03/2021 and hence because of the reduced timeline from 11 months to 9 months, the Corrigendum changes have been made. However, this does not seem relevant at all. The Tender was originally supposed to have ended in January 2020 and if it was allowed to go through without these major changes, then there would have been 14 months for implementation. Even excluding 3 months of Corona pandemic response, there would have been 11 months. The tender final date was postponed for no valid reason until May 2020 and on April 15, the Corrigendum has been brought in. The shortened timeline is a direct result of the Department extending the end date for tender without any valid reason so as to issue this Corrigendum at an unnoticed time when the media and others are focused on the pandemic. Now to cite the shortened timeline itself as the reason for Corrigendum is highly irrational and arbitrary. Secondly even though the reduced timeline is taken as a reason for argument sake though not accepted, the drastic increase in Turnover and experience is completely disproportional and arbitrary to the decrease of timeline of just 2 months. Why would there be a 300% increase in Turnover and Experience.
It is important to note that CVC guidelines suggest that turnover should be 30% of the tender value. Turnover requirements in the original tender was 40%, almost inline with CVC guidelines, which has then been arbitrarily increased to 120% through Corrigendum. In addition, comparison with other states such as Orissa, Jharkhand, Gujarat, Maharashtra etc clearly shows that they all had a turnover requirement of 30% to 50% of the turnover value which was inline with the original tender condition for TN.
Public Procurement (Preference to Make in India), Order 2017 also clearly establishes that “Procuring Entities shall endeavor to see that eligibility conditions, including on matters like turnover, production capability, and financial strength do not result in unreasonable exclusion of local suppliers, who would otherwise be eligible, beyond what is essential for ensuring quality or creditworthiness of the supplier.” Therefore, the eligibility conditions in the BharatNet tenders are in violation of the clause as many domestic firms are being excluded due to the turnover and experience required by the Corrigendum.
Comparison with other states such as Orissa, Jharkhand, Gujarat, Maharashtra etc clearly shows that they all had a turnover requirement of 30% to 50% of the turnover value which was inline with the original tender condition for TN.
Arappor Iyakkam was continuously raising these issues, and sent representations to Chief Minister, Chief Secretary, Department of Telecommunications, Central Vigilance Commission, Competition Commission of India. But there was no action by TANFINET or the State Government.
2) Drastic Increase in Experience Requirements: The cumulative experience in the last 3 years have been changed to experience in each of the last 3 years in Package B, C and D, again which will result in eliminating bidders. Therefore, the Experience has been increased 3 times arbitrarily in package B, C and D.
In Packages B, the following amendments were made in the Corrigendum. ● Minimum experience requirement for laying fiber optic cable was only 5000 Kms. This requirement has been increased to 15000 Kms. Therefore, the minimum executed work conditions increased by 3 times through amendment on 15/04/2020. ● Fiber optic cable laying experience has been increased from 5000 Kms to 15000 Kms in each of the packages ● New clause of OFC manufacturer should have experience supplying 75000 Km to Govt/ Private from Apr 2016 ● New clause of OFC manufacturer having manufacture capacity of 1,25,000 Km ● ‘Sole Bidder or consortium should have executed works to the minimum value of Rs 204 Cr in Optical Fibre cable laying for Telecom infrastructure in the last 3 financial years’ has been changed to each of the financial years through amendment on 15/04/2020.
Similar changes are made in Package C and D.
Like turnover, the experience requirements have also been changed drastically. While the initial tender requirements were reasonable, the changed conditions are in violation to the CVC guidelines, the Public Procurement (Preference to Make in India), Order 2017 order, and made only with an intention to limit competition and favour specific firms.
In addition, experience requirements in most states such as Gujarat, Maharashtra and Orissa for similarly placed tenders were only a maximum of 5000 Kms of fiber optic laying. Orissa specifically mentions that 30% fiber optic laying of estimated route Km during the last 3 years as experience condition. However TN has increased from around 30% to 100% or more in Package B, C and D.
3) Unnecessarily Changed Configuration of Block Routers: In Package A Electronics tender, TANFINET changed the configuration of Block Routers. While the Block router specification in the original tender is said to be manufactured by many Original Equipment Manufacturer (OEM), it is reliably learnt that the changed specification will result in eliminating all other OEM’s except Huawei group and CISCO groups . It is learnt that they are the only ones that manufactures the newly changed configuration. This is a clear indication of favoritism to particular OEMs. It is reliably learnt that TANFINET made these changes to favour Huawei group of companies in particular. Even if more than one bidder participated in the tender, everyone would have had to technically adopted the same OEM as consortium member resulting in favouritism and cartelization.
S No Original from Annexure A of NIT/TANFINET/001 package A page 42 Changes through Consolidated Queries Response for package A page no 120 last row 1 Block Router Specification was 1GE(4,2)+1GO(4,4)+10GO(4,4) + 100GO(2,0) with total capacity of 294 Gbps (at operating temperature of 0 to 65 degrees) Block Router specification has been changed to 1GE(4,2)+1GO(4,4)+10GO(8,8) + 100GO(2,2) with total capacity of 700 Gbps (at operating temperature of 0 to 65 degrees)
These additional slots for future that are brought about in 100GO and 10GO seem to be done specifically to favour 1 or 2 OEMs.
It must be noted that this change is not issued as part of the Corrigendum but done as part of a reply to questions for clarification. However, after Arappor raised this issue in additional complaint to Chief Minister, Chief Secretary, Dept of Telecomm, CVC, DPIIT, Competition Commission and others on 20/04/2020 (Annexure 2) and 29/04/2020 (Annexure 3), TANFINET brought about a Corrigendum on 09/05/2020 revoking this router change. They did so as this change directly proved their criminality towards making changes to favour specific companies. It is also learnt that the cost difference between the two block routers in the original tender and the changed one runs into tens of lakhs and since there are 1515 numbers of block routers sought, the difference in configuration is going to result in hundreds of crores of increased budget. While the overall budget for package A itself would be around Rs 350 to Rs 400 crores, it is learnt that this single change is going to cause a budgetary increase of around Rs 600 crores. How can a clarification sought by a bidder change the configuration of the product itself to favour configuration/ specification of one particular company alone and increase the budget multiple times? It must be understood that if these changes were allowed to continue, it would resulted in a major loss to the exchequer.
Further another restrictive clause on 09/05/2020 was introduced when they issued a clarification saying all IP/MPLS routers should be from the same OEM including the NOC router while the original tender condition did not have such a clause on the NOC router. This can be seen in page 4 sl.no 19 of the clarification document on 09/05/2020 issued by TANFINET. This would have again eliminated most bidders. However, as we started enquiring about the rationality of this change, suddenly another amendment appeared on the morning of 13/05/2020 taking back this restrictive clause as well. All this only shows that changes are being done in a very irrational manner with desperation to favour one or two particular group of companies by TANFINET
4) Inclusion of Proof of Concept:Corrigendum changes included physical presentation of Proof of Concept as part of Technical Scrutiny for packages A, B, C and D. In the e-tender process, this presentation of proof of concept is a direct physical meeting with a technical committee appointed by TANFINET. While the whole idea of e-tenders is to avoid physical point of contact, this Corrigendum has been brought about specifically to bring in subjectivity in the tender process, eliminate competition and to provide room for favouring specific companies. In addition, if timeline was a serious issue, why did the Corrigendum mention physical presentation of proof of concept for technical bid which will extend the timeline further, especially given the Corona restrictions. It must be noted that none of the other states that have executed the Bharatnet tenders had proof of concept. Given we are dealing with routers and fiber optic cables that have standards, there is no need for a physical meeting. The only rational for bringing this condition is to bring about subjectivity and discretion and favour specific companies.
Along with this many more changes have been made as well.
Irrelevant Reasons Provided as Basis for Corrigendum
The State Government has provided the following reasons for tender changes in the Corrigendum:
a) The fact that Tamil Nadu is the last State to implement BharatNet under State Led Model (b) COVID 19 crisis across the country (c) Amendment to the MOU issued by Government of India stipulating a revised Project Execution Period (PEP) and (d) Queries received during the pre-bid meeting
None of the above reasons has any validity. The first 2 reasons are more of a statement that shouldn’t affect the eligibility conditions by any thread of imagination.
The 3rd reason of amendment due to the reduced timeline from 11 months to 9 months for increasing the eligibility criteria is not valid for the following reasons. The Tender was originally scheduled to end by January 2020. If so, the winning bidder would have had 14 months for execution, much more than the required time. However, the deadline of tender was postponed till May without any valid reason just to bring about these amendments and this delay by TANFINET itself is being used as a reason for changes in tender conditions. Introducing POC on the contrary is only going to extend the timeline further and is against this stated reason itself.
The 4th reason for amendments made does not stand any water. Queries in the pre-bid meetings can result in relaxation of conditions to increase competition. But the queries by certain companies to restrict competition and suit their business numbers only indicates nepotism/ collusion in the tender process.
Overall, the changes in the Corrigendum were completely arbitrary, disproportionate, irrational and with malafide intent. Transfer of officers standing against the proposed tender corruption, appointment of favourable officers, unnecessary extension of timelines, irrelevant reasons for tender changes, and massive changes to the tenders through the Corrigendum, withdrawal of approvals by IAS officers, and many other events that unfolded during the tender process clearly indicate the malafide intention of the officials involved and how they conspired to favour two specific companies. There seems to be no other purpose than to limit competition and it is reliably learnt that these changes were made to favour 2 particular OEMs namely Sterlite Technology Solutions and Huawei group. Further, the continuous denial and inaction of top TANFINET officials about the issues raised also indicates their involvement.
Role of Infrastructure Development Board: The original tender conditions were approved by the TN Infrastructure Development Board consisting of almost 15 senior IAS officials as per the requirements of TNIDB act. However, without getting their approval, the massive tender amendments were done making it almost a new tender. To get around this criminality, the IAS officials apparently signed a resolution saying that their original approval itself is not required as per the TNIDB act even though it mandates it. TNIDB’s role in the illegalities must also be probed .
DPIIT sought Report and Puts Tenders on Hold in Response to Arappor’ Complaint
In response to Arappor Iyakkam’s complaint, DPIIT sent a letter to Chief Secretary and Mr Ravichandran, IAS, Managing Director of TANFINET on 30/04/2020 to enquire into the allegations made by Arappor Iyakkam, sought an urgent report to be placed before the standing committee of DPIIT and has asked not to finalize the tender until disposal of Arappor Iyakkam’s complaint. DPIIT further sent a letter to Chief Secretary and TANFINET asking them to not open the tenders and also sought for extension of the submission until our complaint is disposed.
DPIIT directs TANFINET to cancel the BhartNet tenders as the Tender Conditions are Restrictive and Discriminatory
Following this, DPIIT organized a video conference with the Secretary, Department of Telecommunications, Additional Chief Secretary (IIT), TANFINET MD, another aggrieved bidder, and Arappor Iyakkam on 23/06/2020. Arappor Iyakkam explained the violations in the Corrigendums in detail. A prospective bidder Tejas Networks and TEPC had also made complaints of restrictive clauses and they also presented their views. Additional Chief Secretary (IIT) and TANFINET MD responded to the violations. However, both of them did not have any valid explanations for the violations and issues raised. At this juncture, it is important to highlight that the Joint Secretary of the Department of Telecommunications also detailed out the various violations pointed by Arappor and stated that all the violations raised are valid and recommended for Cancellation of the tender. He elaborated that the turnover and experience conditions specified in the Corrigendum are restrictive and discriminatory and against the CVC guidelines and the Public Procurement (Preference to Make in India), Order 2017, and these conditions will restrict competition. DPIIT also pointed out to change in router conditions as favouring specific companies.
The DPIIT in its letter dated 26/06/2020 to Secretary-Dept of Telecom, Chief Secretary, IT Secretary and TANFINET MD said that the tender conditions in TN Bharatnet tenders were found to be ‘restrictive and discriminatory’. The DPIIT has passed orders to direct the Tamilnadu Government to scrap all the 4 Bharatnet tender packages and float it afresh with non-restrictive qualification criteria.
Demanding Action Against Public Servants
Given that the changes brought through the Corrigendum were proved to be restrictive and discriminatory as alleged by Arappor Iyakkam, it is now important to establish accountability on the public servants responsible for these massive malafide changes.
The continuous attempts of favouring specific companies, brazen flouting of tender rules would not have been possible without the nexus between Mr. R.B Udayakumar, Mr.Hans Raj Verma IAS, Mr.Ravichandran IAS. Mr.Hans Raj Verma IAS (Additional Chief Secretary), Mr.Ravichandran IAS (MD - TANFINET) created the conducive environment for favouring two specific companies at the behest of Mr. R.B Udayakumar to favour specific companies. All this clearly indicates the role played by the public servants in these collusive and corrupt practices of bid rigging and tender irregularities. The investigation should look at the pecuniary gain for which these changes were made as well. Given that a central agency has already conducted an enquiry and found the tender conditions discriminatory and restrictive, the appearance of cognizable offence is made out and DVAC should immediately file a FIR and conduct a detailed investigation into this.
Therefore, I request you to:
Register a case under Prevention of Corruption Act, 1988, Tender Acts, Competition Act, Indian Penal Code and other associated laws against Mr. R.B Udayakumar, Mr.Hans Raj Verma IAS, Mr.Ravichandran IAS, other public servants and firms responsible for effecting such massive illegal changes in BharatNet TANFINET tender conditions to favour specific firms.
Jayaram Venkatesan Convener - Arappor Iyakkam
Enclosures: 1) Representation from Arappor requesting the Chief Secretary to revoke the transfer of Santosh Babu, IAS dated 28/01/2020 2) Complaint from Arappor dated 19/04/2020 - Initial complaint listing the major violations 3) Additional evidences for complaint from Arappor dated 29/04/2020 - Additional changes of experience, router configuration, and POC 4) Additional evidences for complaint from Arappor dated 14/05/2020 after router configuration was reverted 5) Additional evidences for complaint of Arappor dated 12/06/2020 6) DPIIT letter dated 30/04/2020 7) DPIIT letter dated 12/06/2020 8) DPIIT letter dated 13/06/2020 9) DPIITs letter of Video Conference on Arappor allegations 10) DPIIT letter 26/06/2020 cancelling the BharatNet tenders
The tender documents and Corrigendums can be found in the following drive link - https://bit.ly/3iUHQxd