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Ousted in Rs 12,000 crore bid to supply Carbines to Indian Army, alleges vendor

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New Delhi: The vendor of an Indo-Russian company that manufactures assault rifles in Amethi has filed a petition in the Delhi HC alleging unfair ouster from the bidding process of an estimated โ‚น12,000-crore contract to supply close-quarter battle carbines to the Indian Army. Indo-Russian Rifles Private Limited (IRRPL) produces AK 203 assault rifles at the Amethi small arms factory. Its authorised vendor is M/s BSS Material Ltd. It had delivered the first batch of rifles to the army last year.

IRRPL had bid for a competition to supply 425,213 close-quarter battle carbines to the armed forces through M/s BSS Material Ltd. last year, but the bid was rejected by the defence ministry.

M/s BSS Material has now petitioned the high court, alleging “ambiguity” in the bidding process because of which the financials of the vendor were considered by the technical evaluation committee (TEC) instead of the financials of original equipment manufacturer IRRPL.

The petitioner has also urged the court to direct the TEC to reconsider its bid and remove the ambiguity in the selection documents. The court, on its part, has asked the defence ministry to respond to the vendor’s claim that its ouster was arbitrary.

The court has also issued notices to the defence ministry, Chief of Defence Staff & Secretary, and five others in this regard.

The ministry has been asked to submit its response by August 9, the next date of hearing.Email queries sent to IRRPL and the defence ministry remained unanswered till as of press time. IRRPL, inaugurated in 2019, is geared to produce more than 600,000 rifles annually. Through its vendor, IRRPL had offered the AK 19 carbines, which have high commonality with the AK 203 which are being manufactured at Amethi.Among the leading contenders for the contract are Jindal Defence and Adani Group’s PLR Systems. Alleging ambiguity in the selection process, the petitioner has argued that considering the financials of the manufacturer is “usual and general practice”. It was in December last year that the TEC had rejected the petitioner’s bid for not satisfying the technical criteria, i.e. financial conditions, namely average annual turnover and net worth. In its petition, M/s BSS Material said that in July 2023, it had urged the TEC to consider the average annual turnover and net worth of the original equipment manufacturer, i.e. IRRPL, instead of the authorised vendor (M/s BSS Material).

M/s BSS Material said it reiterated its request in August last year. On December 11, 2023, the petitioner said, it received a letter from the office of the ADG, Acquisition, saying the techno commercial offer of the petitioner company has been rejected for being “non-compliant” with the technical evaluation, i.e. financial criteria (average annual turnover and net worth).

The petition argues that by not providing information on whose financials-vendor’s or the OEM’s–need to be assessed for cases in which the bid has been submitted by the vendor, the technical committee has made an error by considering the financials of the vendor.

M/s BSS Material has argued that it wrote to the TEC twice–on July 24 and August 7, 2023–urging the latter to consider the financials of IRRPL, but to no avail. It has further contended that it sent two representations to the TEC after its application was rejected for the bid but received no response. The petitioner has also annexed letters written to the office of the prime minister, defence minister and others, highlighting the importance of “removing the ambiguity in the bid documents”.

The petitioner also underscored the importance of a “logical and merit-based evaluation of the technical bid submitted by the bidders and in accordance with the provisions relating to fielding of an equipment on no cost no commitment”.

M/s BSS Material has argued that it would be “highly unfeasible” to compare the financials of the vendor with that of the manufacturer, as the former does not make any kind of investments in raw material, production facility and/or necessary assets (both fixed and current) required for manufacturing of the equipment.

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