Don’t call it a nexus, these are tender ties!

The purpose of calling for tenders is to ensure transparency in awarding government contracts which run into thousands of crores. That’s the theory, but in reality, it is an altogether different story, with many politicians and bureaucrats devising ingenious way to ‘fix’ the bidding process.

Tender documents are often ‘managed’ even before they are advertised. Here, the company approaches the minister concerned either directly or through touts and makes a ‘commitment’. The tender is then tailored by inserting conditions that are favourable to this company, while at the same time making it tough for rival firms to qualify.

While a part of the ‘commitment’ has to be paid in advance, the remaining is released at each stage of the contract -- the first instalment when the tender document incorporating the favourable conditions is released, the second when the company is shortlisted, and the third when the work order is issued. The bidders are clever. They know that there are instances when ministers have not kept their word even after being paid off. That’s why, they never pay the entire amount in one tranche.

The whole process is not as simple as it appears, though, as not just the minister, but almost everybody in the pecking order, starting from the caseworker, has to be “taken care of”. A thorough knowledge of the intricacies of the working of this “system,” including the multiple layers of bureaucracy, is required, lest the file is “lost” somewhere in the labyrinth. Usually, the tout – Mr Consultant -- draws up a “package” of who will get what, and does all the groundwork. Sometimes, bureaucrats themselves act as agents of ministers.

Yet, no matter how well-oiled the “system” is, there is always some risk. Sometimes, the minister might change mid-way, or the government itself might fall, in which case the amount already paid is lost. The concept of returning the money for work not done does not exist in this “system.”

Now, there could be instances when an interested company becomes aware of the project only after the bid document is released, in which case tampering with the tender conditions is difficult. But “entrepreneurs” never lose hope. All that the company has to do is to strike a deal with the minister, who will then summon the other bidders and request them to withdraw from the fray, with the promise of awarding them other big projects in the future “as I am already committed on this one.”

Of course, companies do not pay up from their own pockets to get these contracts. They get to recover the bribe amount by escalating the project or contract cost somewhere down the line. Who pays then? You guessed it: You do!

The inventiveness does not end there. In the case of civil works, large projects are broken down into many small parts and awarded to several favoured contractors, instead of one, to overcome the conditions of the tender process drawn up by the same government. On paper, everything is kept legal and perfect.

The next hurdle appears at the time of payment of bills, which are cleared only after the contractor pays up a fixed percentage of the total amount. Ease of doing business with the government consists in knowing which palm to grease and when.

Many companies prefer to work with corrupt bureaucrats as they feel that such officers clear files faster, as their motivation to amass wealth is high, while the honest ones are generally slow.

Undoubtedly, there are many upright officers and some straightforward ministers, too, but there is not much they can do, given how deeply entrenched the “system” is.