DLF land row: Global tendering is a farce; it won't curb crony capitalists

Global tenders and international bids by themselves are no guarantee that crony capitalists would be held in check. Yesterday’s ( 3 September, 2014) Haryana High Court verdict cancelling allotment of 350 acre of land in Gurgaon to DLF by the Haryana government fortifies this view.

The court did not strike down the land acquisition by the Haryana government from the local panchayat but only questioned and quashed the allotment in turn made by the latter to DLF in what was evidently a farcical international bidding.

There were a clutch of bids from DLF as well as from Unitech and Malaysia-based Consortium comprising Country Heights, Country Club of South Africa and Rajarhat IT Park. In a commercial project, the accent obviously cannot be on price alone so much so that to allot land to the highest bidder would defeat the very purpose of the project.

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To wit, a formidable international financial combine might outbid others in an oil exploration contract but the government of India would be failing in its duty if it awards the contract to it despite knowing it has no experience or knowledge in this highly technical field given the fact that the main purpose of oil exploration is to end the nation’s oil thirst and not raking in moolah for the government. Hence the two-way bidding process.

In the first stage, there is a technical bid. Only those conforming to the minimum standards of technical competence are shortlisted for eventual participation in the commercial bid. This is as it should be.

The Haryana government seems to have latched on to this leeway to keep competition at bay. To be sure, the competitors were dyed-in-the-wool builders but they had no experience in making and operating an eighteen hole golf course. Touch! It was all meticulously planned – write in a clause that others won’t be able to fulfill, and presto the land would be the crony capitalist’s.

That the government played to the script is further evidenced by the fact that in the absence of competition in the commercial bid, DLF could easily pull wool over the eyes of everyone – quote Rs 12,000 per square meter as against the minimum (reserve) price of Rs 11,978.

The Punjab and Haryana High Court has seen through the trick. It has not questioned the right of the government to conduct a two way bidding process but only pointed out that in the name of eliminating people without technical competence, irrelevant and farcical clauses should not be written in. A builder should know how to optimise the utilisation of land, how to follow green norms even while making a concrete jungle, so to speak and how to provide for all the amenities in a gated community.

Laying a golf course is peripheral to the whole issue and in any case is no big deal.

The court has rightly asked international bidding to be conducted afresh in which DLF too can participate. The judgment must be hailed for not only coming down heavily on crony capitalism but also for warning governments that technical bids cannot be the alibis for paving the way for the crony capitalist.

The farce of a project going to the lone bidder must be stopped. It must be mandated that if there is only one in the fray, a fresh round of invitation for bids must be carried out and this process repeated until such time there are at least three or four participants. Lest technical bids become a ruse for elimination of competition, it must be mandated that the technical specifications must be made by experts in the chosen field with detailed explanation for harping on competence and experience in a given area.