BSNL's contract runs risk of being caught up in litigation

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It has taken BSNL eight months to arrive at the cheapest rate for its 63 million GSM line contract, but the state owned company is realising that even wireless technology can get entangled in knots, that is legal knots.

 

The Swedish company Ericsson is said to have quoted the lowest rate, USD 110 per line, which makes it eligible to supply 27 million lines for a little under USD 3 billion.

 

Nokia and the government owned ITI will share the rest of the USD 7 billion contract, if they match the price. ZTE and Motorola have lost out.

 

Director-Finance, BSNL, SD Saxena, "It is like a one day match. Some days some one wins and some days some one else."

 

But Motorola is not taking it sportingly. It has contested the decision in the Delhi High Court. The court has given BSNL two weeks to reply. BSNL can process the tender, but runs the risk of the court setting aside the award of contracts. The Chinese ZTE and Motorola, which will outsource equipment from the Chinese Huawei, did not qualify technically.

 

SD Saxena adds, "It was not security concerns, but Motorola, etc did not qualify technically."

 

Motorola says it was at no stage told about its technical ineligibility, despite being in communication with BSNL and providing all the compliance undertakings.

 

It says Siemens and Nokia's financial bids should not have been considered separately as they have announced their decision to merge from next year. But BSNL says it has obtained assurances that the merger will not come in the way of the contracts being fulfilled.

 

Even the Prime Minister's Office has got into the act. It has brought to the notice of the Secretary, Department of Telecommunications, allegations that ministry officials influenced the award of the contract, and that the French Alcatel will gain indirectly through its association with ITI.

 

Whatever the merits of the charges, one thing is clear: government contracts are pre-disposed to litigation -and delay.