US company favoured over India in boat deal . . . The Ministry of Home Affairs (MHA) has flouted all procurement rules to nominate a US boat building company for the purpose of buying 150 coastal security boats. The global tender launched for this Rs 500 cr deal kept out all Indian players by introducing clauses that are difficult to be fulfilled by them. Moreover, some of the equipment requirements mentioned in the tender are not needed by the Marine Police Organisation, which will use the boats. The Request for Proposal (that is the tender), which is on the MHA website, shows (Page 103, para 2.1.6) that the US Arneson's "surface piercing drive" has been nominated for the deal. Further, under "Routine Maintenance", the model "Arneson Drive, model ASD 14" is mentioned on page 67. The Marine Police Organisation was formed post the 26/11 terror attack. A fleet of around 280 boats was sanctioned for it for the purpose of patrolling and guarding India's vast coastline. The first order of 120 boats went to the Defence Public Sector Units (DPSUs) -- the Goa Shipyard Limited (GSL) and the Kolkata-based Garden Reach Shipbuilders Engineers (GRSE). These boats were delivered two years ago and have been performing well. Recently, the tender for another 150 boats was floated globally. Indian as well as global manufacturers participated in the bidding process. Sources say that the propulsion system mentioned in the tender is not required by the Marine Police Organisation as it will not be able to exploit and maintain such complicated equipment. Indian Navy is already facing a number of problems because of this equipment fitted on its Fast Attack Crafts. A regular fixed pitch propeller system is best suited for the Marine Police. The speed requirement in the latest tender has also been revised from the earlier tender's "high speed" to a maximum of 25 knots. Sources said that the system nominated by the MHA has a cruising speed of 12 knots and a maximum speed of 25 knots. India does not need such a high speed boat when the job can be done by a boat with a lower speed. Another clause that keeps out Indian manufacturers is the earnest money deposit (EMD) clause in Para 2.11 of Schedule 1. It states that the EMD requirement is Rs 7.5 cr. The annual turnover requirement for the company that will get the contract is Rs 50 cr in the last three years, making it Rs 150 cr in the past three years. A source told this newspaper, "Clearly no Indian boat builder, who makes boats of this type, can qualify. In addition, the requirement of having built at least 25 boats in one year in the past three years may even disqualify public sector yards like GSL and GRSE, who have set up significant infrastructure and built the previous series of boast for the MHA (Phase-1 boats)." All this amounts to a single vendor nomination, which as per procurement procedures of security equipment is not acceptable, and has in the past resulted in retraction of tenders. When The Sunday Guardian contacted MHA officials, they said that the ministry had held a pre-bid conference in November, in which it sought the views of the manufacturers. These views are under consideration and if needed the RFP would be amended. The officials said that a level playing field for Indian manufacturers would be considered by introducing changes in the tender before it expires. The last date for the RFP is 16 January 2012. The MHA follows the procurement manual Directorate General of Supplies and Disposal (DGS&D), for all its purchases. 15 boat manufacturers attended the pre-bid conference in November. According to sources, GRSE and GSL officials met Home Minister P. Chidambaram recently to say that since they had won the first contract and had delivered the boats, they should be given the second contract too. The tender also combines the vessel order along with annual maintenance contract (AMC). AMC contracts are usually tendered out separately to service providers suited best for such jobs.