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2023 Supreme(Del) 4003
IN THE HIGH COURT OF DELHI AT NEW DELHI
Satish Chandra Sharma, Sanjeev Narula, JJ.
Dhanush Infotech Private Limited Through Its Chairman And Managing Director – Appellant
Versus
National Informatics Centre Services Inc. – Respondent
W.P.(C) 14204 of 2022 & CM APPLs. 43410 of 2022, 46387 of 2022
Decided On : 25-08-2023
Mr. Vivek Soni, Advocate, for the Petitioner in W.P.(C) 14204 of 2022 & CM APPLs. 43410 of 2022, 46387 of 2022.
Mr. Vikram Jetly, CGSC with Ms. Shreya Jetly, Advocate with Mr. Manoj Kumar Kulshresth, GM Law, NICSI and Ms. Hemlata Gupta NICSI in W.P.(C) 14204 of 2022 & CM APPLs. 43410 of 2022, 46387 of 2022 & W.P.(C) 2953/2023 & CM APPL. 11508/2023.
Mr. R.M. Sinha, Mr. P.M. Sinha, Ms. Namita and Ms. Nandni Harsh, Advocates, for the Petitioner in W.P.(C) 2953/2023 & CM APPL. 11508/2023.
The rejection of bids as outliers in a tender process must align with the methodology stipulated in the RFP, showcasing due diligence and minimizing arbitrary decisions. It is important to maintain consistency and transparency in the tender process.
Headnote:
outliers - Tender Process - 8.3, 9.2 - The court discussed the conditions of the RFP relevant to the issue at hand, the two-layered process to weed out extreme quotes, and the application of statistical techniques to identify outliers. The rejection of the Petitioners' bids for being outliers was found to be in line with the methodology stipulated in the RFP, showcasing due diligence and minimizing arbitrary decisions.
Fact of the Case:
The Petitioners contested the rejection of their bids in a tender process for empanelment of vendors, citing their categorization as 'outliers' under the terms and conditions of the tender. They argued that their bids were the most competitive and should not have been rejected.
Finding of the Court:
The Court found that the rejection of the Petitioners' bids for being outliers was in line with the methodology stipulated in the RFP, showcasing due diligence and minimizing arbitrary decisions. The Court emphasized the importance of maintaining consistency and transparency in the tender process.
Issues: The main issue was the rejection of the Petitioners' bids as outliers in the tender process, and the subsequent challenge to the methodology used for bid evaluation.
Ratio Decidendi: The court held that the rejection of bids as outliers was in line with the methodology stipulated in the RFP, and that introducing alternative methodologies would compromise the transparency and fairness of the process. The Court emphasized the importance of maintaining consistency and transparency in the tender process.
Final Decision: Both petitions were dismissed by the Court.
JUDGMENT
Sanjeev Narula, J. The present petitions relate to a tender process for empanelment of vendors for providing development and maintenance services in respect of software and websites employed by government offices for emerging and ongoing projects undertaken under the aegis of the Government of India [hereinafter, "the Tender"]. The Petitioners converge on a singular grievance: the rejection of their bids, citing their categorization as `outliers' under the terms and conditions of the tender. Given the similarity in the factual matrix and contentions raised, the Court deems it prudent to pronounce a common judgement. For clarity and convenience, our deliberation will predominantly revolve around the details set out in W.P.(C) 14204/2022. The facts, where they deviate, are delineated in the judgement.
BRIEF FACTS
2. The Petitioners - Dhanush InfoTech Private Limited [hereinafter, "Dhanush"]1 [Petitioner in W.P. (C.) 14204/2022.] and CMS Computers Limited [referred to as "CMS"],2 [Petitioner in W.P.(C) 2953/2023.] are inter alia engaged in providing information technology ["IT"] support services to various governmental and non-governmental entities. They assert their expertise in delivering IT solutions for numerous e-governance initiatives spearheaded by entities such as National Informatics Centre, Ministry of Electronics and Information Technology and various other public sector undertakings.
3. The Respondent released a Request for Proposal ["RFP"] aimed at empanelling agencies in Tier 1A, 2 and 3 categories, for design, development, implementation, and maintenance of application software and website under the Tender. Within this tender's framework, an empanelment of fifteen vendors for Tier 2 and ten vendors of Tier 1A categories was envisioned for future projects. On 18th May, 2022, Dhanush submitted their bid for the Tender as a Tier 2 vendor, while CMS applied as a Tier 1A vendor. Amongst the ten and six bidders who participated at the Tier 2 and 1A level respectively, seven and five successfully navigated the first stage of technical evaluation, advancing to the financial evaluation stage, which was bifurcated into two segments: (i) Identification of Outliers and (ii) Sequencing of Bidders as L1, L2, L3, and so on. Despite the Petitioners' bids emerging as the most competitive, they were tagged as `outliers', i.e., bidders offering extreme quotes, thus leading to the rejection of their bids.
4. Aggrieved with the bid rejection, the instant petitions have been filed by the Petitioners.
SUBMISSIONS OF THE PARTIES
5. Mr. Vivek Soni, counsel appearing for Dhanush, made the following submissions:
5.1. Dhanush's bid has been rejected in an unjust, unfair, and arbitrary manner. When contrasted with the margins suggested by other shortlisted bidders, Dhanush proposed the lowest operative margin (7.00%), yet, their bid faced rejection.
5.2. RFP for the Tender aimed to attract a wide pool of bidders, with an intent to shortlist fifteen vendors for provision of service. Astonishingly, only six were finalized for the Letters of Empanelment. As informed by the Respondent's tender division, the margin requirement ranged between a floor of 7.075% and a ceiling of 13.2%. Most successful bids fell within the 8.49% (L1) to 9.95% bracket, significantly higher than 7.00%. Dhanush's bid was therefore rejected due to insignificant shortfall of 0.075% from the floor margin.
5.3. Keeping in view the Public Exchequer's best interests, Dhanush's bid could have been negotiated and accepted.
5.4. The Respondent's methodology and formula utilised for determining successful bids appears skewed, given the data set nature and the nominal variance observed. When the issue was examined by a reputed statistical institute, the experts recommended use of a different method, which, if applied, reveals operative margin limit between 6.98%-11.02%. This alternative method, being more efficient and authentic, should be employed for bid evaluation.
5.5
