CERA asks for reforms in NHAI tendering process

CERA delegation led by Secretary-General Satin Sachdeva met Shri R.K.Pandey, Member – Projects, National Highways Authority of India to hand over the letter that highlighted the concerns of India’s equipment rental industry and possible solutions to NHAI and asked for reforms in NHAI tendering process. It also highlighted that Construction equipment rental companies and other vendors face the problems of stuck payments and excessively delayed payments in national highway projects as the principal contractors and their subcontractors who take equipment on rent from rental companies and do not release payments even after they have received all the payments from NHAI. This concern of delayed and stuck payment/non-payment has also been raised by Minister of Road Transport and Highways, Shri Nitin Gadkari himself in the past several times where he stressed for strict reforms to address this issue.

Hearing the delegation and after reading the concerns and solutions, R.K.Pandey said that NHAI would think and discuss these suggestions and revert.

In the letter, CERA has asked NHAI to add certain clauses in tendering process and eligibility qualification for bidders so as to safeguard the interests of construction equipment rental companies.

- NHAI should take NOC (No objection Certificate) or Affidavit from infrastructure/construction company-contractors/subcontractors before awarding them the contract, that the principal contractor and sub-contractor has cleared dues of vendors in previous projects. Make this a factor in credit rating of infra companies.

- NHAI should fix stipulated time for contractors/subcontractors for payment to their vendors from the date of invoice.

- NHAI should create a software wherein the contractors/subcontractors and all vendors including the equipment rental companies are registered so that the amount released by NHAI to contractors can be tracked whether the contractor/subcontractor is clearing the invoices of vendors also. NHAI can charge a fees for this tracking facility. In today’s time, a foolproof sourcing technology can be created based on digital signature whereby all interested parties' payments can be protected and secured through various technology platforms.

- NHAI should not issue a completion certificate to any contractor/sub-contractor unless they have cleared the payment of all their vendors. Such a mechanism is in place in Singapore and is highly effective.

- NHAI should add a clause in their tender eligibility that the contractor/sub-contractor should hire construction machinery/equipment from a CERA member only as CERA’s members are certified for skilled operators/technical staff and latest technology construction equipment.

During the meeting, CERA also said that NHAI Chairman in his speech at EXCON 2019 urged to reduce the cost of construction which is possible if equipment are taken on rental basis, thus reducing the burden of cost of equipment on that particular project.

CERA delegation members who attended the meeting were Satin Sachdeva, Aman Khattar, Rohit Sachdeva, Inderjeet Singh, and Jannat Wadhwa.