Flawed clauses, financial risks: Karnataka cancels 8 Bengaluru flyover tenders

In April, the Karnataka Government approved 11 elevated corridors with an estimated cost of Rs 13,262.70 crore, to be built by Bengaluru Smart Infrastructure Limited. (Representative Image/Express File Photo).

The Karnataka Government has cancelled tenders for eight proposed elevated corridors and flyovers worth thousands of crores of rupees in Bengaluru, citing flaws in documents, months after announcing an ambitious infrastructure plan for the city.

Invoking Section 15 of the Karnataka Transparency in Public Procurements (KTPP) Act, the Urban Development Department ordered on October 1 the cancellation of tenders for these eight elevated corridors and flyovers, and that fresh tenders be invited later.

On April 27, the government approved 11 elevated corridors totalling about 75.6 km, with an estimated cost of Rs 13,262.70 crore, to be built by Bengaluru Smart Infrastructure Limited (B-SMILE) for the Greater Bengaluru Authority (GBA) across five city corporations.

In August and September, B-SMILE sought approval for tenders including a 5.2-km corridor from Sirsi Circle to Nayandahalli on Mysuru Road, a 1.5-km corridor from Doddaballapura Road to the NH-7 Navayuga flyover at Kogilu Circle, and a 0.5-km split flyover at the MEI Junction on Tumkur Road.

‘All eight documents built on one template’

An empowered committee met on September 16 and set up a sub-committee, headed by GBA Chief Commissioner M Maheshwar Rao, to review all eight proposals.

An order, accessed by The Indian Express, shows that the sub-committee submitted its report on September 30, recommending cancellation of all tenders over flawed documentation.

“The tenders for all eight works may be annulled by the Tender Accepting Authority before acceptance, with reasons recorded in writing and communicated through the Karnataka Public Procurement Portal, under Clause 27 of the Instructions to Tenderers and section 14 of the KTPP Act, 1999,” the sub-committee said in its report.

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“The fact that the bids, having been opened, none of them can now be corrected in the tenders as issued. No Letter of Acceptance or work order may issue meanwhile, and the earnest money of all bidders may be refunded promptly notwithstanding the condition that it is returned only after award,” it said.

The sub-committee has recommended setting up an empowered committee with the authority to make decisions and cancel the tenders for all eight flyover projects before they are formally accepted. It also recommended inviting fresh tenders using new tender documents specifically prepared for these projects and approved by the Finance Department.

“All eight documents are built on one template which combines provisions of K/W (Karnataka Works)-4 with provisions of the MoRTH (Ministry of Road Transport and Highways) EPC documents and adds provisions found in neither; they were described to the Board as K/W-4 with NHAI standards, and no approval of the government for the composite has been produced.”

13 problems

The sub-committee report found 13 common problems in the contracts for all eight flyovers, with several conditions differing from standard government rules. The contracts did not specify clear payment deadlines for contractors or provide for interest on delayed payments. They also lacked clear rules for calculating the cost of additional work, creating a risk of uncontrolled project expenses.

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The penalties for construction delays were calculated based on individual milestone payments rather than the total contract value, potentially reducing the amount recoverable from contractors. The maintenance clauses were contradictory, as the contract price was stated to include maintenance while separate payments were also allowed.

At Sirsi Circle, the maintenance amount mentioned in the contract was approximately Rs 20.19 crore, compared with an estimated Rs 4.01 crore. The contracts also contained unclear rules regarding security deposits and the recovery of advances.

In addition, a missing word in one clause could make contractors responsible for delays caused by utility agencies. The contracts did not explicitly allow contractors to terminate the agreement if the authority failed to fulfil its obligations.

The arbitration clause was removed without providing an alternative dispute-resolution mechanism, creating uncertainty about how disputes would be settled. Finally, the bids were valid for 180 days, while the earnest money could remain tied up for around 360 days and was refundable only after the contract was awarded.