NHAI tightens rules to enhance quality of National Highway projects

In order to improve the quality of project execution, reduce delays, and bring down the overall lifecycle cost of national highway projects, the National Highways Authority of India (NHAI) issued clarifications to provisions of RFP request for proposal) that are aimed at strengthening contractor qualification norms, enforcing compliance in project execution, and enhancing transparency in financial submissions.

The clarifications come at a time when social media users have complained about the poor construction quality of some of the newly built national highways in the country.

Stringent conditions in various clauses under the RFP will help ensure that only technically capable and experienced contractors qualify for the implementation of National Highway projects, the NHAI says.

One of the important elements of the provision is clarification of 'similar work' criteria in bid qualification, which has often been misrepresented by contractors to gain eligibility for large-scale highway projects despite having experience only in minor or peripheral works that do not reflect the complexity and scale of full-fledged highway development, said the NHAI.

NHAI clarified that 'similar work' shall refer exclusively to completed highway projects that include all major components comparable to those required for the project for which the bid has been invited.

In addition to refining the qualification criteria, the clarifications to RFP also seek to address the unauthorised engagement of EPC (engineering, procurement, and construction) contractors in hybrid annuity model (HAM) and build-operate-transfer (Toll) projects and subcontractors in EPC projects. Instances have been observed where concessionaires or selected bidders have engaged contractors without the required prior approval of the Authority or exceeded the permissible subcontracting limits, the NHAI points out.

NHAI says such practices not only violate contractual norms but also pose risks to quality assurance, project timelines and regulatory oversight.  "Any unauthorised subcontracting and subcontracting beyond permissible limits will be classified as 'Undesirable Practice', thereby attracting penalties on par with fraudulent practices. This move will help to reinforce discipline in contract execution and safeguard the integrity of the implementation process, it adds," it says.

Another major component of the reform involves prohibiting the submission of "Bid and Performance Securities" that are sourced from third parties. "It has been reported that some selected bidders have furnished financial securities issued by third parties, which undermines the principle of accountability and raises concerns regarding enforceability and bidder liability. Now, it has been clarified to disallow such third-party-sourced instruments, ensuring that only securities backed by the bidder or its approved entities are accepted. The step is expected to enhance financial transparency and improve the enforceability of contractual obligations," says the NHAI.

These clarifications will help ensure that National Highway projects are awarded to contractors with proven technical and financial competence, executed by authorised and accountable entities, and monitored with greater regulatory oversight, it says.