MONTECARLO LIMITED v. NTPC LIMITED

1. The petitioner, a company engaged in the business of mining of coal and lignite has questioned the communication dated 29.08.2016 issued by the Respondent, NTPC Limited, intimating that the technocommercial proposal of the petitioner for operation and development of Dulanga Coal mine in the state of Odisha was not acceptable in terms of clause 6.3.[2] of the Invitation to Bid (hereinafter referred to as „ITB‟); which in effect disqualifies the petitioner from participating in the price 2016:DHC:6806-DB bids opening and the reverse auction qua the bid for development and operation of the aforementioned Coal Block, as unreasonable, arbitrary, contrary to the terms of the tender papers and therefore unsustainable.

2. The respondent, NTPC Ltd, had issued separate invitation for bids for development and operation of three coal mines viz. Dulanga Coal Block, Chatti Bariatu and Talaipalli in the state of Odisha. Online bids were invited on Single Stage Two Envelope Bidding basis (Envelope-1:- Techno-Commercial Bid and Envelope-II: - Price Bid) with Reverse Auction.

3. The issue in controversy between the parties is as to whether the proposal/bid of the petitioner was responsive to the qualifying requirements (hereinafter called "QR") set out in the tender documents. The dispute, in the present case, hinges on the interpretation of the requirement of a bidder of having experience in "Drilling" for removal of overburden and coal, which the petitioner claims to be possessing but the respondent, NTPC Limited, insists on the experience of "drilling for the purposes of blasting" and not drilling in a generic sense as the essential condition for meeting the QR for acceptance of the first stage of techno commercial bid.

4. It is submitted that after certain clarificatory communication between the petitioner and the respondent, the project proposal of the petitioner for Dulanga Coal Block was submitted on 26.04.2016 and 27.04.2016 on the respondent's website. The techno commercial bid of the petitioner was rejected by the respondent by the impugned communication dated 29.08.2016.

5. It would be necessary to cull out the relevant provisions of the tender documents (ITB) for appreciating the contention of the parties:- “6.[3] TECHNO-COMMERCIAL PROPOSAL PHASE This phase shall be conducted in the following steps: 6.3.[1] PRELIMINARY EXAMINATION OF TECHNO- COMMERCIAL PROPOSALS (a) OWNER will examine the Project Proposals to determine whether they are complete, whether required securities have been furnished, whether the documents have been properly signed and whether the bids are generally in order. (b) Prior to the detailed evaluation, OWNER will initially determine whether each Techno Commercial Proposal is of acceptable quality, is generally complete and is substantially responsive to the bidding documents. For purposes of this determination, a substantially responsive Proposal is one that conforms to all the terms, conditions and specifications of the bidding documents without material deviations, objections, conditionalities or reservations. A material deviation, objection, conditionality or reservation is one (i) that affects in any substantial way the scope, quality or performance of the contract; (ii) that limits ill any substantial way, inconsistent with the bidding documents, the Owner's rights or the successful Bidder's obligations under the contract; or (iii) whose rectification would unfairly affect the competitive position of other Bidders who are presenting substantially responsive Proposals.

(c) OWNER's determination of a Techno Commercial Proposal's responsiveness is to be based on the contents of the Techno Commercial Proposal itself without recourse to extrinsic evidence. If a Techno Commercial Proposal is not substantially responsive, it will be rejected by OWNER, and may not subsequently be made responsive by the Bidder by correction of the nonconformity. 6.3.[2] EVALUATION OF RESPONSIVE TECHNO- COMMERCIAL PROPOSAL The responsive Techno-Commercial Proposal shall be evaluated as under: 6.3.2.[1] EVALUATION OF QUALIFICATION PROPOSALS The Qualification Proposals shall be evaluated in detail as specified in Chapter 9 to determine fulfilment of Qualification Requirements specified in Chapter 7 of this RFP Document. 6.3.2.[2] EVALUATION OF TECHNICAL PROPOSALS The Technical! Proposals shall be evaluated further in. detail as specified in Chapter 9 to determine compliance with the Technical Proposals requirements. 6.3.[4] CLARIFICATION MEETING: The Owner, if required shall hold discussions or clarification meeting with only those bidders who have been considered qualified and whose Techno Commercial Proposal have been found to be responsive. However, it will not be construed from inviting/holding of these post bid discussions that the bidder has been considered eligible for opening of their Price Proposal 6.3.[5] The responsive Techno-Commercial Proposal which meets the Qualifying Requirements specified in Chapter 7 and Technical Requirements specified in Chapter 8 of RFP Documents shall be considered for Price Proposal Phase of the Bidding Process. The Bidders who meets Qualifying Requirements Specified in Chapter 7 and Technical requirements specified in Chapter 8 of RFP Documents shall be termed as Shortlisted Bidders.

7.0 In addition to the satisfactory fulfilment of the requirements stipulated under section ITS, the following shall also apply: 7.[1] TECHNICAL CRITERIA 7.1.[1] The Bidder should have, in the preceding 7 (seven) years reckoned from the date of opening of the Techno-commercial Bids developed & operated single coal I lignite mine having coal/lignite reserves of atleast 150 million tonnes & annual capacity of at least 6 MTPA and produced at least 2 million tonnes of coal/lignite from such mine. OR 7.1.[2] The Bidder should have, in the preceding 7 (seven) years reckoned from the date of opening of the Techno-commercial Bids, operated and produced: a) At least 23 Million SCM of aggregated volume of overburden and/ or coal/ lignite from a maximum of seven open cast mines of Coal I Lignite, in any year. b) At least 11.[5] Million SCM of composite volume of overburden and coal/lignite from single open cast mine in any year, out of which at least 3 million tonnes shall be coal I lignite. The qualifying works at clause 7.1.2(a) can be from same mine or different mines including the mine considered to meet qualifying requirement at clause 7.1.2(b). NOTES: i. The word "operated" means that the Bidder should have performed the necessary activities of drilling, excavation, hauling etc. on its own or through sub-contracting. ii. The word "developed" means that the Bidder should have performed the necessary activities of Land Acquisition I assisted in Land Acquisition, Statutory clearances/assisted in Statutory clearances and carried out 'Infrastructure development' on its own or through subcontracting.

9. EVALUATION METHODOLOGY FOR TECHNO COMMERCIAL PROPOSAL (QUALIFICATION PROPOSAL AND TECHNICAL PROPOSAL) 9.[1] Evaluation of Qualification Proposal: The Techno-Commercial Proposal shall be scrutinized to establish "responsiveness" as per Clause 6.3.1. The Responsive Techno-Commercial Proposal shall be evaluated in detail to determine their fulfilment of Qualifying requirements specified in Chapter 7 of this RFP document. During the bid evaluation, NTPC may, at its discretion, ask the Bidder for a clarification of its Qualification; Proposal including documentary evidence pertaining to only the reference mines declared in the Qualification Proposal for the purpose of meeting Qualifying Requirement specified in Chapter 7 of this RFP document. The request for clarification and the response shall be in writing and no change in the substance of the TECHNO-COMMERCIAL Proposal including substitution of reference mines in the Qualification Proposal by new/additional mines for conforming to Qualifying Requirement shall be sought, offered or permitted. The Qualification Proposals which meets the qualification criteria shall be considered for Technical Proposal Evaluation Phase of the Bidding Process. The Bidders who meet the qualification criteria shall be termed as Qualified Bidders. 9.[2] Evaluation of Technical Proposal: The Technical Proposals shall be evaluated to determine their compliance with the Technical Proposal Requirements. For this purpose, NTPC shall use the supporting documents and/or information available with or obtained by NTPC. 9.2.[1] During evaluation NTPC may seek clarification from the Bidders, may conduct discussions with the Bidders, and may ask the bidder to make Technical presentation. Technical proposal shall include details as has been sought vide Chapter 8. 9.2.[2] The Technical Proposals without sufficient information as per the terms of Chapter 8 of this document shall be deemed "Non Responsive Technical Proposal". 9.2.[3] The Responsive Technical Proposals meeting the requirements to the satisfaction of Owner shall be considered for further detailed Technical Evaluation. 9.[3] Detailed Evaluation of Technical Proposals submitted by the Bidder. 9.3.[1] The purpose of technical evaluation is to check responsive and assess the compliance with the requirements of NTPC. 9.3.[2] To ensure effective evaluation of Technical Proposals the Bidders shall provide the necessary details as specified in Clause 8.4. The Technical evaluation will be for evaluating whether the Technical Proposal of the Bidder meets the following criteria. (a) Time Schedule to Achieve First Year Coal Production Target - NTPC shall evaluate the PERT chart submitted by the Bidder, to determine its completeness; reasonableness; and achievability. (b) Adequacy of the Equipment Plan- The Bidder shall submit an equipment plan giving details of the equipment that shall be used by the Mine Operator to provide Mining Services which shall be not less than the Minimum Equipment to be deployed as specified by NTPC at Schedule 6 of Project Agreement. NTPC shall evaluate the adequacy of equipment to meet the criteria imposed by NTPC in terms of quantity of production, quality of coal produced etc.

(c) Development and Operational Philosophy - NTPC shall evaluate the feasibility of the development and operational philosophy being proposed by the Bidder for the Site.

(d) Staffing - NTPC shall evaluate the staffing plan being proposed by the Bidder to determine its ability to meet the requirements for NTPC's project. (e) Mine Infrastructure Facilities - NTPC shall evaluate the proposed site facilities being proposed by the Bidder to determine their ability to support the proposed fleet of mining equipment and accommodate the, projected staffing levels. This assessment shall include Bidder's plan for workshop, warehouse and office complex. (f) Maintenance of Major Mining Equipment- NTPC shall evaluate the proposed program of the Bidder for maintenance of the mining equipments to determine its ability to meet the production requirements for the Dulanga Block. (g) Control of Coal Quality - NTPC shall evaluate the proposed program of the Bidder in respect of quality control of delivered coal to ensure that the quality of dispatched coal meets the specification~ set by NTPC. (h) Coal handling, crushing - NTPC shall evaluate the proposed equipment and program for the crushing and handling of coal to meet NTPC's production and delivery requirements.

(i) Environmental Compliance - NTPC shall evaluate the proposed environmental program to determine its compliance with key requirements of the approved Mining Plan. (j) Safety - NTPC shall evaluate the proposed Safety Program to determine its ability to achieve satisfactory levels of safety for the Project. (k) Training - NTPC shall evaluate Bidder's training plan and overall philosophy to determine its ability to meet the requirements of NTPC.

(I) Site Security and Control of Coal Theft- NTPC shall evaluate the proposed program for security of the Site and the control of coal theft to determine whether it meets the requirements of NTPC.

(m) Land Acquisition and Construction of R&R Colony - NTPC shall evaluate

Bidder's proposed program for Land acquisition and Construction of R&R Colony to determine its ability and commitment to meet the requirements of NTPC. (emphasis provided)

6. The petitioner, in its project proposal uploaded on 26.04.2016 gave reference of three mines in support of its claim in terms of clause 7.1.[2] (b) of the ITB, towards meeting the QR. The three mines referred to in the proposal were (i) Mata No Madh, Lignite Mine, Kutch, GMDC (Mine 1); (ii) Juna Kundada OCP of Western Coalfield Limited (Mine 2); (iii) Khadia OCP, Northern Coalfield Limited (Mine 3). Out of the said mines, the data with respect to Mine Nos.[2] and 3 did not meet the QR as it did not relate to operation and production of 11.[5] million BCM of composite volume of overburden and coal/lignite from single open cast mine in any year, out of which at least 3 million tonnes was to be coal/lignite. Thus, only Mine No.1 (Mata No Madh) was considered as the reference mine for evaluation of the proposal for Dulanga Coal Block of the petitioner.