Anger as CB&I fails to disclose McDermott ban

Vol 24, PW 12 (06 May 21) People & Policy

IndianOil-controlled Chennai Petroleum (CPCL) is under pressure to explain why it hasn't disqualified US contractor Chicago Bridge & Iron (CB&I) from a multi-million dollar tender linked to the Rs28,983cr ($3.94bn) construction of a new 9m t/y refinery at Nagapattinam in Tamil Nadu.

On March 2 (2021), McDermott-affiliate CB&I bid lowest in one of three EPCM packages where CPCL also wants a Project Management Consultant (PMC), sparking loud protests from rival bidders. In dispute is CB&I's failure to disclose that Engineers India had 'blacklisted' two J Ray McDermott companies on October 19 (2012) and November 19 (2012) in an unrelated ONGC tender.

According to the Indian government's Central Public Procurement Portal, EIL's ban on J Ray McDermott Eastern Hemisphere Ltd (Mauritius) and J Ray McDermott Middle East Ltd (Dubai) remain in force and expire only later this year on December 31 (2021). "It is up to CPCL to accept or reject the bidder," says a source.

"But a failure to disclose should lead to automatic bid rejection." Citing guidelines from India's anti-corruption Central Vigilance Commission, our source adds CB&I was duty-bound to disclose EIL's ban in the Transparency International-inspired Integrity Pact (familiar to all state-owned companies) that it had signed and submitted to CPCL with its bid documents.

But it didn't. Instead, CB&I sent accounts for the past three years until 2019-20 from McDermott International to prove its financial strength when it bid on August 4 (2020).

On March 2 (2021), bids were opened with CB&I emerging lowest bidder at Rs224.79cr ($32m), followed by Technip at Rs272.18cr ($38m), EIL at Rs295cr ($42m) and Worley India at Rs357.22cr ($51m). Asked why CPCL had not disqualified CB&I, general manager projects R Anand replied angrily: "Why should anyone in CPCL share information with you about our tendering or other internal processes? Nobody in CPCL will speak with you!"