BSNL?s fresh tender for adding 5.5 million lines runs the risk of once again riding into controversy. In a move which can be seen as changing the rules mid-way and also violating the government?s laid down guidelines on placing orders for equipment, the state-owned firm has made it mandatory that only those equipment vendors would be eligible to bid who submit their source code for hardware and software in a government-controlled escrow account.
The move has already had its first casualty with the Sweden-based Ericsson opting out of the tender. The development is significant since in the past the firm has emerged as the lowest bidder in BSNL?s tenders and also built its first 30 million lines.
While the government did come out with security guidelines on import of telecom equipment mandating companies to deposit their source code in a government-controlled escrow account, it later relaxed the norms with European vendors opposing the move. The Prime Minister?s Office wrote to the department of telecommunications and the home ministry that both the system run concurrently ? that of depositing the source code with the government and providing self-certification that the equipment do not have any spywares. In the interim the two ministries were advised to look for some alternate mechanism which takes care of security concerns and the apprehensions of the European vendors.
Taking advantage of the relaxation all the private operators have recently placed orders for their equipment on a mix of European and Chinese vendors.
The change of rules also comes mid-way as in July BSNL had shortlisted three telecom equipment vendors: Ericsson, Nokia Siemens and Alcatel Lucent for its 5.5 million lines. At that time the government had barred it from placing orders to Chinese vendors. However, with the security norm put in place the ban on Chinese vendors was lifted. The company then re-floated the tender for which China?s Huawei and ZTE and European vendors like Nokia Siemens and Alcatel Lucent have submitted their bids. However, the two European companies have refused to submit their source code, and therefore run the risk of being disqualified later.
Confirming that Ericsson had opted out of the process, vice-president marketing, P Balaji told FE, ?This tender requires the vendor to mandatory deposit the hardware and software code in an escrow account. It is well known that Ericsson, some other western players and industry associations have already voiced their concerns with the government of India. Making it mandatory requirement in the tender is not in line with the current agreed guidelines issued by the government. We are in a dialogue with the government and the decision is still pending. Therefore, at this stage, we cannot adhere to such a requirement?.
The genesis of the tender itself has been out of controversy. Earlier the company had floated the world?s largest tender for 93 million lines, which was struck down by the CVC because of irregularities. However, to meet its immediate shortfall the government allowed to float it the 5.5 million tender.
