Indian Railways may soon find itself in the eye of a storm related to awarding of an advertising campaign. Flouting all set norms on awarding of commercial contracts based on tender process, the railways has handed out the production of its television ad-film to leading advertising agency Ogilvy and Mather (O&M). The proposed ad film will be promoting Indian Railways and its association with the Commonwealth Games and will be made at a budget of Rs 2 crore.
However, according to a chief vigilance officer in a central ministry, there are three-tier rules for awarding a contract worth more than Rs 25 lakh. ?For any contract worth more than Rs 25 lakh the state-owned company or the government departments have to invite expression of interest (EoI) followed by technical and financial bids.? the official said.
Former vigilance commissioner Sudhir Kumar told FE single-tender virtually amounts to nomination. ?Contract on nomination basis violates all norms of competition, price discovery and reasonableness of cost,? Kumar said.
The ad-film was recently approved by a tender committee comprising top officials in the railway ministry. According to the information available with FE, O&M was the only party invited to make the film. The ad-film will be aired on Doordarshan and other networks during the upcoming Commonwealth Games.
?It has been decided with the approval of railway board chairman Vivek Sahai to engage Ogilvy & Mather to create a TV commercial on single-tender basis. …The proposal received from the firm has been approved for being evaluated on a single basis in view of the need to have a reputed agency which can deliver a quality film in a very short time,? the tender committee said in a meeting.
A query sent to the rail ministry in this regard remains unanswered. The project worth nearly Rs 2 crore is likely to be completed by the end of this month. As per an advertising industry source, production of such kind of TV commercials cost about Rs 50-60 lakh depending upon inputs.
The railways has justified the cost saying Ogilvy has worked on similar campaigns such as Incredible India for which it charged Rs 2.95 crore. When contacted a tourism ministry official said, ?I don?t think the figure quoted by Indian Railways is correct. The production of Incredible India film had not cost more than Rs 50-60 lakh.?
According to advertising industry sources, this is not an isolated incident. ?Ad-film contracts from various government bodies are generally given out on personal relationship and the comfort-level of official with certain ad-film makers or agencies. Such ads account for nearly 25% of the overall business and therefore these are lucrative for everyone,? a top executive in a leading advertising agency said on conditions of anonymity.