𝗔 𝗖𝗮𝘀𝗲 𝗦𝘁𝘂𝗱𝘆: 𝗪𝗵𝗲𝗻 𝗜𝗻𝘁𝗲𝗴𝗿𝗶𝘁𝘆 𝗧𝗮𝗸𝗲𝘀 𝗮 𝗕𝗮𝗰𝗸 𝘀𝗲𝗮𝘁— 𝗟𝗲𝗮𝗱𝗲𝗿𝘀𝗵𝗶𝗽 𝗙𝗮𝗶𝗹𝘂𝗿𝗲 𝗶𝗻 𝗧𝗲𝗻𝗱𝗲𝗿 𝗙𝗶𝗻𝗮𝗹𝗶𝘀𝗮𝘁𝗶𝗼𝗻

 CASE STUDY:When Integrity Takes a Back Seat-Leadership Failure in Tender Finalisation

 1. Origin of Investigation

Routine scrutiny of a tender file revealed that L-1 and L-2 were rejected without justified basis, and the contract was awarded to L-3 at an abnormally high price, causing preventable financial loss to the PSU. This led to a vigilance investigation based solely on available documents and recorded statements.

2. Background

The PSU manufactures refractory bricks and undertakes lining, monitoring and maintenance jobs for steel plants. For the first time, it decided to outsource lining & maintenance of a 300-MT converter through Limited Tender Enquiry (LTE) floated to 7 parties. The NIT was issued to the bidders having experience in 200-MT+ converter/ladle/blast furnace jobs — the basis for qualification.

3. Evaluation & Deviations

Three bids were received. Instead of open comparison: L-1 and L-2 were rejected and

L-3 alone was declared acceptable, making it single technically suitable.

L-1 was rejected citing lack of expertise and “impracticable pricing”, also for not having mag-carbon experience — a criterion not mentioned in NIT but added later.

Investigation found: L-1 Qualified as per NIT and 'A' class contractor registered with the Integrated Steel Plant and having Similar Work Experience Proven of ₹18.41 lakhs job. Whereas L-3 was a Class-'C' contractor. Rejection of L-1 and L-2 was arbitrary, non-transparent and against CVC norms, violating natural justice under LTE.

4. Financial Impact

Bidder Quoted Price Compared to Estimate

Against the estimate of Rs 3 lakhs, L-1 quoted ₹3.82 lakh, within +30% of estimate. L-3 quoted ₹13.39 lakh, which was  4.5× estimate & 3.5× L-1

Even post-negotiation at ₹8.96 lakh, price remained: 3× estimate and 2.35× L-1.

The PSU suffered a loss of ₹5.14 lakh. Next year's contract was settled at ₹6.97 lakh, confirming inflation and favour to L-3.

5. Procedural Breach

Instead of referring to Tender Committee: Head of MM & Contracts directly issued LOI to L-3, without TC recommendation and Competent Authority’s approval. CEO was verbally informed about the exigency. No Opportunity was given to L-1/L-2 to respond to the deficiencies. It became a fait accompli — later TC merely regularised a decision already executed. Claimed urgency was false, as work actually began 15 days later.

6. Key Interrogation Disclosure

During questioning, the Head of the Organisation stated that the Head of Works of the Integrated Steel Plant  had instructed to award the job to a specific contractor, which was complied by the organisation. (By this time that gentleman had already superannuated.)

This established: Predetermined contract outcome, external influence over evaluation, Collusive corruption and back-to-back contracting.

The tender was not mishandled — it was pre-engineered.

7. Findings & Action

The investigation confirmed deliberate violation of procedure, transparency & fairness.

Major penalty was imposed on five senior officials, and system improvements were implemented.

This case shows how leadership failure and collusion can derail procurement integrity, convert competition into manipulation, and directly harm public interest.

Here, integrity didn’t only take a back seat — it was pushed out of the vehicle, and the system bore the cost.

NB: This case study is compiled exclusively for general awareness and capacity-building. Names and identifiers have been intentionally omitted, and no portion of this document is intended to malign, defame, or adversely reflect upon any person or organisation.