Tech majors cry foul over defence inventory project tendering

The government's ambitious project to computerise Indian Army's inventory in a phased manner could suffer more delays, with technology companies Oracle India and Infosys Ltd raising concerns about the manner in which the project has been tendered.

Over the past three months, Oracle and Infosys have written to the defence ministry alleging "preferential procurement practices" while selecting the implementation agencies for the project. The letters have also been marked to Defence Minister A K Antony and the Central Vigilance Commission.

The initiative, the Computerised Inventory Control Project, was first opened for bids in 2008 and has been tendered thrice. The current phase, the second, aims to bring Indian Army's inventory - including arms and ammunition, vehicles and fuel - to the central ordinance depot level online by using an enterprise resource planning (ERP) software. While the second phase was expected to cover 4,000 users, the next phase is aimed at increasing the users by four times. The current project was tipped around Rs 500 crore.

In a letter dated November 19, Oracle India had alleged that "all bids quoting Oracle ERP Solution have been rejected over last 4-5 years in all the defence ERP projects during the technical evaluation leading to the commercials of only single ERP being opened."

Financial bids of two entities, which had qualified the technical rounds, were opened last month. L&T Infotech emerged the lowest bidder, though it was competition with a leading infotech firm. Both the entities had partnered with Oracle's rival ERP firm, SAP. L&T has quoted Rs 450 crore for the project. However, the contract has not yet been awarded.

None of the firms involved - Oracle, Infosys, SAP and L&T Infotech - commented. Queries sent to the secretary of defence, R K Mathur, on Monday remained unanswered despite repeated phone calls.

The letter, seen by Business Standard, gave details of the stages at which Oracle bids were rejected for the project. It also named other projects of the various arms of the defence where Oracle had been unsuccessful in bagging a contract. "We are at a very initial stage of computerisation in Indian defence and removing the competition in ERP projects will lead to a huge loss to the exchequer," the Oracle letter added.

Infosys, which had partnered with Oracle, said in its letter it had offered "an alternative but technically compliant solution for ERP". It has requested a "re-evaluation by a freshly constituted independent board which does not have any representation from the existing evaluation committee." Oracle, too, has asked for a re-evaluation by an independent and neutral committee.

The Infosys letter, dated October 22, which was also seen by Business Standard, said, "This would offer an unbiased evaluation of the POC (proof of concept) and also clear any misgivings about any prejudice towards Infosys Ltd due to its alternate ERP product which has eventually benefitted the organisation by introducing competitiveness in an otherwise monopolistic environment."