VSS Project Procurement: Anatomy of a Scandal

Admin

It appears that the #foundation stone of #Corruption in the #procurement of Video Surveillance System (#VSS) projects within #IndianRailways was laid with meticulous foresight. A retired General Manager (#GM), speaking under strict condition of anonymity, has raised grave and unsettling concerns, which—if left unanswered—would amount to an institutional complicity in a systemic #scam.

July 14, 2025: Official Release—“Railways to Install CCTV Camera in Coaches to Enhance Passenger-Safety”

He has posed the following damning questions to the #RailwayBoard, which cast serious doubt on the integrity, legality, and rationality of the VSS procurement methodology:

  1. When same item is being procured through Stores tenders as pure supply contracts by the #Stores Department of Zonal Railways (ZRs) and Production Units (PUs) for fitment in Electric Locomotives, what justification exists for their procurement through #Works tenders by the #Mechanical Department for installation in coaches?
  2. If such items are supply contracts for #Coach Production Units like ICF, RCF, and MCF—who procure them via Stores tenders—why are #ZonalRailways deviating from this standard practice?
  3. When #Electrical Department has opted for Stores tender route for installation in Locos, why Mechanical Department has opted works tender route for the same work for Coaches? Why there is contradiction within the Zonal Railways itself?
  4. Why are the Zonal Railways insistent upon Works tenders despite the material-intensive nature of the project (virtually 100% supply of goods except installation and commissioning), in contravention of existing instructions?
  5. It is pertinent to note that as per Rule 142 of GFR 2024, the term ‘goods’ expressly includes associated services such as #transportation, #insurance, #installation, #commissioning, #training, and #maintenance. This provision was deliberately added to prevent misclassification of supply-contracts as works-contracts merely by including installation and commissioning. The present case clearly qualifies as a #supply-contract. Then why, in blatant disregard of GFR, has the #works-tender route been chosen?
  6. Existing norms prescribe Works tenders only for complex, multi-disciplinary works involving various domains (civil, electrical, signaling, etc.). This project—supply, installation, and commissioning of a single item—falls squarely under Stores tender jurisdiction. Then why through works tenders?
  7. How can #eligibility conditions for “similar works” of high value (mandatorily applicable for works tenders) be justifiably imposed when such projects are being executed for the first time in Indian Railways? Does it not mean putting a cart before the horse?
  8. Can installation of #CCTV on static assets like buildings and roads be equated at par and categorized as “similar work” (mentioned in eligibility condition of works tenders) to the installation of highly sophisticated VSS equipment like this on dynamic rolling stock?
  9. When the #technical eligibility criteria already mandate rigorous scrutiny, including stringent #SQTC certification and approval, the imposition of additional commercial barriers—such as the requirement of prior execution of similar high-value contracts—under Works tenders appears redundant and unwarranted. It begs the question: what legitimate value do such conditions add, particularly when the so-called ‘similar’ works (e.g., static CCTV installations) are fundamentally distinct from the current technologically advanced and dynamic application envisaged in rolling stock? Rather than ensuring #quality, such criteria merely serve to arbitrarily restrict #competition and create a non-level playing field. What is the purpose, if not to restrict fair competition and create artificial monopolies?
  10. The provisions of the #MSME Act do not extend to works tenders. Consequently, by deliberately choosing the impermissible route of a works contract for what is essentially goods procurement, the statutory benefits and preferences guaranteed to small-scale industries under the MSME Act are rendered inapplicable. This effectively excludes MSMEs from fair participation. The critical question remains — why are they being denied their rightful protection and opportunity?
  11. In the absence of any Board directive to adopt Works tenders for such projects, what is the justification for Mechanical departments of Zonal Railways to opt for works tenders route rather than stores tenders in violation of logic, policy, and prudence?
  12. Concrete examples of cost disparity between Works and Stores tenders expose the financial magnitude of the fraud. It is pertinent to recall that, in the past, on East Central Railway (#ECR), axle counters were procured through Stores contracts at a unit cost of ₹3.5 lakhs, whereas the same item, from the very same #RDSO-approved vendor, was later procured via Works tender at an inflated rate of ₹8.38 lakhs.
  13. Similarly, #UFSBI units were purchased at ₹8.25 lakhs through Stores tenders, but the identical equipment was acquired for ₹18.00 lakhs under a Works tender from the same approved source—M/s Deltron Control Systems. The glaring disparity in pricing led to the unequivocal conclusion that such material-intensive procurements—where material cost exceeds 65% of total project value—must, in the interest of #transparency and #economy, be routed strictly through the Stores procurement channel. This principle was formally adopted to prevent misuse of Works tenders for what are essentially supply contracts.

The answers, though unstated, are glaringly obvious. The deliberate deviation from Stores tenders to Works tenders constitutes a calculated conspiracy to secure undue financial advantages. The Mechanical Department—functioning as the sole demander, tendering authority, executor, inspector, certifier, and user—has rendered the procurement process opaque and devoid of independent checks and balances.

This well-orchestrated bypassing of Stores procurement norms in favour of Works tenders serves one clear objective: exclusion of genuine #competition and favoritism towards a select #cartel, under the garb of #experience and eligibility. The crux of the manipulation lies in the deliberate choice of the Works tender route, which—by default—invokes onerous commercial eligibility criteria such as prior execution of one similar work of 60%, two of 40%, or three of 30% of the #Tender value. Given that the current project is being undertaken for the first time on Indian Railways, it is evident that no genuine #bidder can possess the stipulated past credentials. This automatically disqualifies most prospective participants, leaving the field open only for a select few pre-identified entities. That, precisely, is the reason this route was carefully selected.

Adding insult to injury, the so-called “similar” works—such as static CCTV installations on roads and buildings for state governments—bear no technological or operational resemblance to the complex, dynamic systems intended for use in rolling stock. Treating these as equivalent is a distortion of facts and a gross misrepresentation.

In legal terms, such conduct amounts to abuse of #discretionary powers, a betrayal of fiduciary responsibility, and a #textbook illustration of procurement malpractice bordering on fraud.

Sources say that the #NorthernRailway having set this precedent—of works tender—under oral directions of a high-ranking officer in the Railway Board, possibly linked to departmental bias and other ZRs have merely followed them. That the #CRB himself is a Mechanical officer adds another layer of suspicion to the irregularities.

A #scandal of this proportion demands immediate judicial scrutiny, intervention from #Vigilance agencies, and a #policy-level correction from the highest echelons of governance.