In an effort to rein in defaulting highway contractors and consultants, the central government is planning to modify contract conditions to prevent them from bidding on national highway (NH) projects after a "major or catastrophic failure" is recorded in an ongoing project, even without formal debarment.

The Ministry of Road Transport and Highways is proposing changes to contract conditions that would render contractors ineligible to bid on NH projects for two years following a significant failure. This move aims to circumvent the common practice of contractors obtaining court stays against debarment or blacklisting orders. Highway agencies have debarred or suspended over 60 contractors and consultancy firms in the past two years and have imposed penalties of over Rs 307 crore.

According to an official, the issue of contractors and consultants securing quick legal relief was discussed at a high-level meeting to review the highway sector. A detailed assessment is planned to identify any patterns in how contractors and consultants obtain such relief.

The proposed "major or catastrophic incident" conditions will encompass events such as bridge collapses, viaduct failures, elevated stretch collapses, reinforced wall failures, and severe road damage.

An official noted that debarment can severely impact a company's business, prompting contractors and consultants to seek relief through various means. The new eligibility condition, linked to major incidents, will restrict contractors from securing NH projects, making it difficult for them to challenge the restrictions legally. The government aims to protect federal programs from unethical contractors or contractors that have unsatisfactory business records. Suspension and debarment are not punitive measures but are intended to ensure that only responsible persons and companies participate in government programs.

A debarment typically excludes a person or company for a specific period, generally not longer than 3 years, and has government-wide effect, applying to all federal programs and procurement. If an individual is suspended or debarred, they may not bid on or receive any federally funded contracts, grants, cooperative agreements, scholarships, fellowships, contracts of assistance, loans, loan guarantees, subsidies, or insurance.