NHAI Tightens RFP Provisions

In a significant policy move, the National Highways Authority of India (NHAI) has issued a Press Release dated September 17, 2025, issuing a series of clarifications to its Request for Proposal (RFP) provisions, with the objective of improving the quality of project execution, curbing delays, and lowering the lifecycle cost of national highway projects. It reflects NHAI’s determination to refine contractor selection processes, enforce compliance during project execution, and enhance transparency in financial submissions.

Given the scale of India’s highway development with increasing dependence on Engineering, Procurement and Construction (EPC), Hybrid Annuity Model (HAM), and Build-Operate-Transfer (Toll) (BOT) frameworks, the clarity and robustness of RFP provisions have a direct bearing on project quality and safety, timely completion of works, and effective utilization of public resources.

In recent years, gaps in these provisions have allowed practices such as misrepresentation of bidder experience, unauthorized subcontracting, and the use of third party-backed bid securities, creating compliance challenges and financial risks. The latest clarifications directly address these issues to close systemic loopholes and instill greater discipline.

Key Clarifications in RFP Provisions

1. Redefining the “Similar Work” Criteria: One of the most notable reforms is the clarification of what constitutes ‘similar work’ for bid qualification. Previously, contractors with peripheral work experience were qualifying for complex highway projects, causing execution delays and poor quality, creating misalignments between bidder capacity and project complexity. NHAI has now expressly clarified that ‘similar work’ will mean only completed highway projects that include all major components comparable to the project under bid. This stricter interpretation ensures that only technically capable and proven contractors qualify, thereby enhancing the reliability of project execution.
2. Addressing Unauthorized Subcontracting: Several instances were observed where concessionaires engaged subcontractors without prior approval or exceeded permissible subcontracting limits. Under the revised provisions, any subcontracting beyond permissible limits or without approval will now be classified as an ‘undesirable practice’, attracting penalties equivalent to fraudulent practices. This clarification reinforces accountability and safeguards the integrity of the contracting process.
3. Ban on Third-Party Bid and Performance Securities: NHAI had observed instances where bidders submitted securities issued by unrelated third parties, raising concerns about enforceability and accountability. To address this, only securities backed by the bidder or its approved entities will now be accepted.

Implications

1. The tightening of qualification norms means that bidders must demonstrate genuine technical capability and financial integrity. Misrepresentation or unauthorized subcontracting could now attract severe penalties.
2. Greater scrutiny over subcontracting arrangements ensures that project execution aligns with contractual obligations, reducing risks of delays and quality lapses.
3. These measures enhance regulatory oversight, safeguard public funds, and align procurement practices with global standards of accountability.
4. Stricter norms and compliance are expected to translate into better-quality roads, timely project completion, and efficient use of resources, directly benefiting road users and the economy.

These reforms mark a decisive step toward a more accountable and transparent highway contracting framework. By tightening eligibility criteria, controlling subcontracting, and securing financial instruments, NHAI aims to ensure that only capable and responsible entities deliver critical highway projects. As India expands its highway network, these measures will lead to sustainable infrastructure growth, benefiting both road users and the economy.