invitation of ids for dry- leasing of new upto …mmd.airindia.co.in/aimmd/tender/tender for...

HMM/16/A320 NEW/LEASE/ENQ-002 DT.08.01.2016

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INVITATION OF BIDS FOR DRY- LEASING OF

NEW

UPTO 15 AIRBUS A320 CEO/NEO AIRCRAFT

NEW DELHI

JANUARY 2016


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INTRODUCTION

Air India Limited (AI) is a scheduled full service airline, fully owned by the Government of India. AI was one of the launch operators of A320 aircraft and purchased 31 aircraft during the years 1989 to 1993 fitted with IAE V2500-A1 Engines. Again, during 2006 to 2010 AI purchased 43 A320 family aircraft including 4 A320 aircraft fitted with CFM 56-5B Engines. Subsequently, as part of its fleet replacement, AI has inducted 5 new A320 aircraft on dry lease in 2015 and has firmed up the induction of 14 A320 NEO aircraft fitted with CFM LEAP 1A26 engines – for deliveries commencing from 2017 upto 2019. AI’s present fleet of 120+ aircraft has a mix of Boeing and Airbus aircraft in its fleet. Majority of the aircraft maintenance, engine overhaul and components’ repair is performed by its 100% subsidiary, Air India Engineering Services Ltd (AIESL) in-house. AI’s maintenance facilities are approved by the Director General of Civil Aviation (DGCA) of India, the civil aviation regulatory authority of India. Its engine overhaul facilities and ATEC facility, and many other component overhaul shops are also approved by FAA / EASA.

1. PURPOSE AI intends to induct on dry lease upto 15 (Fifteen) new A320 aircraft with sharklets- individually or collectively also referred to as the “Aircraft” or the “A320 Aircraft”- for a period of maximum upto Twelve (12) years as below:

• A320 ceo Aircraft (the “A320 ceo Aircraft”) or • A320 neo Aircraft (the “A320 neo Aircraft”),

THE A320 CEO AIRCRAFT WILL BE POWERED BY CFM56-5B4/3 PIP ENGINES, AND THE A320 NEO AIRCRAFT WILL BE POWERED BY CFM LEAP -1A26 ENGINES. Deliveries of the Aircraft are sought by Air India between 1st April 2017 and 31stDecember 2017. Delivery schedule of offered aircraft may be indicated by bidders in the relevant column at Annexure-II (T1). Earlier deliveries, if offered, may be accepted.

Note: To fulfill the requirement of inducting 15 A320s on dry lease in 2016-2017, AI is seeking

aircraft in either the used or new aircraft (CEO or NEO) category, or combination of both, through separate simultaneous tenders.

AI is seeking bids separately for dry lease of upto 15 NEW A320 CEO/NEO aircraft with Sharklets powered by CFM56-5B4/3 (for CEO) or CFM LEAP 1A26 (for NEO) Engines.

With the two separate tenders for used aircraft and new aircraft, respectively, AI plans to fulfill its total requirement of 15 A320 aircraft.

AI reserves the right to select either USED aircraft or NEW aircraft or a combination of both or reject fully or partly any bid submitted pursuant to this tender.


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2. STRUCTURE OF THE DOCUMENT

Annexure I General Terms and Conditions

Annexure II (including T1, T2, T3, T4, T5, T6, T7) and Technical Bid Requirements Appendices 1A, 1B, 2 and 3

Annexure III (including F1, F2, F3, F4, F4A, F5) Financial Bid Requirements

Annexure IV Integrity Pact

IMPORTANT: PLEASE COMPLETE THE ANNEXURES AS PROVIDED IN THIS TENDER WITH THE REQUESTED INFORMATION AND SUBMIT AS A PART OF THE BID.

3. SUBMISSION

a) Bidders are required to submit their bids in HARD COPIES in two separate sealed envelopes consisting in (1) the Technical Bid and (2) the Financial Bid duly super-scribing “Tender

NO.HMM/16/A320 NEW/LEASE/ENQ-002 (Technical Bid)‘’and “Tender NO.HMM/16/A320

NEW/LEASE/ENQ-002(Financial Bid)’’respectively.

NOTE: The bids should be submitted duly filled in the bid formats specified in this tender.

b) The envelope containing the Technical Bid must also contain the Integrity Pact duly signed as per details in tender document. Additionally, scanned copy of the technical bid in PDF format may be provided in CD / SD (Secure Digital) Card inside the envelope marked “Soft Copy of Technical Bid”.

c) There should be no indication whatsoever, of any pricing information in the Technical Bid. d) The envelope containing the Financial Bid may also contain, scanned copy of the Financial Bid in

PDF format CD / SD (Secure Digital) Card inside the envelope marked “Soft Copy of Financial Bid”. e) These two separate sealed envelopes containing the Technical Bid and Financial Bid, shall further

be sealed in another master envelope, duly super-scribed with the tender reference Tender

NO.HMM/16/A320 NEW/LEASE/ENQ-002 and should be submitted in the tender box placed at the address given below.

Attn: Mr. M.L. Krishnamoorthi Dy. General Manager (MM), Phone: +91 11 2462 6579

Office of Executive Director (Materials Management) Materials Management Department Air India Limited Safdarjung Airport, New Delhi – 110 003 INDIA

Last date of receipt of bids is 08.02.2016 latest by 1430 hours IST. f) Bids should be submitted on Company’s letterhead, duly signed and stamped on every page by

authorized signatory of Bidder’s company. g) After downloading this document, please communicate your intention to participate in this


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Tender- with your name, telephone number, postal and email address to the following email IDs:- [email protected] or [email protected]

h) AI is not responsible for the quotation lost in transit or not received in time including postal delay.

4. IMPORTANT INFORMATION TO BIDDERS: a) Last date for receipt of quotation at the address below, is 08.02.2016 at 1430 Hrs. IST.

b) Technical quotes will be opened on 08.02.2016 at 1500 Hrs. IST in the office of

Executive Director (Materials Management) Materials Management Department, Air India Limited, Safdarjung Airport, New Delhi – 110 003, INDIA Attn: Mr. M.L. Krishnamoorthi Dy. General Manager (MM) Phone: +91 11 2462 6579

c) Any queries with regard to this tender may be addressed to:

FOR TERMS & CONDITIONS OF THIS TENDER: FOR TECHNICAL INFORMATION:

MR. M. L. KRISHNAMOORTHI Dy. General Manager (MM) Materials Management Dept., Air India Ltd. Safdarjung Airport, New Delhi – 110 003, INDIA Phone: +91 11 24626579 E Mail:[email protected]

MR. T. C. SHARMA General Manager (Engg.) Air India Engineering Services Ltd. 205, G+5 Building, Opp. Terminal 1A, Indira Gandhi International Airport, New Delhi – 1100037, INDIA Phone: +91 11 25673417 E-mail: [email protected]

d) Any amendments to tender document/ extension of closing / opening date will be displayed on

mailto:[email protected]


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our website, www.airindia.in and no separate communication will be sent in this regard.

e) If bidders so desire, duly authorized representative of their Company can remain present at the time of the opening of the tenders. The representative must carry an authority letter from Company’s authorized signatory for participation in the tender opening.

f) The opening date of the Financial Bids will be intimated later after evaluation of the Technical Bids.

ANNEXURE - I

GENERAL TERMS AND CONDITIONS

(Clause Nos. 1 to 15: Mandatory requirements)

1. Bids received through fax and email (in encrypted or any other form) will not be considered and

summarily rejected. Only bids submitted in accordance with this tender document will be considered. Bids for the CEO A320 and the NEO A320 aircraft should be submitted separately.

2. Bids shall be acceptable only from Manufacturers / Airlines / Operators / Lessors of International standing and repute owning or leasing aircraft. Bids from Agents / Brokers will not be considered.

3. The bids should be accompanied by confirmation of the aircraft manufacturer (Airbus) validating delivery slots offered are on firm order or in case offered new aircraft are ready for delivery proof of ownership, if owner, otherwise documentary proof that Lessor has assignment rights on the Aircraft offered for lease. In case the bid is from the company or firm managing the lease, the same should be accompanied by documentary proof specifying the authority to manage the lease of each Aircraft offered by the company or firm managing the lease.

4. Financial Bids of only such Bidders shall be considered whose Technical Bids are found to be qualifying by AI after completion of Technical Bids’ evaluation.

5. The Lessee should be permitted to sub-lease the Leased New Aircraft to its subsidiaries and /or associate entities as also allow charters without requiring prior approvals from Lessor. The Lessee should also be permitted to lease to outside parties with the permission of the Lessor, such permission being not unreasonably withheld.

6. Special Purpose Company (SPC) a. The Aircraft should be leased through Ireland based Lessor, for which the bidder to use/set up such

a SPC at its own costs. b. The bidder shall also agree to provide a Parent Support Guarantee letter in respect of such SPC

formed as a Lessor. 7. Indian PAN (Permanent Account Number) of the Lessor, issued by Indian Income Tax authorities,

under the Indian Income Tax Act of 1961 would be mandatorily required to be obtained by the successful Bidder with whom Lease Agreements are finalized.

8. Tax Residency Certificates from the local authorities where Lessor is resident and assessed for income and other required forms / declarations / certificates (such as Form 10(F) as per Indian Income tax rules, No Permanent Establishment Certificate etc) would be required to be provided by the successful Bidder to Air India annually / such other periodicity as may be prescribed under Indian Income Tax Law.


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9. Contract a) After evaluation of the bids, AI after approval of its Board of Directors will enter into contract with

the successful Lessor(s) for agreed lease period as per terms and conditions of this tender and the negotiated terms with option to renew for a mutually agreed period and term.

b) Offered Aircraft and related documents shall be made available by the selected lessor(s) to the representatives of AI for inspection before acceptance of the Aircraft. The Aircraft will be taken on lease only after it is inspected and accepted by AI.

c) The Bidder to confirm that it has obtained their required approvals to offer the subject Aircraft under this Tender.

10. Integrity Pact The parties are required to sign and submit the enclosed Integrity pact (Annexure-IV) along with the offer. It will be noted that the contents of this Integrity Pact is as per the regulatory requirements and hence, no changes to the contents are permissible. Also, refer attached brief on Integrity Pact and Independent External Monitor (IEM). Shri Pratyush Sinha is the IEM and his contact details are as under: Mobile : +91 9868116811 E-mail : [email protected]

11. Price

a) Price refers to the offered Fixed Monthly Aircraft Lease Rentals and the performance based (Flight hour and cycles) Maintenance Reserves, if applicable, towards Restorations & Heavy Maintenance Charges more appropriately explained in the Financial Bid formats at Annexure-III (F1 and F2).

b) All amounts to be quoted in US Dollars only. c) In the event of any Bid being received in a currency other than US Dollars, the conversion rate (TC

Selling Rate) published by the State Bank of India on the date of opening of the Financial Bid will be used for evaluation of Bids.

12. Regulatory Agency Clearances The Lease Agreement when executed will be subject to AI and its related Government Approvals such as Reserve Bank of India, Ministry of Finance, Export / Import approvals and DGCA, India.

13. Warranty All Manufacturers (OEMs – for airframe, engines, APU and components)provided warranties and

guarantees should be assigned to AI. The warranties and guarantees applicable including the

guarantee levels, compensation for exceeding the guarantee levels, attached conditionality’s etc

needs to be disclosed to Air India in the financial bid.

14. Security Deposit a) Any Security Deposit required by the Lessor will be given by AI on signing of the Lease Agreement

in the form of Standby Letter of Credit (SBLC) to be issued / confirmed by international bank of repute acceptable to Lessor since payment of advance deposits are restricted as per the regulations of Reserve Bank of India.

b) No other guarantee will be offered, other than the SBLCs towards security deposit. c) In case the bidder requires Security Deposit in Cash on or after signing of the Lease Agreement,

mailto:[email protected]


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the bidder should be agreeable to provide a Counter-bank guarantee to be issued/confirmed by International Bank acceptable to Lessee, valid till the delivery of Aircraft to AI, commensurate to such amount subject to such guarantee being enforceable in India.

d) At the time of execution of LOI, if required, AI will give initial deposit by way of SBLC or Cash upto maximum of US$ 50,000 per Aircraft. Such initial deposit shall be adjusted against the Security Deposit payable to the Lessor at the time of Lease Agreement. If for any reason the Lease Agreement is not concluded, such initial deposit shall forthwith be refunded unconditionally in full to AI. Wherever initial deposit is given in Cash, the same shall either be substituted with SBLC on signing of the Lease Agreement or should be covered by a Counter-bank guarantee to be issued / confirmed by International Bank acceptable to Lessee, valid till the delivery of Aircraft to AI, commensurate to such amount subject to such guarantee being enforceable in India.

e) All Security deposits would be refundable in full upon termination or at the lease expiry. f) For the Initial deposit / Security Deposits requirement for dates earlier than the Aircraft Delivery

dates, in case cash security deposit is required, the selected bidder(s) would be agreeable to provide enforceable Undertaking/Indemnity/Guarantee valid for the said period against such deposit requirements till the Delivery of aircraft.

15. NEO A320 Aircraft engines maintenance reserves

a) All scheduled/unscheduled maintenance of CFM LEAP - 1A26 engines that will come installed on the Leased NEO A320 aircraft will be covered under PBH agreement with the OEM/ PBH service provider during the entire lease term for refurbishment, performance restoration, LLP replacement etc.. AI will be making monthly payments to the Engine OEM / PBH service provider under PBH Agreement for services including aforementioned maintenance to standards that will be in compliance with lessee’s Approved Maintenance Program, and in accordance with the manufacturer’s manuals.

b) Lessor should be agreeable that lessee’s obligations of monthly payment of Maintenance Reserves (MRs) towards (a) Engine Performance Restoration and (b) Engine LLP Replacement are waived in view of monthly payments by AI to the Engine OEM / PBH service provider under the PBH Agreement. However in case the PBH agreement is not in effect, Engine MRs to be quoted will be payable.

c) The lessor on lease return however will be compensated based on the Tripartite Agreement to be executed between Lessor, Lessee and PBH Vendor :

i. for the utilization of engines since last shop visit - at PBH refurbishment hourly rate.

ii. for the LLP utilized till lease return - at lower of the then current OEM catalogue price for each LLP on pro-rata basis or the LLP hourly rate as mentioned in the PBH agreement

d) Lessor should also be agreeable to execute a Tripartite Agreement with OEM / PBH service provider and AI.

16. Manufacturer’s Credits All the Manufacturers concession / credits against purchase of the Aircraft by the Manufacturer to be passed onto/assigned to AI. The details of such credits/concessions including the value of such concessions/credits are to be given in the Financial Bid only.

17. Tender Acceptance


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a) The Bidder should be agreeable to AI opting to lease less number of Aircraft than the number of Aircraft offered by the Bidder, without changing the rate, terms & conditions.

b) The acceptance of the bids is subject to AI receiving approvals from Regulatory/Government authorities and its Board.

c) AI reserves its right to terminate the process of tendering at any stage, and not to proceed further at its discretion, without assigning any reason thereof.

d) AI reserves the right to accept or reject any quotation partially or in its entirety without assigning any reasons whatsoever.

e) AI reserves the right to finally accept the bids so as to achieve its aim of leasing in totality upto 15 (Fifteen) Aircraft subject to requirement indicated at Para 2 of Introduction Section. AI would require offer of minimum of at least Three (3) Aircraft, with identical configuration, in the bids for dry lease. Accordingly, AI reserves the right to award the contract to one or more Bidders subject to the evaluated terms being acceptable to AI. The decision of AI to lease or not to lease Aircraft from the Bidders would be at its sole discretion and final.

18. Lease Agreement - draft It is desired that the Bidder submits a copy of their DRAFT Lease Agreement along with the Technical Bid, excluding any commercial details.

19. Insurance a) The Aircraft will be insured by Lessee, with total liabilities not to exceed US$ 750 million and with

deductible limit of US$ 750,000. b) Bidders are required to indicate Insurance Value of each Aircraft in US$ at Annexure-III (F2). c) Bidders have to provide annual reduction in insurance value in the Annexure-III (F2).

20. Notification

Any liquidation/merger/take-over/amalgamation of Head Lessor/Owner/Lessor in the case of successful Bidder should be intimated to AI. In such an eventuality, AI reserves the right to continue/discontinue the Lease Agreement including treating such change as Termination Event in terms of Point no.22 of this Tender.

21. Jurisdiction All disputes and differences arising out of this Tender shall be subject to the jurisdiction of Courts of New Delhi, India. However, if required by bidder, this can be considered at Courts of London, UK.

22. Arbitration Any dispute arising between the parties in respect of the construction, interpretation, application, meaning, scope, operation or effect of this document or the validity or breach thereof, shall first be settled by mutual consultation. If the dispute remains unresolved after a period of Ninety (90) days from the date when the mutual consultation has started, the matter shall be referred for settlement to "SCOPE FORUM OF CONCILIATION AND ARBITRATION", Government of India and the award made in pursuance thereof shall be binding on the parties.(http://www.scopeonline.in/about.htm). However, if required by Bidder, this can be considered at Singapore.

23. Termination


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The Lease Agreement would be terminated under the following conditions: a) By giving six months’ notice on either side. b) In the event of Lessor’s failure to meet the contractual obligations, including delayed deliveries

beyond 6 months period with AI subject to being compensated for such delayed delivery, AI will be at liberty to terminate the Lease Agreement with a notice of Three (3) months.

c) Early exit offer to be provided in the Financial Bid for exit beyond certain minimum lease period, indication to such offer having been made without values can be given in the Technical Bid itself. A buy-out option for early exit/end of lease shall also be offered in the Financial Bid.

24. Validity of Bids Bids should be valid for a period of at least One Hundred Eighty (180) days from the closing date of Tender to be mutually extended by both parties in case the need arises.

Note:- In certain cases, the acceptance of the bid would be subject to AI obtaining prior approvals of the Govt., in which case, the extended validity of bid for obtaining such additional approvals could be required by AI.

25. Terms that are not covered in this Tender or terms offered, which are at variance with the terms of this Tender must be clearly specified in the following: Annexure-II (T5): Variance - General and Technical Terms & Conditions; Annexure-III (F3): Variance-General and Financial Terms & Conditions.

IMPORTANT: 1. Bidders are requested to confirm their acceptance of the above terms and conditions at Annexure

II - ( T7), and Annexure-III (F5) (covering letters from bidder to Air India Limited for submitting Technical and Financial bids).

2. Non-compliance to any one of the Mandatory Conditions (Clause no. 1 through 15) stipulated

above would lead to disqualification of the bid.


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ANNEXURE – II(T1)

TECHNICAL BID REQUIREMENTS

A. A320 AIRCRAFT LEASE-IN REQUIREMENTS

SN ITEM AI REQUIREMENTS BIDDER’S OFFER

(Do Not Leave The Rows Empty)

01. Number of Aircraft Required

Upto 15 (Fifteen) New A320 Aircraft with Sharklets

NEO:

CEO:

02. Lease Period Maximum upto Twelve (12) years.

03.

Indicative Delivery Schedule

A. AI seeks to induct 15 A320s between 1st April 2017 and 31st December 2017 with no more than two units per month.

B. Aircraft deliveries offered beyond 31stDec

2017 will not be considered.

C. Earlier deliveries, if any, may be accepted.

D. In case of delay in deliveries, the Bidder should offer to compensate for such delayed delivery compensation receivable from the manufacturers. Such compensation amounts should be indicated in the sealed Financial Bid.

Calendar months

in 2017

Number of Aircraft being Offered in bid

NEO CEO APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

B. A320 AIRCRAFT TECHNICAL REQUIREMENTS – MANDATORY

SN ITEM DESCRIPTION

01. Engine type CEO: CFM56-5B4/3 PIP NEO : CFM LEAP - 1A26

02. APU Type Honeywell Model No. 131-9A

03. SBs/ADs compliance Must have complied with all Airworthiness Directives (ADs) issued by FAA, EASA or State of Design and Mandatory Service Bulletins issued by OEMs as applicable to the aircraft, Engine, APU and installed Equipment, falling due on or before the date of delivery.

04. MTOW CEO: 77 Tons NEO: 79 Tons

05. EDTO 120 minutes EDTO Approval

06. Cabin Configuration a) All Economy Configuration of 180 seats with seat pitch of 28-29 inch.

b) AI being Full Service Airline, Two ATLAS standard Galleys i.e. G1 (Fwd) & G5 (Aft) with Standard inserts like Convection Ovens


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(Qty 6), Beverage Makers (Qty 4), Water Heater (Qty 1), Hot cups (Qty 2), Full size meal Trolleys (Qty 11) etc. are required.

c) Lavatories: 3 d) No Inflight Entertainment System

07. Cargo Ventilation & Heating System

For Aft Cargo hold only

08 Sharklets Aircraft (CEO or NEO) must be fitted with Sharklets

09. External Painting Aircraft to be painted in Air India’s livery

10. Oxygen system for passenger, cabin crew and toilets

Offered aircraft must be fitted with 22 MINUTES Oxygen supply arrangement for the passengers, cabin crew and toilets

11. High Altitude, Runway Slope, Tailwinds Certification

Offered Aircraft must have certification for Operations: (i) To High Altitude Airport (up to 14,100 ft.) (ii) to Runway slope between 2 and 3 % (iii) of 15 Knots Tail winds for Landing and Take-off Operation

12. RNP AR Certification Certification for RNP 0.3 AR Operations

13. Cockpit Door Enhanced Security Measures

Cockpit Door Surveillance System Modification must be complied with.

14. Metric Units Aircraft Instrumentation and Technical documents like AFM etc., in Metric units (Fuel, Aircraft weights, Fluids).

15. Automatic Fixed ELT Impact activated ELT is an additional requirement for aircraft operating in India. This is a fixed ELT meeting TSO C91a requirements. The ELT shall have an external fixed antenna and capable of transmitting on 121.5, 243 & 406 MHz with remote control panel installed in the cockpit.

16. Survival ELTs Qty. 2

17. Budgetary limits for SCN and BFE

Budgetary limits for the SCN/BFE considered by the bidder and incorporated in the offered monthly aircraft lease rentals would be required to be indicated in the sealed Financial bid format only. Note 1: In order to harmonize the configuration of leased A320 aircraft with AI’s current configuration of A320 aircraft, lists of AI’s SCN & BFE are appended as Appendix-1A and 1B (SCN lists) & Appendix-2 (BFE list). Bidders are required to agree to align the offered Aircraft with AI’s SCN/BFE lists. Note 2: For any clarification about specifications in the SCN lists, Bidders are requested to contact Airbus, under intimation to AI, which has been authorized by Air India to share the information with the bidders.

18. Emergency Equipment

Emergency Equipment to be aligned with the current equipment on AI fleet aircraft. Note: AI’s current Emergency Equipment list is provided as Appendix 3 for reference

ANNEXURE – II(T2)


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OTHER TECHNICAL BIDREQUIREMENTS

A. AIRCRAFT DOCUMENTS / DATA

Following Aircraft documents are required at the time of delivery of the Aircraft: 1. Standard package of technical data for normal airline flight operations and maintenance

planning (hard & electronic copies). (Note: Access to download manuals through Airbus World Portal and CFM web should be provided)

2. MPD, MMEL, AFM, Weight & Balance Manual etc. 3. CMMs of BFE equipment such as Galleys, Passenger Seats, Impact & Water activated ELTs. 4. Emergency Equipment List, their description and layout diagrams 5. LOPA 6. Standard Certificates received from the manufacturer

B. AIRCRAFT CUSTOMISATION, INSPECTION AND ACCEPTANCE AT DELIVERY:

1. AI team would be involved in the customization of the Aircraft definition in association with the manufacturer.

2. Aircraft will be accepted after technical inspection and finding airworthiness records satisfactory to AI’s requirement by AI representatives and the following:

a) Engine Power Assurance Check as per AMM. b) Performance of AIRBUS acceptance test flight c) Full Video BSI of Engines and APU.

C. AIRCRAFT DELIVERY LOCATION

Aircraft delivery would be taken at Airbus facility at Hamburg, Germany or Toulouse, France. However, the cost of ferry flight from the delivery location to New Delhi, India would be loaded in the evaluation.

D. MAINTENANCE DURING LEASE PERIOD Complete maintenance repair, overhaul, modifications, refurbishments and testing of Aircraft, CFM56-5B Engines, APU, Aircraft / CFM56-5B Engine components including passenger seats, carpet, seat covers, hard time components, OC/CM components, etc. during the lease term will be carried out by AI/AI subsidiary under DGCA, India CAR 145 approvals and as per DGCA approved maintenance programme. Note: AI’s engine overhaul facilities and ATEC facility, and many other component overhaul shops are approved by FAA / EASA for CFM56-5B Engines. AI presently does not have FAA or EASA approvals for Aircraft maintenance; however it is planning for acquiring the same. For NEO A320 Engines: Maintenance, overhaul, LLP replacement, refurbishment etc. will be performed under power by hour arrangement (PBH) with OEM/any other service provider as indicated at Clause 15 of ANNEXURE – I

E. MAINTENANCE RESERVES (To be quoted in FINANCIAL BID)


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1. MR rates to be quoted in the financial bid format only with economic conditions of 2016. 2. Maintenance reserves shall be quoted separately for each Maintenance Reserve head (e.g.

6Y Check, 12Y Check, Landing Gears, APU and Engine usage &LLPs) on per aircraft basis. For the A320 NEO engines, however, in view of PBH arrangement, MRs for engines, even though quoted as above, will not be payable by lessee in terms of clause no. 15 of the Annexure-I

3. % escalation factor (non-compounded) on MRs to be applied based on indices with a formula to be mutually agreed subject to a maximum cap. The financials be indicated in the financial bid format.

4. The maintenance reserves will be either payable monthly in arrears or through Standby Letter of Credit (SBLCs) renewable annually to be placed by AI towards such agreed MR contributions with mechanism for mutual annual MR reconciliation. Bidder to indicate their offer towards acceptance of SBLC in lieu of MR payments, in the technical bid itself.

5. Where applicable, the Maintenance Reserves rates should be quoted for 1:1 to 2.5:1 flight-hour/cycle ratio in increments of 0.25:1 (Table for various combinations of Flight hours/ Flight cycles ratio to be provided). The evaluation will be done on the basis of a Hour to Cycle ratio of 1.5:1.

6. MRs accumulated in respect of Airframe, Landing Gear, Engine Performance Restoration, Engine LLP & APU will be available for drawdown whenever the relevant qualifying event occurs like 6-Year, 12-Year Check, L/G Overhaul, Engine Refurbishment/Overhaul, LLP change & APU Refurbishment/Overhaul occurs.

7. Lessor shall be liable to release Maintenance Reserves to AI in case of the bids which require MR contributions to be paid by AI periodically, for performing airframe, engine maintenance, engine LLPs, landing gear & APU maintenance after performance of relevant work.

8. The same should be reimbursed by Lessor on claims invoices by lessee within 30 days in full to AI without any deduction, abatement, disallowances on accomplishment of relevant maintenance events claims sent to Lessor. Lessor should also agree to annual reconciliation for MRs.

9. Lessor should also agree to park the funds in a separate Escrow bank account of the funds collected from these MRs, in case of cash payments of MRs.

F. AD COST SHARING DURING THE LEASE PERIOD Lessor should agree to share the cost of compliance of ADs based on a mutually acceptable formula.

G. TRAININGS 1. Training days and training aids granted by the manufacturer in respect of Engineers,

Mechanics, Cabin Attendants and Pilots shall be extended to AI. Details of the Training Package offered including for the Cockpit, cabin crew and technical personnel are required to be disclosed in the Technical Bid.

2. Data and training for preparation of the Load and Trim Sheet to AI Team before delivery of the first Aircraft of the lot offered by the Lessor.

H. AIRBUS/CFM CUSTOMER SUPPORT Manufacturer’s granted customer support shall be extended to AI, details of which should be


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provided in the Technical bid documentation.

.

ANNEXURE– II(T3)

REDELIVERY CONDITIONS


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The redelivery conditions will be predetermined between the selected Lessor and AI and will be frozen at the time of entering into Lease Agreement. At the time of return of the Aircraft to the Lessor as provided for in the Lease Agreement, the Aircraft shall be in the same configuration, or in such a configuration as approved by Indian DGCA, with all on-board equipment as delivered by the Lessor to the Lessee, subject to normal wear and tear, and to meet the following conditions:

1. GENERAL CONDITIONS The Aircraft shall be redelivered in India. The Aircraft shall have been maintained and repaired in accordance with the Maintenance Program, approved and authorized by Indian DGCA, as if such Aircraft were to be kept in further commercial service by the Lessee and shall meet the following requirements:

a) the Aircraft shall be clean by airline standards; b) the Aircraft shall be in a condition permitting commercial revenue service under the applicable

operating regulations of the DGCA of India; c) the Aircraft shall have in existence a valid and existing certificate of airworthiness issued by the

DGCA of India and an export certificate of airworthiness issued by the Aviation Authority to a country specified by the Lessor. The cost of any unique requirements imposed by the Aviation Authority of the importing country will be borne by the Lessor;

d) the Lessee shall comply with the Manufacturer’s specifications as amended from time to time by mandatory service bulletins;

e) the Aircraft shall be returned with the fuselage and fin repainted in neutral white and with no airline markings, identities nor logos visible at redelivery with AI Certification;

f) In case of delay in redelivery of the Aircraft, – ascribable on account of the lessee only, lease rental would apply on pro-rata per diem basis till the actual redelivery of the Aircraft, at the lease rate which would be agreed in the final Lease Agreement. No penal lease rental should apply for such delays in re-deliveries;

g) At the time of redelivery of Aircraft, AI may compensate with a negotiated financial amount against the non-compliance of any or all of the redelivery conditions based on the then applicable rates as at the end of lease. Upon technical acceptance of such compensation for buy-outs/End of lease compensation, the Bidder should be agreeable to waiver of lease rentals from the date of such acceptance. Pending settlement of compensations for deficiencies between the parties, Aircraft to be taken back by lessor immediately upon being offered by AI;

As an option, six months prior to the expiry date of the Lease, the Aircraft shall be made

available for each of the Lessor and AI to perform a preliminary inspection of the Aircraft, engines and records to determine the redelivery work-package. The condition of the Aircraft (including APU, engines and records) shall be documented as a reference for any deviations at the end of the Lease Term. The Aircraft (including APU, engines and records) shall be made available for such preliminary inspection. Lessor and AI may mutually agree on the buy-out amount in lieu of any stipulated redelivery conditions not being met.

h) Lessor should accept engine refurbishment / Performance-Restoration Shop Visit at AI’s in-


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house facility. AI presently has FAA and EASA approval for CFM56-5B engines. i) Lessor should accept APU refurbishment / overhaul at AI’s in-house facility, as and when it

becomes FAA / EASA compliant for Honeywell Model No. 131-9A APU. j) AI has in-house facility for servicing of large number of Airframe & Engine components (hard

time, OC/CM) while the rest are serviced abroad at OEM, or FAA/EASA approved facilities. The lessor should accept components serviced at in-house facility with release certificate issued under the Indian DGCA approved system.

k) Mandatory MPD tasks / SBs / ADs received during the redelivery checks/shop visits having compliance date falling after redelivery date but within the stipulated period in the lease agreement, shall be complied by AI on account of the lessor. Also, if this compliance results in extension of the lease period, no lease rental shall be payable by AI.

l) Compliance/acceptance of all the above items should be expressly indicated in the offer. The conditions which are not acceptable should be clearly spelt out in Annexure- II (T5) i.e. Variance – General and Technical Terms & Conditions, failing which it shall be presumed that the requirements listed above are accepted.

2. ENGINES

Each of the engines shall be returned in serviceable condition and with at least 30% of production EGT margin. Further Engine LLPs will have a minimum balance life of 1,500 Flight Cycles. No Engine will have ‘on watch’ or reduced inspection interval based on the last bore scope inspection. In the event the engines do not meet min. balance life condition, the compensation is capped at following: For CEO - AtMR rates for Engine LLPsagreed in the lease agreement. For NEO- At PBH hourly rate for LLPs as agreed in the lease / Tripartite agreement

3. LANDING GEARS Each of the Landing Gear shall be returned in airworthy condition with a minimum of 2,000 cycles / 12 months remaining to the next overhaul. In the event that the landing gears do not meet these return conditions, the lessee shall compensate the Lessor at the then current Landing Gears overhaul costs divided by the Landing Gear overhaul life expressed as a cost per cycle or per month.

4. COCKPIT AND CABIN a) All decals shall be clean, secure and legible; b) All fairing panels shall be free of cracks, shall be clean, secure and repainted as necessary; c) Floor coverings shall be clean and effectively sealed; d) Seat covers shall be in good condition, clean and shall conform to the Aviation Authority fire

resistance regulations; e) Seats shall be fully serviceable and shall be repaired as necessary.

5. CARGO COMPARTMENTS a) All panels shall be in good condition; b) All nets shall be in good condition.

6. DOCUMENTATION

a) At the time of any such return of the Aircraft, the Lessee shall deliver to the Lessor one (1) copy of


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each of the Manuals and Technical Records. (Including current revisions thereto). b) The information described in the Aircraft Documentation shall be provided to the Lessor at time

of such return of the Aircraft in the form and manner under which the Lessee maintains such information and shall include data peculiar to the Aircraft. The Lessee shall provide the Aircraft Documentation in English. All Aircraft Documentation provided at the time of such return of the Aircraft shall be listed and described by the Lessee’s title or description. The Lessee shall ensure that all Aircraft documentation shall be in good condition, readable and capable of being reproduced using standard reproduction processes, complete and up to date in accordance with industry standards.

7. INSPECTION

The period allowed for inspection of the return condition of the Aircraft shall have such duration as to permit the conduct by the Lessor or its representatives of the following: a) Inspection of the Manuals and Technical Records; b) Inspection of the Aircraft Structure and Parts at the time of the Heavy Maintenance check; c) Inspection of the Engines including without limitation:

(i) A Borescope inspection as per AMM; (ii) Max. Performance Assurance Run;

d) A two-hour (or as otherwise agreed between the Lessor and the Lessee) flight carried out by and at the expense of the Lessee to the Lessor’s requirements with Lessor’s representatives as observers.

Note: For evaluating the bids having variation in the Redelivery Conditions in respect of hours / cycles for each of the above-mentioned items, the difference in quantifiable conditions will be evaluated based on the proximity to the specified redelivery conditions of hours/cycles. Further, impact of such loading / unloading based on the quoted MR rates for the technically qualified bids will be carried out during Financial Bid for determining overall financial evaluation.


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ANNEXURE - II (T4)

BIDDER’S PROFILE & DOCUMENTS CHECKLIST

A. Bidders are required to give complete information as requested in the table, if additional

information is submitted, please refer to the same in these columns. TABLE I: BIDDER’S PROFILE

SN ITEM DESCRIPTION

(DO NOT LEAVE BLANK)

01. Name of Company : Nature of entity : Complete Postal Address : Country of incorporation :

02. State specifically whether the Bidder is Owner / Airline / Operator/ Lessor. Provide definitive documentary proofs in this regard as given below.

03. Name and address of the Owner of the Aircraft, if different from thebidder. Also, please indicate Ownership / financing arrangement of the Aircraft on offer, giving names and addresses of Lessor, Head Lessor, Security Trustee, and Mortgagee etc.

04. Details of the Contact person: Name : Designation : Tel : Email :

05. Details of Proof of ownership / assignment rights / lease manager of the Aircraft (Please mention Document details here and attach Copy) Note: If bidder is not the owner, please provide documentary evidence of authority to offer the Aircraft.AI would be verifying the above details from Manufacturer/Other sources independently for which Lessor is expected to agree.

06. Bidders’ Fleet Size and Type of fleet details Mention the Numbers, type and values of Aircraft purchased &


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Leased out with Regional distribution.

07. If the Lessor or its parent company is listed on any stock exchange, identify such stock exchange or exchanges. If neither the Lessor nor its parent company is listed on any stock exchange, provide a list of all shareholders holding more than 5% of the issued share capital of the Lessor or its parent company, as the case may be, and specify their respective shareholdings. (In case of any offer submitted by a Manager of Aircraft, similar financial information must be provided in relation to such Manager)

08. Please Provide: A. Signed Additional Write up/brief profile of the Company B. Key details of Top Management and Directors C. Audited Summarized Financial statements of the company for

the last three years duly authenticated by Management of the bidder.

D. Last three years Annual Report with Directors Reports.

09. Name of the main Bank and country of location

10. Contact details of persons at the main bank who will be able to provide reference on request.

B. Bidders are required to ensure that the following documents under TABLE II have beenenclosed

along with the bids. TABLE II – Checklist for the DOCUMENTS to be attached

SN ITEM CONFIRM

01. Enclosed Pre Signed Integrity Pact Yes

No

02. Enclosed Documentary proof for ownership / Authority to offer theAircraft (if not owned)

Yes No

03.

Audited Summarised Financial Statements of the company for the last three years

Yes No

04. Last three years Annual Report with Directors Reports Yes No

05. Statement declaring Mandatory Compliances for individual terms of the Requirements stated at Sr.no. 1 to 15 of the Annexure-I containing General Terms and conditions.

Yes

No

Signature: Name: Designation: Company Stamp:


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ANNEXURE - II (T5)

VARIANCE – GENERAL TERMS & CONDITIONS AND TECHNICAL REQUIREMENTS

The table below lists the summary of exclusions of the General Terms & Conditions and Technical Requirements, Terms & Conditions of this Tender, which are not acceptable in totality. The terms & conditions, which we offer instead, will be as follows:

SN ANNEXURE: _______ PARA NO. _______ SUBJECT ________________________

OUR TERMS & CONDITIONS

Note: 1. This Annexure is mandatory and in case no variance is to be reported, ‘NIL’ statement must besubmitted in the above format. General Terms & Conditions and Technical Requirements, Terms & Conditions spelt out in Annexure I & II, not detailed above shall deem to have been accepted by the Bidder.

2. SINCE NO VARIATION IS ACCEPTABLE FOR MANDATORY CONDITIONS, THIS VARIANCE STATEMENT SHOULD NOT BE USED FOR DEVIATIONS/VARIANCES FOR MANDATORY CLAUSES.



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ANNEXURE - II (T6)

TECHNICAL BID EVALUATION CRITERIA

Subject to Technical Bid meeting all the mandatory conditions as provided in the Annexures I & II, further evaluation of the Bids for this tender will be carried out based on the following :-.

1. Annexure-I : Compliance status of General Terms and Conditions by the Bidder 2. Annexure-II : Compliance status of Technical Requirements, Terms and Conditions by the

Bidder

Note : 1. Offers for CEO A320 and NEO A320 aircraft will be evaluated separately based on the above criteria. 2.In the event of any bid is found to be not meeting the Technical Bid Mandatory requirements as mentioned in AnnexureI and Annexure II (T1), such bid will be disqualified.


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ANNEXURE II (T7)

To The Office of Executive Director (Materials Management) Materials Management Department Air India Limited Safdarjung Airport, New Delhi – 110 003 INDIA Attn:Mr. M.L. Krishnamoorthi Dy. General Manager (MM) Phone: +91 11 2462 6579 Ref: Date: _____________ Dear Sir,

Sub: Technical Bid as per AI Tender No. NO.HMM/16/A320 NEW/LEASE/ENQ-002

With reference to AI Tender No NO.HMM/16/A320 NEW/LEASE/ENQ-002 for Dry Lease of 15 new A320 Aircraft, we hereby submit our offer for the same, towards which, our technical quote consisting of the Annexure I, Annexure II (T1 to T5), and Annexure IV (Integrity Pact) in sealed envelope are enclosed. We hereby confirm that we shall fully abide by the provisions of the General Terms &Conditions, Technical Bids Requirements, and the Integrity Pact duly executed by us and attached. However, a few exclusions to the requirements, terms & conditions of the tender are reflected in Annexure II (T5) (in case there is no variance in the terms & conditions of the tender, please submit ‘NIL’ statement).


Encl: As Above

ANNEXURE III (F1)


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FINANCIAL BID REQUIREMENTS

1. Airlines / operators / owners of aircraft / leasing companies having aircraft of its own/ have

authority to offer aircraft on lease can only participate in the Tender. AI will not deal with any agents / brokers during the process of evaluation and finalization of the lease contract.

2 (i) Lessor shall contribute on a pro rata basis towards the portion of the documented total cost (including labour and material cost) exceeding US$ 10,000 per aircraft for complying, by means of a terminating action, with each Airworthiness Directive (AD) or similar mandatory modification issued by either the DGCA of India or the FAA and being mandatory during the Lease Term to enable continued certification of airworthiness of the aircraft. If the aircraft have to be grounded beyond the normal scheduled maintenance period for complying with the ADs, Lessor shall provide rent holiday for such additional grounding.

(ii) Lessor shall pay to the lessee for the compliance of optional or recommendatory SBs required by the Lessor. Lessor shall reimburse the out-of-pocket expenses incurred by the lessee and also for the downtime of the aircraft.

3. The aircraft shall be delivered to AI in AI livery at the time of induction. 4. Impact of applicable Indian Tax Liabilities would be factored for evaluation of the bid as

indicated in Annexure – III (F4). 5. Quotations for dry lease shall be in US Dollars. 6. AI reserves the right to accept or reject any offer or part thereof without assigning any

reasons thereof. 7. The lease arrangement is subject to receiving approvals from DGCA – India, AI’s Board and

the Government of India. 8. LEASE RENTAL

The lease rental shall be specified in terms of fixed amount per aircraft per month in US$.

ANNEXURE III (F2)


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FINANCIAL BID

LEASE TERM –Maximum up to 12 YEARS Please provide separate bids for CEO A320 and NEO A320 aircraft in the following columns as these bids will be evaluated separately. (A) LEASE RENTAL, MAINTENANCE RESERVES and others (US$) Offer in US$ (To be indicated

S/N Cost Elements for each offered Aircraft)

RATES (BID) REMARKS

Lease Rentals per month per Aircraft

1. {Give details as per Note no.1 of Annexure-III (F4)}

Restoration / Heavy maintenance Charges

a) Airframe ‘6Y’ check

b) Airframe ‘12Y’ check

2. c) Landing Gears

d) APU

e) Engine

f) Engine LLPs

g) Escalation Rate, if any

3. Security Deposit –

Any other expenses to be borne by the Lessee

4. /Credits offered (please specify each) such as :-

- Manufacturers Credits (please specify) - OEM Warranties and Guarantees

- Any other

(B) Insurance Value (In US$)to be indicated for each Aircraft, the %/amount of reduction

offeredannually for the Hull insurance value be indicated in the bid (C) Delayed delivery compensation offered, if any– Not considered for evaluation

Notes: (i) Maintenance Reserve (MR) rates should be quoted for flight-hour/ cycle ratio of 1:1 to 2.5:1 in

increments of 0.25:1 (table for various combinations of flight-hours/cycle ratio to be provided). In case Lessor agrees for SBLC to be placed by AI towards such MR contribution, year wise amount of SBLC required should be indicated. The MRs if required to be paid in cash would be payable monthly based on actual reported hours and cycles.


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(ii) Escalation rate % p.a. for MRs be also quoted to be indices based subject to maximum cap. Indicate the indices formula offered for such escalation. Indicate specifically whether such escalation would be on straight line OR on compounded basis. This additional cost will get added up in the bid at the time of evaluation.

(iii) The lease rental will be payable on fixed basis for the Aircraft on monthly basis only from delivery date. For avoidance of doubt, any payment in respect of an accrual period of less than one month shall be made on pro-rata basis.

(iv) The Aircraft lease rental rates quoted would be fixed for the contracted delivery dates offered, no escalation shall be applicable for any delay in delivery beyond the offered scheduled delivery dates and would remain fixed for the entire lease period.

(v) Any Security Deposit required by the Lessor will be given by AI on signing of the Lease Agreement in the form of Standby Letter of Credit (SBLC) to be issued / confirmed by international bank of repute acceptable to Lessor since payment of advance deposits are restricted as per the regulations of Reserve Bank of India. No other guarantee will be offered, other than the SBLCs towards security deposit. In case the bidder requires Security Deposit in Cash on or after signing of the Lease Agreement, the bidder should be agreeable to provide a Counter-bank guarantee to be issued/confirmed by International Bank acceptable to Lessee, valid till the delivery of Aircraft to AI, commensurate to such amount subject to such guarantee being enforceable in India. At the time of execution of LOI, if required, AI will give initial deposit by way of SBLC or Cash upto maximum of US$ 50,000 per Aircraft. Such initial deposit shall be adjusted against the Security Deposit payable to the Lessor at the time of Lease Agreement. If for any reason the Lease Agreement cannot be concluded, such initial deposit shall forthwith be refunded unconditionally in full to AI. Wherever initial deposit is given in Cash, the same shall either be substituted with SBLC on signing of the Lease Agreement or should be covered by a Counter-bank guarantee to be issued / confirmed by International Bank acceptable to Lessee, valid till the delivery of Aircraft to AI, commensurate to such amount subject to such guarantee being enforceable in India. All Security deposits would be refundable in full upon termination or at the lease expiry. For the Initial deposit / Security Deposits requirement for dates earlier than the Aircraft Delivery dates, the selected bidder(s) would be agreeable to provide enforceable Undertaking/Indemnity/Guarantee valid for the said period against such deposit requirements till the Delivery of Aircraft.

(vi) The impact of applicable Indian Taxes, if any, will be considered for financial evaluation. (vii) The non-acceptance of the requirements, terms and conditions of the tender or any variance there

from shall be considered for evaluation. (viii) Each party will bear their own legal and documentation costs. (ix) OVERWRITING/ALTERATION/INTERCHANGED RATES IN THE FINANCIAL BID WILL LEAD TO

REJECTION.

Signature: Name: Designation: Company:


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ANNEXURE III (F3)

VARIANCE – GENERAL AND FINANCIAL TERMS & CONDITIONS

Summary of exclusions of the Terms & Conditions (General and Financial) under various Annexures in this AI tender, which are not acceptable in totality, are provided below. The terms & condition, which we offer, will be as follows:

SN Annexure: __Para No.___Subject ______ Our Terms & Conditions

Note: This Annexure is mandatory and in case there is no variance to be reported, NIL statement

mustbe submitted in the above format.



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ANNEXURE III (F4)

FINANCIAL BID EVALUATION CRITERIA

Offers for CEO A320 and NEO A320 will be evaluated separately based on criteria given below. The financial evaluation for this tender will be based on the lowest of the total of the evaluated average annualized financial impact to AI for the offered lease period considering impact of variations in terms offered as related to the following aspects covering the lease term of minimum 6 years maximum up to 12 years :- 1. Lease Rental per Aircraft per month(as per Point A1 of the Financial Bid format) offered onmonthly

basis fixed for the entire lease duration would be evaluated based on the following parameters :-

a. Lease rental offered for baseline Aircraft incorporating the items indicated in the AI SCNs/BFEs listings based on 2016 economic conditions

b. Budgetary limits for the SCNs/BFEs with itemised listing for such SCNs/BFEs included in factoring the above offered lease rentals and the % rate quoted to be applied in the event of such budget exceeding

c. Manufacturer Escalation % factor offered and applicable for the offered delivery dates d. Finance (swap) costs/rates, if any, indicated and factored for the offered lease rentals.

The Offered Aircraft Lease Rentals per month in US$ quoted after incorporating all the above factors/parameters would remain fixed from Delivery date for entire duration of agreed lease period.

2. Maintenance Reserves(as per Point A2 of the Financial Bid format)

a. MRs quoted for individual items based on economic conditions of 2016 considered on the basis of Aircraft utilization at the rate of 4,000 Block Hours / 2,600 Cycles per annum, averaged on a monthly basis

b. In the cases, where Lessors insist on monthly cash MR payments, cost of financing, in such cases shall be considered at 11% per annum.

c. For NEO A320 offers with CFM Leap engine the PBH rates for Performance Restoration and LLPs under the AI-CFM Engine PBH arrangement shall be considered in lieu of quoted Engine related MR rates

3. Cost assessed by AI for compliance of such requirements, terms and conditions which are either

not accepted by the bidder or are at variance with the terms and conditions detailed in the tender, including financial impact of applicable Indian tax liabilities, would be loaded in the price quoted by the bidder

4. Cost of financing, wherever applicable in case of variance with tender terms, shall be considered

at 11% per annum including towards Security Deposits.


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5. Cost of ferry flight from the delivery location to New Delhi, India would be loaded / unloaded in the evaluation.

6. Redelivery Costs will be suitably loaded / unloaded for redelivery conditions in variance from those

indicated in Annexure-II (T3) based on the quoted MR rates for the technically qualified bids.

7. Value of definitive Manufacturer’s Credits offered/extended to AI 8. Un-conditional Discounts offered, if any. 9. Any parameter having additional cost implication to AI such as Insurance values and the offered

annual reduction thereupon required by Lessor shall be evaluated based on present aircraft insurance costs.

10. Other Costs.

No conditional offers or discounts would be accepted. The Lowest of the aggregated annualized costs of all the above elements will be followed for shortlisting the bidders.


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ANNEXURE III (F4A)

FINANCIAL BID EVALUATION FORMAT – TO BE FILLED UP BY THE BIDDER

SN DESCRIPTION QUOTED AMOUNT

(USD)

EVALUATED AMOUNT to BE ANNUALIZED (USD) TO BE

WORKED OUT BY AI

01.

Aircraft Monthly Lease rental in respect of each Aircraft offered :

a. Lease rental incorporating AI SCNs/BFEs listings based on 2016 economic conditions {(Note 1.a of Annex III (F4)}

b. Budgetary limits for the SCNs/BFEs included in the above lease rentals {(Note 1.b of Annex III (F4)}

c. % rate to be applied in the event of such budget exceeding above Budgetary limits for the SCNs/BFEs {(Note 1.b of Annex III (F4)}

d. Manufacturer Escalation % factor offered and applicable for the offered delivery dates {(Note 1.c of Annex III (F4)}

e. Finance (swap) costs/rates, if any, indicated and factored for the offered lease rentals. {(Note 1.d of Annex III (F4)}

Total Aircraft monthly lease rental in respect of each Aircraft offered


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02.

MR (itemized quoted rates to be evaluated for the applicable FH/FC/Months as per tender)

MR Rates x (applicable

FH/FC/Months)-

Annual Escalation rate (%) To be factored in for MR costs for

the offered lease period

03.

Delivery Cost

Estimated Ferry Cost

04. Redelivery Cost (Differential)

Difference in tender conditions x

applicable PBH/ MR rates

05.

Security Deposit (based on rentals per month)

AND / OR

Security Deposit (SBLC in

lieu of cash MRs, based on annualized MRs and net financing costs)

No. of months rentals x Financing cost at n % per annum

AND / OR No. of months MR equivalent

Security Deposit x Financing cost at n% per annum

(where n = 11% if Security Deposit /

MR required in cash and 6 % if Security Deposit / MR required by way of SBLC)

06.

Insurance Cost (Hull values and annual reduction offered to be evaluated based on premium rate of 0.25% per annum - annualized)

Total Hull Value offered over lease

period x 0.25%

07. Manufacturer Credits, if

any

08. Unconditional discounts / other expenses, if any (to be specified)

9. TOTAL (Net of Credits / Discounts 1 to 8)

10. Average Annualized Costs (Total / Offered Lease period)

Lowest of the aggregated annualized costs of all the above elements will be followed for shortlisting the bidders


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ANNEXURE III (F5) To: Office of Executive Director (Materials Management) Materials Management Department Air India Limited Safdarjung Airport, New Delhi – 110 003 INDIA Attn: Mr. M.L. Krishnamoorthi Dy. General Manager (MM) Phone : +91 11 2462 6579 Ref: Date:___________ Dear Sir, Subject: Financial Quotation as per your Tender No. NO.HMM/16/A320 NEW/LEASE/ENQ-002 With reference to your Tender NO NO.HMM/16/A320 NEW/LEASE/ENQ-002 dated 08.01.2016 for Dry Lease of 15 new A320 Aircraft; we hereby submit our best quotes in the Annexure-III (F2 & F4A) along with other Parts of Annexure III, which are enclosed, as desired. We also agree to the General and Financial Terms &Conditions of your tender. However, a few exclusions to your terms & conditions are reflected in Annexure-III (F3) (In case there is no variance in the terms & conditions of our tender, submit ‘NIL’ statement). It is confirmed that no payment in any form, like commission etc. shall be made to anyone whether in India or aboard, in respect of business generated by the company from AI Limited. Thanking you,


Encl: As above


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INTEGRITY PACT BEING A MANDATORY REQUIREMENT IS REQUIRED TO BE SUBMITTED AND SIGNED WITHOUT MAKING ANY ALTERATION TO THE DOCUMENT

Annexure IV INTEGRITY PACT

Between

Air India Limited (AIL), hereinafter referred to as “The Principal”,and

hereinafter referred to as “The Bidder/ Contractor”

PREAMBLE

The Principal intends to award, under laid down organizational procedures, contract(s) for dry lease upto 15 (Fifteen) new A320 aircraft with sharklets.

. The Principal values full compliance with all relevant laws of the land, rules, regulations, economic use of resources and of fairness/transparency in its relations with its Bidder(s) and/or Contractor(s). In order to achieve these goals, the Principal will appoint an Independent External Monitor (IEM), who will monitor the tender process and the execution of the contract for compliance with the principles mentioned above. Section 1 – Commitments of the Principal

1. The Principal commits itself to take all measures necessary to prevent corruption and to observe

the following principles:-

a. No employee of the Principal, personally or through family members, will in connection with the tender for, or the execution of a contract, demand, take a promise for or accept, for self or third person, any material or immaterial benefit which the person is not legally entitled to. The word ‘take’ shall also include the past and future.

b. The Principal will, during the tender process treat all Bidder(s) with equity and reason. The Principal will in particular, before and during the tender process, provide to all Bidder(s) the same information and will not provide to any Bidder(s) confidential/additional information through which the Bidder(s) could obtain an advantage in relation to the tender process or the contract execution.

c. The Principal will exclude from the process all known prejudiced persons and persons who would be known to have a connection or nexus with the prospective bidder.

2. If the Principal obtains information on the conduct of any of its employees which is a criminal offence under the IPC/PC Act or the conduct rules of the Principal, or if there be a substantivesuspicion in this regard, the Principal will inform the Chief Vigilance Officer and in addition can initiate disciplinary actions.


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Section 2 – Commitments of the Bidder(s)/ contractor(s) 1. The Bidder(s)/ Contractor(s) commit themselves to take all measures necessary to prevent

corruption in their dealings with AIL. He commits himself to observe the following principles during his participation in the tender process and during the contract execution.

a. The Bidder(s)/ Contractor(s) will not, directly or through any other person or firm, offer,

promise or give to any of the Principal’s employees involved in the tender process or the execution of the contract or to any third person any material or other benefit which he/she is not legally entitled to, in order to obtain in exchange any advantage of any kind whatsoever during the tender process or during the execution of the contract.

b. The Bidder(s)/Contractor(s) will not enter with other Bidders into any undisclosed agreement or understanding, whether formal or informal. This applies in particular to prices, specifications, certifications, subsidiary contracts, submission or non-submission of bids or any other actions to restrict competitiveness or to introduce cartelization in the bidding process.

c. The Bidder(s)/Contractor(s) will not commit any offence under the relevant IPC/PC Act; further the Bidder(s)/ Contractor(s) will not use improperly, for purposes of competition or personal gain, or pass on to others, any information or document provided by the Principal as part of the business relationship, regarding plans, technical proposals and business details, including information contained or transmitted electronically.

d. The Bidder(s)/Contractors(s) of foreign origin shall disclose the name and address of the Agents/representatives in India, if any. Similarly the Bidder(s)/Contractors(s) of Indian Nationality shall furnish the name and address of the foreign principals, if any. Further details as mentioned in the “Guidelines on Indian Agents of Foreign Suppliers” shall be disclosed by the Bidder(s)/Contractor(s).Further, as mentioned in the Guidelines all the payments made to the Indian agent/representative have to be in Indian Rupees only. Copy of the “Guidelines on Indian Agents of Foreign Suppliers” is placed at (Page nos. 6-7)

e. The Bidder(s)/Contractor(s) will, when presenting his bid, disclose any and all payments he has made, is committed to or intends to make to agents, brokers or any other intermediaries in connection with the award of the contract.

f. This integrity pact shall override the confidentiality clause, if any, in the offer submitted by the Contractor/Bidder and in the agreement entered into by the Principal with the Contractor/Bidder.

2. The Bidder(s)/Contractor(s) will not instigate third persons to commit offences or acts outlined above or be an accessory to such offences.

Section 3 - Disqualification from tender process and exclusion from future contracts If the Bidder(s)/Contractor(s), before award or during execution has committed a transgression through a violation of Section 2, above or in any other form such as to put his reliability orcredibility in question, the Principal is entitled to disqualify the Bidder(s)/Contractor(s) from the tender process or take action as per the procedure mentioned in the “Guidelines on Banning of business dealings”. Copy of the “Guidelines on Banning of business dealings” is placed at Page nos. 8-16. Section 4 – Compensation for Damages


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1. If the Principal has disqualified the Bidder(s) from the tender process prior to the award according to Section 3, the Principal is entitled to demand and recover the damages equivalent to Earnest Money Deposit/Bid Security and other actual damages due to the consequential delay.

2. If the Principal has terminated the contract according to Section 3, or if the Principal is entitled to terminate the contract according to Section 3, the Principal shall be entitled to demand and recover from the Contractor liquidated damages of the Contract value or the amount equivalent to Performance Bank Guarantee.

3. The Contractor/Bidder shall not be entitled to claim from the Principal any amounts either as damages or otherwise, on account of termination.

Section 5 – Previous transgression 1. The Bidder declares that no previous transgressions occurred in the last 3 years with any other

Company in any country conforming to the corruption approach or with any other Public Sector Enterprise in India that could justify his exclusion from the tender process.

2. If the Bidder makes incorrect statement on this subject, he can be disqualified from the tender process or action can be taken as per the procedure mentioned in “Guidelines on Banning of business dealings”.

Section 6 – Equal treatment of all Bidders/Contractors/Subcontractors 1. The Bidder(s)/ Contractor(s) undertake(s) to demand from all subcontractors a commitment in

conformitywith this Integrity Pact, and to submit it to the Principal before contract signing. 2. The Principal will enter into agreements with identical conditions as this one with all Bidders,

Contractors and Subcontractors. 3. The Principal will disqualify from the tender process all bidders who do not sign this Pact or violate

its provisions.

Section 7 – Criminal charges against violating Bidder(s)/Contractor(s)/ Subcontractor(s) If the Principal obtains knowledge of conduct of a Bidder, Contractor or Subcontractor, or of an employee or a representative or an associate of a Bidder, Contractor or Subcontractor which constitutes corruption, or if the Principal has substantive suspicion in this regard, the Principal will inform the same to the Chief Vigilance Officer. Section 8 – Independent External Monitor/Monitors 1. The Principal appoints competent and credible Independent External Monitor for this Pact. The

task of the Monitor is to review independently and objectively, whether and to what extent the parties comply with the obligations under this agreement.

2. The Monitor is not subject to instructions by the representatives of the parties and performs his functions neutrally and independently. He shall report to the Chairman, AIL.

3. The Bidder(s)/Contractor(s) accepts thatthe Monitor has the right to access without restriction to all Project documentation of the Principal including that provided by the Contractor. The Contractor will also grant the Monitor, upon his request and demonstration of a valid interest, unrestricted and unconditional access to his project documentation. The same is applicable to Subcontractors. The


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Monitor is under contractual obligation to treat the information and documents of the Bidder(s)/ Contractor(s)/ Subcontractor(s) with confidentiality.

4. The Principal will provide to the Monitor sufficient information about all meetings among the parties related to the Project provided such meetings could have an impact on the contractual relations between the Principal and the Contractor. The parties offer to the Monitor the option to participate in such meetings.

5. As soon as the Monitor notices, or believes to notice, a violation of this agreement, he will so inform the Management of the Principal and request the Management to discontinue or take corrective action, or to take other relevant action. The monitor can in this regard submit non-binding recommendations. Beyond this, the Monitor has no right to demand from the parties that they act in a specific manner, refrain from action or tolerate action.

6. The Monitor will submit a written report to the Chairman, AIL within 8 to 10 weeks from the date of reference or intimation to him by the Principal and, should the occasion arise, submit proposals for correcting problematic situations.

7. Monitor shall be entitled to compensation on the same terms as being extended to / provided to Independent Directors on the AIL Board.

8. If the Monitor has reported to the Chairman AIL, a substantiated suspicion of an offence under relevant IPC/ PC Act, and the Chairman AIL has not, within the reasonable time taken visible action to proceed against such offence or reported it to the Chief Vigilance Officer, the Monitor may also transmit this information directly to the Central Vigilance Commissioner.

9. The word ‘Monitor’ would include both singular and plural.

Section 9 – Pact Duration This Pact begins when both parties have legally signed it. It expires for the Contractor 3 years after the last payment under the contract, and for all other Bidders 12 months after the contract has been awarded. If any claim is made/lodged during this time, the same shall be binding and continue to be valid despite the lapse of this pact as specified above, unless it is discharged / determined by Board of AIL. Section 10 – Other provisions 1. This agreement is subject to Indian Law. Place of performance and jurisdiction is the Registered

Office of the Principal, i.e. New Delhi. 2. Changes and supplements as well as termination notices need to be made in writing. Side

agreements have not been made.


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GUIDELINES FOR INDIAN AGENTS OF FOREIGN SUPPLIERS 1.0 There shall be compulsory registration of agents for all Global (Open) Tender and Limited Tender.

An agent who is not registered with AIL Departments/Stations shall apply for registration in the prescribed Application –Form.

1.1 Registered agents will file an authenticated Photostat copy duly attested by a Notary Public/Original certificate of the principal confirming the agency agreement and giving the status being enjoyed by the agent and the commission/remuneration/salary/ retainer ship being paid by the principal to the agent before the placement of order by AIL Departments/Stations.

1.2 Wherever the Indian representatives have communicated on behalf of their principals and the foreign parties have stated that they are not paying any commission to the Indian agents, and the Indian representative is working on the basis of salary or as retainer, a written declaration to this effect should be submitted by the party (i.e. Principal) before finalizing the order

2.0 DISCLOSURE OF PARTICULARS OF AGENTS/ REPRESENTATIVES IN INDIA. IF ANY. 2.1 Tenderers of Foreign nationality shall furnish the following details in their offer: 2.1.1 The name and address of the agents/representatives in India, if any and the extent of

authorization and authority given to commit the Principals. In case the agent/representative be a foreign Company, it shall be confirmed whether it is real substantial Company and details of the same shall be furnished.

2.1.2 The amount of commission/remuneration included in the quoted price(s) for such agents/representatives in India.

2.1.3 Confirmation of the Tenderer that the commission/ remuneration if any, payable to his agents/representatives in India, may be paid by AIL in Indian Rupees only.

2.2 Tenderers of Indian Nationality shall furnish the following details in their offers: 2.2.1 The name and address of the foreign principals indicating their nationality as well as their status,

i.e, whether manufacturer or agents of manufacturer holding the Letter of Authority of the Principal specifically authorizing the agent to make an offer in India in response to tender either directly or through the agents/representatives.

2.2.2 The amount of commission/remuneration included in the price (s) quoted by the Tenderer for himself.

2.2.3 Confirmation of the foreign principals of the Tenderer that the commission/remuneration, if any, reserved for the Tenderer in the quoted price (s), may be paid by AIL in India in equivalent Indian Rupees on satisfactory completion of the Project or supplies of Stores and Spares in case of operation items .

2.3 In either case, in the event of contract materializing, the terms of payment will provide for payment of the commission /remuneration, if any payable to the agents/representatives in India in Indian Rupees on expiry of 90 days after the discharge of the obligations under the contract.

2.4 Failure to furnish correct and detailed information as called for in paragraph-2.0 above will render the concerned tender liable to rejection or in the event of a contract materializing, the same liable to termination by AIL. Besides this there would be a penalty of banning business dealings with AIL or damage or payment of a named sum.


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GUIDELINES ON BANNING OF BUSINESS DEALINGS

CONTENTS

S.No. Description Page(s)

1. Introduction 40

2. Scope 40

3. Definitions 41

4. Initiation of Banning / Suspension 42

5. Suspension of Business Dealings 42-43

6. Ground on which Banning of Business Dealing can be initiated 44-46

7. Banning of Business Dealings 46

8. Removal from List of Approved Agencies-Suppliers / Contractors, 46 etc.

9. Procedure for issuing Show-cause Notice 46

10. Appeal against the Decision of the Competent Authority 46

11. Review of the Decision by the Competent Authority 47

12. Circulation of the names of Agencies with whom Business 47 Dealings have been banned


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1. Introduction 1.1 AI, being a Public Sector Enterprise and ‘State’, within the meaning of Article 12 of the Constitution

of India, has to ensure preservation of rights enshrined in Chapter III of the Constitution. AIL has also to safeguard its commercial interests. AIL deals with Agencies, who have a very high degree of integrity, commitments and sincerity towards the work undertaken. It is not in the interest of AIL to deal with Agencies who commit deception, fraud or exercise of coercion or undue influence or other misconduct in the execution of contracts awarded / orders issued to them. In order to ensure compliance with the constitutional mandate, it is incumbent on AIL to observe principles of natural justice before banning the business dealings with any Agency.

1.2 Since banning of business dealings involves civil consequences for an Agency concerned, it is incumbent that adequate opportunity of hearing is provided and the explanation, if tendered, is considered before passing any order in this regard keeping in view the facts and circumstances of the case.

2. Scope 2.1 The General Conditions of Contract (GCC) of AIL generally provide that AIL reserves its rights to

remove from list of approved suppliers/contractors or to ban business dealings if any Agency has been found to have committed misconduct, violation of any law or any term of the agreement and also to suspend business dealings pending investigation. If such provision does not exist in any GCC, the same may be incorporated.

2.2 Similarly, in case of sale of material there is a clause to deal with the Agencies/customers/buyers, who indulge in lifting of material in unauthorized manner. If such a stipulation does not exist in any Sale Order, the same may be incorporated.

2.3 However, absence of such a clause does not in any way restrict the right of Company (AIL) to take action/decision under these guidelines in appropriate cases.

2.4 The procedure of (i) Removal of Agency from the List of approved suppliers / contractors; (ii) Suspension and (iii) Banning of Business Dealing with Agencies, has been laid down in these guidelines.

2.5 These guidelines apply to all the Departments/Stations and subsidiaries of AIL. 2.6 It is clarified that these guidelines do not deal with the decision of the Management not to entertain

any particular Agency due to its poor/inadequate performance or for any other reason. 2.7 The banning shall be with prospective effect, i.e., future business dealings. 3. Definitions In these Guidelines, unless the context otherwise requires: i) ‘Party/Contractor/Supplier/Purchaser/Customer’ shall mean and include a publiclimited company or a

private limited company, a firm whether registered or not, an individual, a cooperative society or an association or a group of persons engaged in any commerce, trade, industry, etc. ‘Party/Contractor/Supplier/Purchaser/Customer’ in the context of these guidelines is indicated as ‘Agency’.

ii) ‘Inter-connected Agency’ shall mean two or more companies having any of thefollowing features:

a. If one is a subsidiary of the other. b. If the Director(s), Partner(s), Manager(s) or Representative(s) are common;


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c. If Management is common; d. If one owns or controls the other in any manner;

iii) ‘Competent Authority’ and ‘Appellate Authority’ shall mean the following:

a. For Company (entire AIL) Wide Banning

The Executive Director – SBU in charge of Procurement shall be the ‘Competent Authority’ for the purpose of these guidelines. Chairman, AIL shall be the ‘Appellate Authority’ in respect of such cases.

b. In case the foreign supplier is not satisfied by the decision of the First Appellate Authority, it may approach AIL Board as Second Appellate Authority.

c. For Departments / Stations only

Any officer not below the rank of Executive Director appointed or nominated by the Functional Director / SBU Head shall be the ‘Appellate Authority’ in all such cases.

d. For Corporate Office only

For procurement of items / award of contracts, to meet the requirement of Corporate Office only, Head of CMMG shall be the “Competent Authority” and Director (Technical) shall be the “Appellate Authority”.

e. Chairman, AIL shall have overall power to take suo-moto action on any information available or received by him and pass such order(s) as he may think appropriate, including modifying the order(s) passed by any authority under these guidelines.

iv) ‘Investigating Department’ shall mean any Department or Unit investigating into theconduct of

the Agency and shall include the Vigilance Department, Central Bureau of Investigation, the State Police or any other authority or agency set up by the Central or State Government having powers to investigate.

v) ‘List of approved Agencies - Parties/Contractors/Suppliers/ Purchasers/Customers shall mean and include list of approved/registered Agencies – Parties/Contractors/Suppliers/ Purchasers/Customers, etc.

4. Initiation of Banning/Suspension Action for banning/suspension of business dealings with any Agency should be initiated by the department having business dealings with them after noticing the irregularities or misconduct on their part. The Vigilance Department of AIL shall have the right to recommend banning/suspension and this shall be binding on the Department/SBU and non-compliance of these recommendations/instructions shall be deemed to be a misconduct on the part of the Head of the Department/SBU. 5. Suspension of Business Dealings 5.1 If the conduct of any Agency dealing with AIL is under investigation by any department (except

Foreign Suppliers of imported coal/coke), the Competent Authority may consider whether the allegations under investigation are of a serious nature and whether pending investigation, it would be advisable to continue business dealing with the Agency. If the Competent Authority, after


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consideration of the matter including the recommendation of the Investigating Department, if any, decides that it would not be in the interest to continue business dealings pending investigation, it may suspend business dealings with the Agency. The order to this effect may indicate a brief of the charges under investigation. If it is decided that inter-connected Agencies would also come within the ambit of the order of suspension, the same should be specifically stated in the order. The order of suspension would operate for a period not more than six months and may be communicated to the Agency as also to the Investigating Department. The Investigating Department may ensure that their investigation is completed and whole process of final order is over within such period.

5.2 The order of suspension shall be communicated to all Departmental Heads within the Departments/Stations. During the period of suspension, no business dealing may be held with the Agency.

5.3 As far as possible, the existing contract(s) with the Agency may continue unless the Competent Authority, having regard to the circumstances of the case, decides otherwise.

5.4 If the gravity of the misconduct/violation under investigation is very serious and it would not be in the interest of AIL, as a whole, to deal with such an Agency pending investigation, the Competent Authority may send his recommendation to Chief Vigilance Officer (CVO), AIL Corporate Office along with the material available. If Corporate Office considers that depending upon the gravity of the misconduct/violation, it would not be desirable for all the Departments/Stations and Subsidiaries of AIL to have any dealings with the Agency concerned, an order suspending business dealings may be issued to all the Departments/Stations by the Competent Authority of the Corporate Office, copy of which may be endorsed to the Agency concerned. Such an order would operate for a period of six months from the date of issue.

5.5 For suspension of business dealings with Foreign Suppliers, following shall be the procedure :-

i. Suspension of the foreign suppliers shall apply throughout the Company including Subsidiaries. ii. Based on the complaint forwarded by ED-Procurement or received directly by Corporate Vigilance,

if gravity of the misconduct under investigation is found serious and it is felt that it would not be in the interest of AIL to continue to deal with such agency, pending investigation, Corporate Vigilance may send such recommendation on the matter to Executive Director-Procurement to place it before a Committee consisting of the following :

1. Director-Finance/Head of Corporate Finance; 2. SBU Head/Department concerned; 3. ED-Headquarters/Head of Corporate Office; 4. GM-Legal/Head of Corporate Law.

The committee shall expeditiously examine the report, give its comments/recommendations within twenty one days of receipt of the reference by ED-Procurement.

iii. The comments/recommendations of the Committee shall then be placed by ED-Procurement before the Board of AIL and if the Board opines that it is a fit case for suspension, SBU Head may pass necessary orders which shall be communicated to the foreign supplier by ED-Headquarters.

5.6 If the Agency concerned asks for detailed reasons of suspension, the Agency may be informed that its conduct is under investigation. It is not necessary to enter into correspondence or argument with the Agency at this stage.

5.7 It is not necessary to give any show-cause notice or personal hearing to the Agency before issuing the order of suspension. However, if investigations are not complete in six months’ time, the Competent


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Authority may extend the period of suspension by another three months, during which period the investigations must be completed.

6. Grounds on which Banning of Business Dealings can be initiated 6.1 If the security consideration, including questions of loyalty of the Agency to the State, so warrants; 6.2 If the Director/Owner of the Agency, proprietor or partner of the firm, is convicted by a Court of

Law for offences involving moral turpitude in relation to its business dealings with the Government or any other public sector enterprises or AIL, during the last five years;

6.3 If there is strong justification for believing that the Directors, Proprietors, Partners, owner of the Agency have been guilty of malpractices such as bribery, corruption, fraud, substitution of tenders, interpolations, etc;

6.4 If the Agency continuously refuses to return/refund the dues of AIL without showing adequate reason and this is not due to any reasonable dispute which would attract proceedings in arbitration or Court of Law;

6.5 If the Agency employs a public servant dismissed/removed or employs a person convicted for an offence involving corruption or abetment of such offence;

6.6 If business dealings with the Agency have been banned by the Govt. or any other public sector enterprise;

6.7 If the Agency has resorted to Corrupt, fraudulent practices, coercion, undue influence and other violations including misrepresentation of facts;

6.8 If the Agency uses intimidation/threatening or brings undue outside pressure on the Company (AIL) or its official in acceptance/ performances of the job under the contract;

6.9 If the Agency indulges in repeated and/or deliberate use of delay tactics in complying with contractual stipulations;

6.10 Wilful indulgence by the Agency in supplying sub-standard material irrespective of whether pre-despatch inspection was carried out by Company (AIL) or not;

6.11 Based on the findings of the investigation report of CBI/Police/internal Vigilance or any other investigative agency including Government Audit against the Agency for malafide/unlawful acts or improper conduct on his part in matters relating to the Company (AIL) or even otherwise;

6.12 Established litigant nature of the Agency to derive undue benefit; 6.13 Continued poor performance of the Agency in several contracts; 6.14 If the Agency misuses the premises or facilities of the Company (AIL), forcefully occupies tampers

or damages the Company’s properties including land, water resources, forests / trees, etc.

(Note: The examples given above are only illustrative and not exhaustive. The Competent Authority may decide to ban business dealing for any good and sufficient reason).

7 Banning of Business Dealings

7.1 Normally, a decision to ban business dealings with any Agency should apply throughout the Company

including Subsidiaries. However, the Competent Authority of the Department/Unit except Corporate Office can impose such ban unit-wise only if in the particular case banning of business dealings by respective Department/Unit will serve the purpose and achieve its objective and banning throughout

theCompany is not required in view of the local conditions and impact of the misconduct/default to beyond the Department/Unit. Any ban imposed by Corporate Office shall be applicable across all Departments/Stations of the Company including Subsidiaries.


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7.2 For Company-wide banning, the proposal should be sent by ACVO of the Department/Unit to the CVO through the Chief Executive of the Department/Unit setting out the facts of the case and the justification of the action proposed along with all the relevant papers and documents except for banning of business dealings with Foreign Suppliers of imported coal/coke.

The Corporate Vigilance shall process the proposal of the Department/Unit for a prima-facie view in the matter by the Competent Authority nominated for Company-wide banning.

The CVO shall get feedback about that agency from all other Departments/Stations. Based on this feedback, a prima-facie decision for banning/or otherwise shall be taken by the Competent Authority.

If the prima-facie decision for Company-wide banning has been taken, the Corporate Vigilance shall issue a show-cause notice to the agency conveying why it should not be banned throughout AIL.

After considering the reply of the Agency and other circumstances and facts of the case, a final decision for Company-wide banning shall be taken by the Competent Authority.

7.3 There will be a Standing Committee in each Department/Unit to be appointed by Chief Executive

for processing the cases of “Banning of Business Dealings” except for banning of business dealings with foreign suppliers of coal/coke. However, for procurement of items/award of contracts, to meet the requirement of Corporate Office only, the committee shall be consisting of Executive Director/General Manager from Finance, Procurement and Legal:

i) To study the report of the Investigating Agency and decide if a prima-facie case for

Company-wide/Local unit wise banning exists, if not, send back the case to the Competent Authority.

ii) To recommend for issue of show-cause notice to the Agency by the concerned department. iii) To examine the reply to show-cause notice and call the Agency for personal hearing, if

required. iv) To submit final recommendation to the Competent Authority for banning or otherwise.

7.4 If the Competent Authority is prima-facie of the view that action for banning business dealings with

the Agency is called for, a show-cause notice may be issued to the Agency as per paragraph 9.1 and an enquiry held accordingly.

8 Removal from List of Approved Agencies - Suppliers/Contractors, etc. 8.1 If the Competent Authority decides that the charge against the Agency is of a minor nature, it may issue

a show-cause notice as to why the name of the Agency should not be removed from the list of approved Agencies - Suppliers/Contractors, etc.

8.2 The effect of such an order would be that the Agency would not be disqualified from competing in Open Tender Enquiries.

8.3 Past performance of the Agency may be taken into account while processing for approval of the Competent Authority for awarding the contract.


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9 Show-cause Notice 9.1 In case where the Competent Authority decides that action against an Agency is called for, a show-

cause notice has to be issued to the Agency. Statement containing the imputation of misconduct or misbehaviour may be appended to the show-cause notice and the Agency should be asked to submit within 15 days a written statement in its defence.

9.2 If the Agency requests for inspection of any relevant document in possession of AIL, necessary facility for inspection of documents may be provided.

9.3 The Competent Authority may consider and pass an appropriate speaking order:

a. For exonerating the Agency if the charges are not established;

b. For removing the Agency from the list of approved Suppliers/Contactors, etc. c. For banning the business dealing with the Agency.

9.4 If it decides to ban business dealings, the period for which the ban would be operative may be

mentioned. The order may also mention that the ban would extend to the interconnected Agencies of the Agency.

10 Appeal against the Decision of the Competent Authority 10.1 The Agency may file an appeal against the order of the Competent Authority banning business

dealing, etc. The appeal shall be to the Appellate Authority. Such an appeal shall be preferred within one month from the date of receipt of the order banning business dealing, etc.

10.2 Appellate Authority would consider the appeal and pass appropriate order which shall be communicated to the Agency as well as the Competent Authority.

11 Review of the Decision by the Competent Authority

Any petition/application filed by the Agency concerning the review of the banning order passed originally by Chief Executive/Competent Authority under the existing guidelines either before or after filing of appeal before the Appellate Authority or after disposal of appeal by the Appellate Authority, the review petition can be decided by the Chief Executive/Competent Authority upon disclosure of new facts/circumstances or subsequent development necessitating such review. The Competent Authority may refer the same petition to the Standing Committee for examination and recommendation.

12 Circulation of the names of Agencies with whom Business Dealings have been banned 12.1 Depending upon the gravity of misconduct established, the Competent Authority of the Corporate

Office may circulate the names of Agency with whom business dealings have been banned, to the Government Departments, other Public Sector Enterprises, etc. for such action as they deem appropriate.


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12.2 If Government Departments or a Public Sector Enterprise request for more information about the Agency with whom business dealings have been banned, a copy of the report of Inquiring Authority together with a copy of the order of the Competent Authority/Appellate Authority may be supplied.

12.3 If business dealings with any Agency have been banned by the Central or State Government or any other Public Sector Enterprise, AIL may, without any further enquiry or investigation, issue an order banning business dealing with the Agency and its inter-connected Agencies.

12.4 Based on the above, Departments/Stations may formulate their own procedure for implementation of the Guidelines.

DATE: 08.01.2016

AIR INDIA LTD.


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INTEGRITY PACT PROGRAM I. INTRODUCTION

Air India Limited, (AIL) is a premier Public Sector airline (a wholly owned subsidiary of Air-India) engaged in air transportation of passengers and cargo in India. The brand name of the Company is Alliance Air and it conducts its business by benchmarking itself to the highest ethical standards, and adopting the best practices followed by the industry. It does business with a number of domestic and international Bidders, Contractors and Vendors of goods and services (Counterparties). AIL is committed to fostering the most ethical and corruption free business environment. AIL values its relationships with all Counterparts and deals with them in a fair and transparent manner. In order to achieve these goals, AIL is implementing the Integrity Pact Program in cooperation with Central Vigilance Commission (CVC) in respect of all contracts of the value of Rs.10 crores and above. As a part of this initiative, AIL will, in consultation with CVC, appoint external Independent Monitors who will help AIL in implementing the Integrity Pact Program. The Integrity Pact would be signed by the Principal and the Vendor at the pre-tendering stage itself, and will form part of the Tender document. A pre-signed Integrity Pact by the Principal would form part of the Tender document. The Vendors would sign the Pact and submit it along with the financial and technical bids. The ingredients of AIL’s Integrity Pact Program are broadly based on :-

- Commitments and Obligation of AIL and its employees - Commitments and Obligation of Counterparties - Violation and Consequences - Independent Monitor - Implementation Guidelines - Role of Independent Monitors.

II. COMMITMENTS AND OBLIGATION OF AIL a. AIL is committed to have the most ethical and corruption- free business dealings with its

Counterparties. b. AIL values its relationship with all Counterparties and will deal with them in a fair and transparent

manner. c. AIL and/or its Associates (employees, agents, consultants, advisors, etc.) will not seek or take bribes

/ undue benefit directly or indirectly for themselves or for third parties. d. In a competitive tender as well as in general procurement, AIL will deal with all Counterparties with

equity, reason and fairness. e. AIL will exclude all Associates who may be prejudiced or have a Conflict of Interest in dealings with

Counterparties. f. AIL will honour its commitments and make due payments to Counterparties in a timely manner. g. AIL will initiate action and pursue it vigorously whenever corruption or unethical behavior occurs. III. COMMITMENTS AND OBLIGATIONS OF THE ‘COUNTER-PARTY’


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a. The Counterparty, directly or indirectly (through Agent, consultant, advisor, etc.), will not pay any

bribes or give illegal benefit to anyone to gain undue advantage in dealing with the Principal, AIL. b. The Counterparty will not engage in collusion, Price-Fixing, etc. with other Counterparties in dealing

with the Principal, AIL. c. The Counterparty will not pass on to any third party any of the Principal’s confidential information

unless authorized by the organization. d. The Counterparty will promote and observe best ethical practices within its organization.

e. The Counterparty will inform the Independent Monitor:

i. If it receives demand for a bribe or illegal payment/benefit and ii. If it comes to know of any unethical or illegal practice in the Principal’s organization

(AIL) iii. If it makes any payment to any of AIL’s Associates.

f. The Counterparty will not make any false or misleading allegations against AIL or its Associates.

IV. VIOLATIONS & CONSEQUENCES a. If a Counterparty commits a violation of its Commitments and Obligations under the Integrity Pact

Program during the bidding process, it shall be liable to compensate AIL by way of Liquidated damages amounting to a sum equivalent to 3% of the value of the offer or the amount equivalent to Earnest Money Deposit/Bid Security, whichever is higher or an amount determined by the Independent Monitor.

b. In case of violation of the Integrity Pact whereby after award of the Contract the Principal (AIL) terminates or is entitled to terminate the Contract, AIL shall be entitled to demand and recover from

the Contractor liquidated damages equivalent to 5% of the contractvalue or the amount equivalent to Security Deposit/Performance Bank Guarantee, whichever is higher or an amount determined by the Independent Monitor.

c. AIL may ban and exclude the Counterparty from future dealings until the Independent Monitor is satisfied that the Counterparty will not commit any future violation.

d. AIL may initiate criminal proceedings against the violating Counterparty, depending on the gravity of the violation.

e. In case there is a violation of the Integrity Pact by the Principal (AIL) or its Associates (i.e. employees, agents, consultants, advisors, etc.), AIL undertakes to take appropriate action against them.

f. If the complaint made by a counter-party is found to be frivolous or mischievous, action in the form of certain sanctions would be taken against the said complainant.

V. INDEPENDENT MONITOR 1. Chairman & MD, AIL, is the authority to appoint Independent Monitor(s) to oversee the

implementation and effectiveness of the Integrity Pact Program. The process for their appointment shall be similar to Outside Expert Committee (OEC). For this purpose, a panel of Independent Monitors may be constituted by AIL and the same may be referred to CVC for clearance.

2. The Independent Monitor will be a person of Impeccable Integrity, Knowledgeable of AIL’s business and experienced in commercial activities.


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3. It will be a voluntary, non-salaried position of 3 years terms. Independent Monitor will have stature /benefits similar to those of Chairman of the Audit Committee of Board/status of the Directors of AIL. The remuneration and perquisites would be similar to the remuneration/perks of independent Directors on the Board of AIL.

4. The main objective of the Independent Monitor will be to oversee the implementation of the Integrity Pact Program, to prevent corruption, or any other unethical practices in the implementation of the contract.

5. The Independent Monitor will not have administrative or enforcement responsibilities. He will coordinate his efforts through the CVO or other anti-corruption institutions such as CVC. (He may engage services of outside agencies such as accounting firms, law firms, etc. at AIL’s expense, if required, in discharge of his responsibilities after obtaining the approval of the Chairman & M.D.)

6. The Independent Monitor will have access to all offices and internal records of the Principal in respect of the Tender in question. He will also have access to Counterparties’ records and information regarding its dealing with the Principal.

7. The Independent Monitor will have the right to attend any meetings between the Principal and the Counterparties. As far as possible, the meetings should be scheduled in India. Inrespect of any meeting to be held outside India, attendance by the Independent Monitor would be decided in consultation with the Chairman & M.D., AIL.

8. If the Independent Monitor observes or suspects an irregularity, he will inform the Chairman of AIL. Once the Independent Monitor is satisfied that any irregularity has taken place, he may also inform the CVO and CVC.

VI. IMPLEMENTATION GUIDELINES To implement the Integrity Pact Program, the following general Guidelines are suggested: a. To select and appoint a Panel of Independent Monitors in consultation with the CVC. b. To get commitment from all Senior Level executives/officials of AIL to implement the program. It should

be recognized that there may be resistance to Integrity Pact program.

c. To develop detailed implementations plans and finalize the Integrity Pact document in consultation with the Independent Monitors.

d. To notify all senior staff members, Board of Directors, any other over-sight body of the Organization and major suppliers of AIL’s plans to implement Integrity Pact program, which is to be Included in AIL’s web site and also disclose this initiative to the media.

VII. PERIODIC REVIEW & EVALUATION It is recommended that the Board of Directors of AIL periodically review the effectiveness of Integrity Pact Program by all or some of the following measures:- 1. The Independent Monitors and senior leadership of AIL do an annual self-assessment of Integrity

Pact Program effectiveness and identify areas / ways to improve the same. 2. The Independent Monitor will submit an annual report on the progress / effectiveness of Integrity

Pact Program to the Board of Directors of AIL. 3. AIL may conduct an annual 360-degree review (through an outside agency, if required) with senior

executives, junior executives, suppliers, and competitors, regarding the effectiveness of the


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Integrity Pact Program in reducing corruption. Feed-back may be taken from the junior and senior executives of the Principal, suppliers and competitors.

4. AIL should meet with CVC on an annual basis to review the effectiveness of the program.

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