MoRTH Moves to Curb Layered Subcontracting in Highways

A wider procurement reset

The Ministry of Road Transport and Highways (MoRTH) is preparing a procurement reset that extends beyond the headline subcontracting review.

Addressing FICCI's 4th Tunnels and Bridges Conference on August 19, Union Minister Nitin Gadkari confirmed MoRTH will re-examine provisions governing subcontracting of highway works, with the stated objective of keeping responsibility for quality and timely execution with the principal contractor.

The trigger is familiar to delivery teams: contracts awarded materially below estimated cost are pushed through multiple subcontracting layers, each retaining a margin and none fully accountable.

Gadkari signalled that GST records will be used to trace these chains and identify breaches of contractual requirements, making intermediary margin layers a compliance liability rather than just a cost problem.

From consultant accountability to QCBS

Performance-based assessment for DPR consultants

The sharper shift is performance-based assessment of DPR consultants. MoRTH already scores contractors on performance; extending the exercise to consultants and linking tender eligibility to those scores changes prequalification economics.

Consultants will now carry delivery risk on report quality, not just on winning the mandate.

Making QCBS the default for complex projects

Afcons Infrastructure Managing Director S Paramasivan, chairing FICCI's Roads and Highways Committee, pushed the debate further.

He flagged tenders awarded at 20 percent or more below estimates under the L1 method and argued that quality-cum-cost based selection provisions already exist with the Finance Ministry and MoRTH but remain underused.

His ask: make QCBS the default for complex projects and those above Rs 1,000 crore, with technical parameters at 70–80 percent of evaluation weight.

For contractors, the signal is structural. If QCBS gains traction, technically weak bidders that survived on aggressive L1 pricing lose access to complex work, while balance-sheet-strong EPC players with in-house engineering capability gain.

Paramasivan also pressed for land acquisition and clearances to sit with project authorities rather than contractors under EPC, and for compensation on verified geological variation in Himalayan tunnelling. Both are long-standing execution risks that depress margins.

Tunnel pipeline and the industry signal

The tunnel pipeline raises the stakes. Gadkari said MoRTH is preparing tunnel tenders worth Rs 2 lakh crore to Rs 2.5 lakh crore and urged domestic manufacturing of tunnel boring machines, whose capital cost remains a major constraint.

Combined with a call for a technical session on ultra-high performance concrete, the direction is clear:

- Procurement reform
- Forensic subcontracting control
- Supply-chain localisation

These elements are being bundled into one delivery overhaul.

The real industry signal is that MoRTH is shifting from price-led award logic toward accountability-led procurement.

Contractors and consultants that can document performance and hold principal-contractor responsibility will absorb the upside; layered intermediaries and low-capability bidders face structural exclusion.