The Narendra Modi government's ambitious smart city project has run into a hitch with the last-minute cancellation of its first major tender.

International consultancy firm McKinsey "unofficially" helped out the urban development ministry in preparing the groundwork for the Rs 7,000-crore project and one of its consultants even authored a key tender document for the selection of the consultant, said people in the know. However, the firm itself wasn't barred from bidding for the tender and was apparently working on a bid when the tender was scrapped on March 9, barely 48 hours before the closing date, these people said.

McKinsey's role in the project was revealed after the National Institute of Urban Affairs (NIUA), which is responsible to implement the project, released the tender seeking request for qualification cum request for proposal on February 17. The document was uploaded on the NIUA website and a cursory look at the Word file's properties showed McKinsey consultant Amit Gupta as its author. The document was also uploaded on the government's Central Public Procurement portal.

The tender was cancelled after the ministry and NIUA received several complaints about the "conflict of interest" and that the document was tailored to benefit McKinsey, the people said.

NIUA Director Jagan Shah admitted to ET that he received calls and messages pointing out the possible conflict of interest, but said there was no written complaint. It was withdrawn since the "requirements for the project changed radically and the goalpost got shifted", Shah said.