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VM instances not getting IP address

I have configured Openstack with two node setup. Controller and Network on a single server and Compute on another server. I have used ubuntu12.04 and did package install of openstack. I have configured neutron openvswitch plugin and I have configured vlan configuration as the tunnel type

It is possible to create the VMs.

I am able to launch vms.

I am doing tcpdump on br-int and br-ext of Compute node and Controller Node

The DHCP boot message is going from the VM to the Controller

The Neutron DHCP is not offering the DHCP address.

How do i resolve this issue