CONTRACT MANAGEMENT

CONTRACT MANAGEMENTDR. K M SONIGENERAL MANAGER, ENGINEERINGITPO, PRAGATI MAIDAN, DELHI

PROPOSALWHEN ONE PERSON SIGNIFIES TO ANOTHER HIS WILLINGNESS TO DO OR TO ABSTAIN FROM DOING ANYTHING, WITH A VIEW TO OBTAINING THE ASSENT OF THAT OTHER TO SUCH ACT OR ABSTNENCE, HE IS SAID TO MAKE A PROPOSAL.

PROMISEWHEN THE PERSON TO WHOM THE PROPOSAL IS MADE SIGNIFIES HIS ASSENT THERETO, THE PROPOSAL IS SAID TO BE ACCEPTED.A PROPOSAL, WHEN ACCEPTED, BECOMES A PROMISE.

EXAMPLE OF PROPOSAL AND PROMISEAn ENGINEER advertises an expression of interestA contractor submits his bid ( proposal)ENGINEER accepts the bid/proposalProposal/bid becomes promise

PROMISORTHE PERSON MAKING THE PROPOSAL IS CALLED THE PROMISOR, AND THE PERSON ACCEPTING THE PROPOSAL IS CALLED THE PROMISEEENGINEER calls the bids, a contractor submits the bid The contractor is promisorENGINEER is promiseE

CONSIDERATIONWHEN, AT THE DESIRE OF THE PROMISOR, THE PROMISEE OR ANY OTHER PERSON HAS DONE OR ABSTAINED FROM DOING, SOMETHING, SUCH ACT OR ABSTINNENCE OR PROMISE IS CALLED A CONSIDERATION FOR THE PROMISE.

considerationIt is the price for which the promise of the other is bought, and the promise thus given for value is enforceable

AGREEMENTEVERY PROMISE AND EVERY SET OF PROMISES, FORMING THE CONSIDERATION FOR EACH OTHER, IS AN AGREEMENT.

VOID AGREEMENTAN AGREEMENT NOT ENFORCEABLE BY LAW IS SAID TO BE VOIDAgreement in restraint of trade is voidAgreement without consideration is voidAgreement in restraint of legal proceedings is voidAgreement to do impossible acts is voidAgreements void for uncertainty

Void agreementThere was an agreement for the sale of tentage with a stipulation that the price, dates of payment and manner of delivery shall be agreed upon from time to time. The agreement is void (agreement to agree in future is void for uncertainty.)

CONTRACTAN AGREEMENT ENFORCEABLE BY LAW IS A CONTRACT

VOIDABLE AGREEMENTAN AGREEMENT WHICH IS ENFORCEABLE BY LAW AT THE OPTION OF ONE OR MORE OF THE PARTIES THERETO, BUT NOT AT THE OPTION OF THE OTHER OR OTHERS, IS A VOIDABLE CONTRACT

CONTRACTA CONTRACT COMES INTO EXISTENCE ONLY WHEN ALL THE TERMS AND CONDITIONS HAVE BEEN FINALISED.

Communication of acceptanceAn offer is accepted when the acceptance is communicated. The communication must be made to the offerOr.A communication of acceptance made to a third person creates no contract.

Exposure of goodsThe exposure of goods by a shopkeeper does not amount to an offer to sell. On picking the goods, it is an offer by the customer to buy, and the sale is not affected until the buyers offer price is accepted by the shopkeeper. Similarly, mere expression of interest by ITPO is not any offer. When a bidder submits the bid in response to the expression of interest, it is an offer and when ITPO accepts the bid, contract is formed.

Offer to the whole worldThough an offer can be made to the whole world, a contract can arise only by acceptance of the offer. Hence knowledge of the terms of the offer is essential for acceptance.

Unaccepted offer A mere making of an offer does not form part of the cause of action for damages for breach of contract which has resulted from the acceptance of the offer. Ordinarily it is the acceptance of the offer and intimation of that acceptance which results in a contract.Unaccepted offer creates no right or obligation.

Communication when completeThe communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.The communication of an acceptance is complete as against the proposer, when it is put in a course of transmission to him so as to be out of the power of the acceptor.The communication of a revocation is complete as against the person who makes it, when is put into a course of transmission to the person to whom it is made, so as to be out of the person to whom it is made, when it comes to his knowledge.

communicationA proposes, by letter, to sell a house to B at a certain price.The communication of the proposal is complete when B receives the letter.B accepts proposal of A by a letter sent by post.The communication of the acceptance is complete,As against A when the letter is posted;As against B, when the letter is received by A.

communicationA revokes his proposal by telegram.The revocation is complete as against a when the telegram is dispatched.It is complete as against B when B receives it.B revokes his acceptance by telegram.revocation of B is complete as against B when the telegram is dispatched, and as against A when it reaches him.

Communication of proposal and acceptanceThe advertisement of ENGINEER for tenders was an invitation to make an offer.The tenders when submitted to THE ENGINEER were Proposals or Offers.The communication of proposal/offer was complete when received by THE ENGINEER.The acceptance of proposal/offer is complete when it is sent either by post or other communication so as to be out of the power of the ENGINEER.

acceptanceTHE ENGINEER did not make any communication to accept the offer.The acceptance was not complete as it was never made and never put to transmission.The offers on tenders were revoked before it was accepted. There was no contract.

communicationThe communication of acceptance of the bid is necessary for completed contract.

Concluded contractWithout communication, contract is not concluded. Internal note sheets and notingS haVE no face value.

revocationA proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer , but not afterwards.An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.

revocationA proposes, by a bid sent by post, to sell the computers to B.B accepts the proposal by a letter sent by post.A may revoke his proposal at any time before or at the moment when B posts his letter of acceptance but not afterwards.B may revoke his acceptance at any time before or at the moment when the letter communicating it reaches A, but not afterwards.

revocationWhen an offer gives the offeror an option to accept within a fixed period, it may be withdrawn even before the expiry of that period unless there is some consideration for keeping it open.

Revocation how made A proposal is revoked-By the communication of notice of revocation by the proposer to the other party;By the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance.By the failure of the acceptor to fulfill a condition precedent to acceptanceBy the death or insanity of the proposer if the fact of his death or insanity comes to the knowledge of the acceptor before acceptance.

acceptanceAcceptance must be absolute and unqualifiedBe expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted.

Acceptance must be unqualified and without conditionOffer and acceptance must be based on three components;CertaintyCommitment and communicationFor a valid contract

acceptanceIf a new condition is put while accepting the bid, contract already signed by the proposer is not completeUntil the proposer accepts the condition

acceptanceAn acceptance with a variation is no acceptance; it is simply counter proposal which must be accepted by the original proposer before a contract is made.

Performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an acceptance of the proposal.

Agreements and contractsAll agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.

Who are competent to MAKE contractEvery person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind and is not disqualified from contracting by any law to which he is subject.

Free consentConsent is said to be free when it is not caused by;CoercionUndue influenceFraudMisrepresentationMistake, subject to certain provisions

Offer cannot impose burden of refusalThe offeror cannot say that if no answer is received within a certain time, the same shall be deemed to have been accepted.

Communication by acceptor himselfThere must be notice of acceptance from the contracting party in some way. Information by an unauthoriZed person is as insufficient as overhearing from behind the door.

Partial acceptanceAcceptance should be of the whole of the offer. The offeree cannot accept a part of its terms which are favourable to him and reject the rest.Such an acceptance is another kind of counter proposal. And does not bind the offeror unless he agrees to the qualified acceptance.A mere inquiry into the terms of a proposal is not the same thing as a counter proposal.

Contract

Tender and contractTender when accepted (and communicated) is contract

tendersItem rate tenderPercentage RATE tender EPC or Turn key tenderlump sum tender

Tender document INCLUDESPress notice/expression of interestNotice inviting tender Instructions to biddersConditions of contractBill of quantitiesGeneral/special Conditionsdrawings

PRESS NOTICE SHOULD INCLUDE NAME OF WORKAUTHORITY INVITING TENDERSPRESCRIBED Time of publicityTYPE OF TENDER DOCUMENT ON WHICH TENDERS INVITEDTIME AND PLACE OF Sale and purchase of tendersELIGIBILITY CRITERION IF ANYDate of receipt and opening of tendersOTHER MAJOR CONDITIONSREFERENCE WHERE DETAILS CAN BE SEEN

ApplicationTime gap between receipt of application and opening of tendersTenders in downloadable formE tendering

No. OFF-1-CTE-1(Pt) VGovernment of IndiaCentral Vigilance Commission*****Satarkta Bhawan, Block A,GPO Complex, INA,New Delhi- 110 023Dated the 24th March 2005Office Order No. 15/3/05Subject: Notice inviting tenders regarding.The Commission has observed that some of the Notice Inviting Tenders (NITs) have a clause that the tender applications could be rejected without assigning any reason. This clause is apparently incorporated in tender enquiries to safeguard the interest of the organisation in exceptional circumstance and to avoid any legal dispute, in such cases.2. The Commission has discussed the issue and it is emphasized that the above clause in the bid document does not mean that the tender accepting authority is free to take decision in an arbitrary manner. He is bound to record clear, logical reasons for any such action of rejection/recall of tenders on the file.3. This should be noted for compliance by all tender acceptingauthorities.Sd/-(Anjana Dube)Deputy SecretaryAll Chief Vigilance Officers

Discrepancies in tendersTENDER DOCUMENT SHOULD CLEARLY SPECIFY PROVISIONS FOR DISCREPANCIES;IN Rates in figures, words and amount worked outNo rates QUOTED for ANY PARTICULAR item (S) Rates quoted in percentage for item rate tenders and quoted for each item for percentage tenders

Qualification criteriaqualification criteria SHOULD NOT BE VAGUEQualification criteria SHOULD BE mentioned in tender document and SHOULD NOT BE left on technical evaluation committeeSimilar work SHOULD BE PROPERLY DEFINED

No. 98/ORD/1Government of IndiaCentral Vigilance Commission******Satarkata Bhavan, Block - 'A',GPO Complex, INA,New Delhi - 110 023Dated 04.09.2003Office Order No.44/9/03ToAll Chief Vigilance OfficersSub: Irregularities in the award of contracts.Sir/Madam,While dealing with the case of a PSU, the Commission has observed that thequalification criteria incorporated in the bid documents was vague and no evaluation criterion was incorporated therein. It is also seen that the category-wise anticipated TEUs were not specified in the bid documents and the same was left for assumptions by Tender Evaluation Committee for comparative evaluation of financial bids, which led to comparative evaluation of bids on surmises and conjectures. Further, it was also provided as a condition in the tender bid that the tenderer should have previous experience in undertaking handling of similar work and/or transportation works preferably of ISO containers, however, no definition of 'similar works' was, indicated in the bid documents.

2. It should be ensured that pre-qualification criteria, performance criteria andevaluation criteria are incorporated in the bid documents in clear and unambiguousterms as these criterion very important to evaluate bids in a transparent manner.Whenever required the departments/organisations should have follow two-bid system,i.e. technical bid and price bid. The price bids should be opened only of those vendorswho were technically qualified by the Deptt./ Organisation. The Commission wouldtherefore advise that the Deptt./ Organisation may issue necessary guidelines in this regardfor future tenders.3. It has also observed that the orders were allegedly split in order to bring it within thepowers of junior officers and that the proper records of machine breakdown were not beingkept. It is therefore, decided that in the matters of petty purchase in emergency items alldepartments/organisations must keep proper records of all machine breakdown etc.4. All CVOs may bring this to the notice of all concerned.Yours faithfully,Sd/-(Anjana Dube)Deputy Secretary

Shortcomings in TENDER/bid document

No.98/ORD/1Government of IndiaCentral Vigilance Commission(CTEs Organization)Satarkta Bhavan, Block AG.P.O. Complex, I.N.A.,New Delhi 110 023Dated the 9th July, 2003Office Order No. 33/7/03ToAll the Chief Vigilance OfficersSubject:- Short-comings in bid documents.Sir/Madam,The Commission has observed that in the award of contracts for goods and services, the detailed evaluation/exclusion criteria are not being stipulated in the bid document and at times is decided after the tender opening. This system is prone to criticism and complaints as it not only leads to a non-transparent and subjective system of evaluation of tenders but also vitiates the sanctity of the tender system.2. The Commission would reiterate that whatever pre-qualification, evaluation/exclusion criteria, etc. which the organization wants to adopt should be made explicit at the time of inviting tenders so that basic concept of transparency and interests of equity and fairness are satisfied. The acceptance/rejection of any bid should not be arbitrary but on justified grounds as per the laid down specifications, evaluation/exclusion criteria leaving no room for complaints as after all, the bidders spend a lot of time and energy besides financial cost initially in preparing the bids and, thereafter, in following up with the organizations for submitting various clarifications and presentations.3. This is issued for strict compliance by all concerned.Yours faithfully,Sd/-(Mange Lal)Deputy SecretaryTelefax No.24651010

No. 12-02-1-CTE-6Government of IndiaCentral Vigilance Commission(CTEs Organisation)Satarkata Bhavan,Block A, GPO Complex,INA, New Delhi 110 023.Dated the 17th December 2002.OFFICE MEMORANDUMSubject : - Prequalification criteria (PQ).The Commission has received complaints regarding discriminatory prequalification criteria incorporated in the tender documents by various Deptts./Organisations. It has also been observed during intensive examination of various works/contracts by CTEO that the prequalification criteria is either not clearly specified or made very stringent/very lax to restrict/facilitate the entry ofbidders.2. The prequalification criteria is a yardstick to allow or disallow the firms to participate in the bids. A vaguely defined PQ criteria results in stalling the process of finalizing the contract or award of the contract in a non-transparent manner. It has been noticed that organizations, at times pick up the PQ criteria from some similar work executed in the past, without appropriately amending thedifferent parameters according to the requirements of the present work. Very often it is seen that only contractors known to the officials of the organization and to the Architects are placed on the select list. This system gives considerable scope for malpractices, favouritism and corruption. It is, therefore, necessary to fix in advance the minimum qualification, experience and number of similar works of a minimum magnitude satisfactorily executed in terms of quality and period ofexecution. vendors including a PSU.

3. Some of the common irregularities/lapses observed in this regard arehighlighted as under: -i) For a work with an estimated cost of Rs.15 crores to be completed intwo years, the criteria for average turnover in the last 5 years was keptas Rs.15 crores although the amount of work to be executed in oneyear was only Rs.7.5 crores. The above resulted in prequalification ofa single firm.ii) One organization for purchase of Computer hardware kept the criteriafor financial annual turnover of Rs.100 crores although the value ofpurchase was less than Rs.10 crores, resulting in disqualification ofreputed computer firms.iii) In one case of purchase of Computer hardware, the prequalificationcriteria stipulated was that the firms should have made profit in the lasttwo years and should possess ISO Certification. It resulted indisqualification of reputed firm.

iv) In a work for supply and installation of A.C. Plant, retendering was resorted to with diluted prequalification criteria without adequate justification, to favour selection of a particular firm.v) An organization invited tenders for hiring of D.G. Sets with eligibility of having 3 years experience in supplying D.G. Sets. The cut off dates regarding work experience were not clearly indicated. The above resulted in qualification of firms which had conducted such business for 3 years, some 20 years back. On account of this vague condition, some firms that were currently not even in the business were also qualified.vi) In many cases, Similar works is not clearly defined in the tender documents. In one such case, the supply and installation of A.C. ducting and the work of installation of false ceiling were combined together. Such works are normally not executed together as A.C. ducting work is normally executed as a part of A.C. work while false ceiling work is a part of civil construction or interior design works. Therefore, no firm can possibly qualify for such work with experience of similar work. The above resulted in qualification of A.C. Contractorswithout having any experience of false ceiling work although the major portion of the work constituted false ceiling work.4. The above list is illustrative and not exhaustive. While framing the prequalification criteria, the end purpose of doing so should be kept in view. The purpose of any selection procedure is to attract the participation of reputed and capable firms with proper track records. The PQ conditions should be exhaustive, yet specific. The factors that may be kept in view while framing the PQ Criteria includes the scope and nature of work, experience of firms in the same field and financial soundness of firms.5. The following points must be kept in view while fixing the eligibility criteria:-Contd.

-: 3 :-A) For Civil/Electrical Worksi) Average Annual financial turnover during the last 3 years, ending 31st March of the previous financial year, should be at least 30% of the estimated cost.ii) Experience of having successfully completed similar works during last 7 years ending last day of month previous to the one in which applications are invited should be either of the following: -a. Three similar completed works costing not less than the amount equal to 40% of the estimated cost.orb. Two similar completed works costing not less than the amount equal to 50% of the estimated cost.orc. One similar completed work costing not less than the amount equal to 80% of the estimated cost.iii) Definition of similar work should be clearly defined.In addition to above, the criteria regarding satisfactory performance of works, personnel, stablishment, plant, equipment etc. may be incorporated according to the requirement of the Project.B) For Store/Purchase ContractsPrequalification/Post Qualification shall be based entirely upon the capability and resources of prospective bidders to perform the particular contract satisfactorily, taking into account their (i) experience and past performance on similar contracts for last 2 years (ii) capabilities with respect to personnel, equipment and manufacturing facilities (iii) financial standing through latest I.T.C.C., Annual report (balance sheet and Profit & Loss Account) of last 3 years. The quantity, delivery and value requirement shall be kept in view, while fixing the PQ criteria. No bidder should be denied prequalification/post qualification for reasons unrelated to its capability and resources to successfully perform the contract.6. It is suggested that these instructions may be circulated amongst the concerned officials of your organization for guidance in fixing prequalification criteria. These instructions are also available on CVCs website, http://cvc.nic.in.(M.P. Juneja)Chief Technical ExaminerToAll CVOs of Ministries/Departments/PSUs/Banks/Insurance Companies/Autonomous Organisations/Societies/UTs.

Reasonability of ratesJUSTIFICATION STATEMENT TO BE PREPARED TO WORK OUT REASONABILITY OF RATES OF THE LOWEST TENDER

NEGOTIATIONIN GENERAL POST NEGOTIATION SHOULD NOT BE CARRIED OUTIN CASE NEGOTIATION IS CARRIED OUT, REASONS SHOULD BE RECORDED ON THE NOTE SHEET

No.005/CRD/012Government of IndiaCentral Vigilance Commission*****Satarkta Bhawan, Block A,GPO Complex, INA,New Delhi- 110 023Dated the 3rd March, 2007Circular No. 4/3/07Sub:- Tendering process - negotiations with L-1.Reference is invited to the Commissions circulars of even number, dated 25.10.2005 and 3.10.2006, on the above cited subject. In supersession of the instructions contained therein, the following consolidated instructions are issued with immediate effect:-(i) As post tender negotiations could often be a source of corruption, it is directed that there should be no post-tender negotiations with L-1, except in certain exceptional situations. Such exceptional situations would include, procurement of proprietary items, items with limited sources of supply and items where there is suspicion of a cartelformation. The justification and details of such negotiations should be duly recorded and documented without any loss of time.(ii) In cases where a decision is taken to go for re-tendering due to the unreasonableness of the quoted rates, but the requirements are urgent and a re-tender for the entire requirement would delay the availability of the item, thus jeopardizing the essential operations, maintenance

And safety, negotiations would be permitted with L-1 bidder(s) for the supply of a bare minimum quantity. The balance quantity should, however, be procured expeditiously through a re-tender, following the normal tendering process.(iii) Negotiations should not be allowed to be misused as a tool for bargaining with L-1 with dubious intentions or lead to delays in decision-making. Convincing reasons must be recorded by the authority recommending negotiations. Competent authority shouldexercise due diligence while accepting a tender or ordering negotiations or calling for a re-tender and a definite timeframe should be indicated so that the time taken for according requisite approvals for the entire process of award of tenders does not exceed one monthfrom the date of submission of recommendations. In cases where the proposal is to be approved at higher levels, a maximum of 15 days should be assigned for clearance at each level. In no case should the overall timeframe exceed the validity period of the tender and it should be ensured that tenders are invariably finalised within their validity period.(iv) As regards the splitting of quantities, some organisations have expressed apprehension that pre-disclosing the distribution of quantities in the bid document may not be feasible, as the capacity of the L-1 firm may not be known in advance. It may be stated that if, after due processing, it is discovered that the quantity to be ordered is

far more than what L-1 alone is capable of supplying and there was no prior decision to split the quantities, then the quantity being finally ordered should be distributed among the other bidders in a manner that is fair, transparent and equitable. It is essentially in cases where the organisations decide in advance to have more than one source of supply (due to critical or vital nature of the item) that the Commission insists on pre-disclosing the ratio of splitting the supply in the tender itself. This must be followed scrupulously.(v) Counter-offers to L-1, in order to arrive at an acceptable price, shall amount to negotiations. However, any counter-offer thereafter to L-2, L-3, etc., (at the rates accepted by L-1) in case of splitting of quantities, as pre-disclosed in the tender, shall not be deemed to be a negotiation.2. It is reiterated that in case L-1 backs-out, there should be a re-tender.3. These instructions issue with the approval of the Commission and may pleasebe noted for immediate compliance.(Vineet Mathur)Deputy SecretaryAll Chief Vigilance Officers

No.005/CRD/12Government of IndiaCentral Vigilance Commission*****Satarkta Bhawan, Block A,GPO Complex, INA,New Delhi- 110 023Dated the 3rd October, 2006Circular No. 37/10/06Subject: Tendering process negotiation with L1.Reference is invited to Commissions instructions of even numberdated 25.10.2005 on the above subject. A number of references have been receivedin the Commission, asking for clarification on issues pertaining to specific situations.2. The Commissions guidelines were framed with a view to ensuring fairand transparent purchase procedure in the organizations. The guidelines are quite clear and it is for the organizations to take appropriate decision, keeping these guidelines in view. In case they want to take action in deviation or modification of the guidelines, to suit their requirements, it is for them to do so by recording the reasons and obtaining the approval of the competent authority for the same. However, in no case, should there be any compromise to transparency, equity or fair treatment to all the participants in a tender.3. The above instructions may be noted for strict compliance.(V. Kannan)DirectorAll Chief Vigilance Officers

Works awarded on nomination basis

No.005/CRD/19Government of IndiaCentral Vigilance Commission*****Satarkta Bhawan, Block A,GPO Complex, INA,New Delhi- 110 023Dated the 9th May 2006CIRCULAR No.15/5/06Subject:- Transparency in Works/Purchase/Consultancy contracts awardedon nomination basis.The Commission had, in its OM No. 06-03-02-CTE-34 dated 20.10.2003 on back to back tie up by PSUs, desired that the practice of award of works to PSUs on nomination basis by Govt. of India/PSUs needed to be reviewed forthwith. It is observed that in a number of cases, Works/Purchase/Consultancy contracts are awarded on nomination basis. There is a need to bring greater transparency and accountability in award of such contracts. While open tendering is the most preferred mode of tendering, even in the case of limited tendering, the Commission has been insisting upon transparency in the preparation of panel.2. In the circumstances, if sometimes award of contract on nomination basis by the PSUs become inevitable, the Commission strongly feels that the following points should be strictly observed. (i) All works awarded on nomination basis should be brought to the notice of the Board of the respective PSUs for scrutiny and vetting post facto.(ii) The reports relating to such awards will be submitted to the Board every quarter.(iii) The audit committee may be required to check at least 10% of such cases.3. This may be noted for strict compliance.(V. Kannan)DirectorAll Chief Vigilance OfficersCopy to:(i) All Secretaries of Govt. of India(ii) All CEOs/Head of the organisation

Time bound processing of tenders

No.008NGLl083Government of IndiaCentral Vigila*n*c**e* CommissionSatarkta Shawan, Siock 'A',GPO Complex, INA,New Delhi- 110 023Dated the 6thNovember 2008Circular No.31/11/08Subject: Time bound processing of procurement.The Commission has observed that at times the processing of tenders is inordinately delayed which may result in time and cost overruns and also invite criticism from the Trade Sector. It is, therefore, essential that tenders are finalized and contracts are awarded in a time bound manner within original validity of the tender, without seeking further extension of validity. While a short validity periodcalls for prompt finalization by observing specific time-line for processing, a longer validity period has the disadvantage of vendors loading their offers in anticipation of likely increase in costs during the period. Hence, it is important to fix the period of validity with utmost care.2. The Commission would, therefore, advise the organizations concerned to fix a reasonable time for the bids to remain valid while issuing tender enquiries, keeping in view the complexity of the tender, time required for processing the tender and seeking the approval of the Competent Authority, etc., and to ensure the finalization of tender within the stipulated original validity. Any delay, which is notdue to unforeseen circumstances, should be viewed seriously and prompt action should be initiated against those found responsible for non-performance.3. Cases requiring extension of validity should be rare. And in the exceptional situations where the validity period is sought to be extended, it should be imperative to bring on record in real time, valid and logical grounds, justifying extension of the said validity.4. These instructions may please be noted for immediate compliance.~ (Shalini Darbari)DirectorAll Chief Vigilance Officers

SOME CONTRACT CLAUSES

Performance guarantee5 % of the contract valueValidity contract period + (60 days)the form of performance guarantee such as b.g., bank draft need to be mentioned in the tender document.Time within which performance guarantee is required to be submitted is to be mentioned.

Security depositRecovery : Deducted from the billsAmount: 5 % of the gross amount of each running bill Max 5 % of the contract amount Replaceable with certain guarantees

Compensation for delayAuthority to levy compensationNotice to be givenMax 10 % of the contract valueRecovery of compensationMay have provision of mile stonesDamages due to delay ?

Incentives for early completionBonus CLAUSE

Determination of contractDefects and no action on removal of defects even after serving the noticeSuspension of the workFails to complete the work within stipulated dateNeglects to carry out his obligations----Notice has to be givenAuthority to determine/rescind the contractRevoke the determination ?

Time and extension for delayConditions to be specifiedHindrance register to be maintainedAuthority to grant extension of time

Time- the essence of contractIf the contract itself provides for extension of time, the same can not be termed to be the essence of the contract.

BillsRunning account bills- considered as advancesAmount of the billFrequency of paymentsFinal bill full and final settlement from both the partiesTime for final bill paymentConditions if anySecurity deposit refund

advancesMobilization advancePlant/machinery advanceRecovery conditionsSecured advanceAdvance payment CONDITIONS

Price variationLabourMaterialsFormulae for adjustmentsBase pricePrice indices

Deviations LimitRatesExtra itemsSubstituted itemsAdditional agreement quantities

Foreclosure of contractCONDITIONS ON WHICH FORECLOSURE OF CONTRACT CAN BE MADE

Defects liability periodNormally 6 months in case of works BUT PROVISION CAN BE MADE FOR ONE YEAR OR MORE

Labour lawsContractor to obtain the licenseOrganization is the principal employer

Settlement of disputes & arbitrationAppointing authorityPROVISION OF Conciliator/ adjudicator IF ANYSole arbitrator OR DRBDISPUTE RESOLUTION During the progress of the work, or after the cancellation, termination, completion or abandonment

CONDITIONS OF Safety considerations, taxes, ----

Termination of contract on death of contractorCan be terminated

CONDITIONS OF Relatives working and quoting the rates/submitting tenders TO BE INCLUDED

No.008 /CRD/008Government of IndiaCentral Vigilance Commission*****Satarkta Bhawan, Block A,GPO Complex, INA,New Delhi- 110 023Dated the 24th July 2008Circular No. 22/07/08Sub: Referring cases of Procurement to the Commission.The Commission has noted a significant rise in the number of references made to it involving procurement at different stages. These relate to specific cases and are not generic in nature. Essentially they belong to the domain of managerial decision making and the matter needs to be decided at that level. The Central Vigilance Commission and its Chief Vigilance Officers, as a matter of policy do not interfere in the process of decision making, which is a management function of the respective organization. The Commission has issued various circulars/guidelines /instructions in orderto promote transparency, improve competition and ensure equity among participants. However, if any organization faces difficulty in the application of any of the circulars/guidelines/instructions issued by the Commission, then it may approach the Commission bringing out the difficulties along with a proposed generic solution listing out the ingredients of the special circumstances for examination and review by the Commission. References of a general nature having elements of managerial decision making and concerning a particular procurement should be avoided.(V. Ramachandran)Chief Technical ExaminerCentral Vigilance CommissionAll Chief Vigilance Officers in the Ministries/Departments/PSEs/ Public SectorBanks/Insurance Companies/ Autonomous Organisations/Societies

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