Telecommunication Accounts and Finance -10

 
Chapter-10  Procedures & Precautions in Tendering,Evaluation, Negotiation and Arbitration
 
A Contract means...
The promises, agreements, transactions between two parties based on which commercial activities are carried out are called contracts. Section 2 (h) of the Indian Contract Act, 1872 defines the term Contract as “An agreement enforceable by law”. An agreement means a set of promises forming the consideration for each other. There must be two parties to a contract. In practice, if some one wants some work to be executed, he approaches a person for the said purpose. The other person on receiving the proposal quotes his price or charges, which are a consideration and other terms and conditions, are finalized. An agreement in relation to it comes into force. If this agreement is liable to be enforced by law, it is called a CONTRACT.
 
The principles of Govt. Contract are...
 
1. The terms of a contract must be precise and definite and there must be no room for ambiguity.
2. Standard forms of contracts should be adopted wherever possible.
3. In cases where standard from of contracts are not used, legal and financial advice should be taken in drafting the contracts before they are finally entered into.
4. No relaxation of specifications agreed upon in a contract or relaxation of the terms of an agreement entered into by Government should be made without proper examination of the financial effect involved in such relaxation.
5. Save in exceptional circumstances, no work of any kind should be commenced without prior execution of contract documents.
6. Provision must be made in contracts for safeguarding Government property entrusted to a contractor and for recovery of hire charges, if any, there for.
7. All contracts should have provisions for recovery of liquidated damages for defaults on the part of the contractor, unless any special instructions are issued by the competent authority.
8. 'Cost Plus' contracts should be avoided except where they are inevitable.
9. The term of contract for the purchase of perishable stores should invariably include a (separate) warranty clause.
10. 'Lump sum' contracts should not be entered into except in case of absolute necessity.
11. A schedule of quantities with their issue rates of such materials, which are supplied departmentally, and used in the contract work, should form an essential part of the contract.
12. The question whether any sales tax, service tax, octroi and terminal taxes and other local taxes and duties are to be paid and is so, by which party, should be settled and cleared up before entering into any contract.
13. No work should be done under and agreement/ contract beyond the date of expiry of its tenure. Wherever it is considered that the work  has to be continued beyond the date of expiry of the tenure timely action should be taken for renewing the contract/agreement for the further  period required, after a suitable review of the provisions of the old agreements/ contract to see whether any modifications therein are required.
14. While awarding contracts or entering into any agreement full consideration should be given by the competent authority to the element of foreign exchange involved therein and subject to other conditions being equal, the offer involving the least expenditure on foreign exchange should be preferred. (Vide para 419.1 P & T Man Vol. II and GID (i) below Rule 12 of GFR)
 
The Contracts in BSNL are...
 

Major Contracts	Procurement tender		Centralised items by BSNL HQ
			Circle purchase of de-centralised item
			Local purchase of de-centralised items
	Works contracts	Engineering works	L & W
			Cable laying
			A & P
			DP & SI works
			Tower constructions
		Civil works	Building
			Electrical
			Anciliary

 

MINOR CONTRACTS	Maintenance Contract	Engineering Mtce.	Cable
			Internal Plant
			External Plant
			Equipment or Instrument repair
		Bldg. Mtce.	Civil
			Electrical
			Horticultural
		Annual Mtce.	Computers
			Office equipment
			Software Mtce.
	Service Contracts	Labour	Security
			Housekeeping
			Date entry and
			business processing
			delivery of bills
		OTHER contracts	Advertisement and
			Publicity
			Marketing of
			services
			Printing &
			publications
			Catering services
	Misc. Contracts		Stationery
			Consumable
			material
			Spares
			Machinery

Open vs. Limited...
The purchase contracts can be classified broadly into two categories i.e., Limited tenders and open tenders.  The term 'limited' means that the purchase is limited by value or by source or by area. The Open tenders means the purchases made by making wide publicity which will be open to registered or recognized suppliers, indigenous suppliers or to global suppliers.
 
The terminology...
Some of the terms frequently used with reference to tenders and contracts are...
 
1. Bidder: A Person, firm, company (or any other legal person) who has submitted an offer in response to a notice inviting tender.
2. Contractor: The bidder whose tender (offer) has been accepted, and who has entered into an valid agreement.
3. Supplier means the individual or firm supplying the goods on contract.
4. Goods means all the equipment, machinery or other material which the supplier is required to supply under the contract.
5. Advance purchaser Order means the intention of purchaser to place the purchase order on the bidder.
6. Purchase Order means the order placed by the purchaser on the supplier signed by the purchaser including all attachments and appendices thereto and all documents incorporated by reference therein. The purchase order shall be deemed to be a 'Contract'.
7. Work Order means the order issued to the contractor by the officer in charge of the works.
8. Contract Price means the price payable to the supplier under the purchase order for the full and proper performance of its contractual obligations.
 
9. Bid documents/ Tender documents means all the documents consisting of
a) Specifications of the materials or work
b) Terms and conditions of the contract and
c) Plans and detailed diagrams, if any, and other related documents forming part of contract.
 
10. Notice Inviting Tender (NIT) means any publication or notice issued to the public through press or otherwise expressing the intention of the corporation toget the supplies or work done and requesting the bidder to make offers.
 
11. Earnest Money Deposit (EMD)/ Bid Security means an amount required to be deposited by the bidder/ tenderer along with his offer as a security against his default of entering into contract.
 
12. Security Deposit/ Performance Guarantee means an amount fixed as security for ensuring the performance of the contract and compliance to the other conditions of contract by the contractor.
 
What is the management of a 'contract'?
Level playing: In the changed economic environment of today, it is necessary to see that the costs that burden the Public Sector transactions as well as other decision making costs are reduced to the minimum and the Public Sector organization is placed on a level playing field with the private sector so that they can compete effectively and operate profitably.
 
Objective: Objectives of the management must be basically be to provide good quality and cost. And the most fundamental of objective of audit is to assure that this actually happens. Therefore, there must not be any conflict between the objectives of the Audit and the Management. Both try to see that the Government gets good value for the money spent.
 
Procurement Policy: A good procurement policy is one that is clearly understood by all. There must be economy, speed, simplicity and transparency in all procurement related functions. Accountability is a basic attribute of a good procurement policy. In the fast changing scenario in the Telecom sector, it appears impossible to conceive that the organization, based on Government set of rules, would be able to compete inthe market with the players who have adopted latest technologies not only in the workplace but also in their decision making mechanism. If the pressure of cut-throat competition puts in making the wrong decisions, it would be treated as management failure and invites questions from all quarters like audit and media and MPs. In these circumstances BSNL has to play a vital role with the constraints on the working of Public Sector and change is required in procurement methods. In order to achieve the goal, the challenges are to be identified.
Purchases: General Guidelines
The following general guidelines can be kept in view in procurement and call of tenders therefore.
a. Procurement should be done following transparent tendering procedure in consistence with the overall procurement policy of the Dept. /Organization.
b. While procuring, the existing inventory and inventory in the pipeline should also be accounted for. Utmost care should be taken to ensure that pilling up the inventory is avoided. Care is also to be exercised in assessing the requirement of items where no norms are prescribed.
c. Procurement will be as per technical specifications applicable at the time ofcalling of the tenders. The applicable specifications with Amendment No. ofany should be indicated in the tender.
 
Demands of Public Accountability:
• Constitutional Provisions
• Government / Audit Instructions
• Compliance to Procedures
• Supervision of Parliament, CVC.
Demands of Commercial Organization:
• New Technologies and business areas
• Necessity of speed and alertness in taking quick decisions
• Role of competitors
• Compliance to various tax and regulatory laws
• Lack of knowledge and training
ATTENTION may be given on the following issues:
• Need of flexibility in decision making process
• De-centralization of administrative & financial powers
• Correct assessment of requirements
• Market survey and vendor identification & rating
• Introduction of new management techniques in supply chain management, inventory control and cost analysis etc.
• Imparting training in tax, commercial and regulatory laws
• Improving communication channels and liasoning with contractors
• Effective supervision of contractors in implementation of contract and adherence of time schedules through progress reports, PERT technique etc.
• Quality consciousness and evaluation of loss on account of sub-standard work or material to relate with procurement costs.
Guidelines of Central Vigilance Commission on Procurement of Materials -
 
Improvement In Procurement System
 
The cardinal principle of any public buying is to procure the materials/services of the‘specified’ quality, at the most competitive prices and, if a fair, just and transparent manner. To achieve this end, it is essential to have uniform and well documented policy guidelines in the organization so that this vital activity is executed in a well coordinated manner with least time and cost overruns.
 
Provisioning: It has been noticed that in certain cases excessive, fraudulent and infructuous purchases were made without taking into consideration the important aspects like available stocks, outstanding dues/supplies , past consumption pattern and average like of equipment /items etc. This excessive/infructuous purchases were at times made in collusion with the firms. This resulted in not only the material lying unutilized for years together with no residual like but also a lot of extra expenditure was incurred on the inventory carrying cost. The provisioning of the stores needs to be done with utmost care taking into account the available stock, outstanding due/supplies, the past consumption pattern, average life of the equipment / spares. The requirements also need to be properly clubbed so as to get the most competitive and best prices. The requirements should not be intentionally bifurcated /split so as to avoid approval from higher authorities.
 
Estimated Rates: It was observed that the estimated rates are being worked out in anun-professional and perfunctory manner, at times by extrapolating the price of the lowest capacity equipment or by applying a uniform yearly compounded escalation over the prices of similar equipment purchased few years ago. Consequently, the inflated estimated rates prepared by the organizations resulted in acceptance and payment of higher prices to the firms. As the estimated rate is a vital element in establishing the reasonableness of prices, itis important that the same is worked out in a realistic and objective manner on the basis of prevailing market areas, lat purchase prices, economic indices for the raw material/ labour other input costs, wherever applicable and assessment based on intrinsic value etc.
 
Notice Inviting Tender : Against the most preferred and transparent mode of Global tender enquiry/ Advertised tender enquiry, some of the Organizations are generally issuing limited tender inquiry to select vendors, irrespective of the value of purchase. Further, the credentials of the firms and the criteria adopted for selection of such vendors, in most of the cases, are not put on record. This is not result in lack of competition bust also favoritism to the select vendors. It has been noticed that even incases where advertised/global tender inquiries were issued, the same were published in the local dailies and not in any National Newspaper and particularly in Indian Trade Journal, Calcutta is a Government publication and is regarded as the standard medium for advertising tender notices in India. The main purpose of issuing advertised/global tender is to give wide publicity. It has been noticed that the organizations do not forward the copies of the tender notices to registered/past / likely suppliers and while in case of imported stores, the copies of the tender notices are not being forwarded to Indian Missions/Embassies of major trading countries. In order to give wide publicity, generate enough competition and to avoid favoritism, as far as possible, issue of advertised/global tender inquiries should be resorted to published in ITJ and select National Newspapers. The copies of the tender notices should be sent to all the registered/past/likely suppliers by UPC and also the Indian Missions/Embassies of major trading countries in case of imported.
 
With a view to have wider, fair and adequate competition, it is important the sufficient time of say 4 – 6 weeks in case of advertised/global tender and 3 – 4 weeks in case of limited tenders is allowed, except, in cases of recorded emergencies, wherein also , a reasonable time should be permitted and tenders
 
Tender/Bid document: The terms and conditions being stipulated in the bid documents by some of the Organizations are quite insufficient and sketchy. Sometimes, the bid document contains obsolete, unwanted matter and conflicting and vague provisions , resulting in wrong interpretation, dispute and time & cost overruns. Even the date/time for receipt and opening of tenders is not being incorporated in the documents. The important clause relating to Earnest Money, Delivery Schedule ,Payment terms, performance/warranty Bank Guarantee, Liquidated Damages, Arbitration etc. are not being incorporated in the bid documents. All these clauses are important for safeguarding the interest of the purchaser and also have indirect financial implications in the evaluation of offers and execution of the contracts. All the important clauses as brought out above need to be incorporated in the bidding documents so as to fully safeguard the interest of the Govt. and for evaluation of bidson equitable and fair basis and in transparent manner.
 
Receipt of Tenders: Some of the organizations do not have proper arrangement for receipt of tenders. There is no Tender Box for receipt at scheduled date and time fixed for tender opening. Instead of trade representations leave the tenders with the receptionist or the concerned Purchase officer(s). This procedure is highly objectionable as the possibility of tampering and interpolation of offers cannot be ruled out. A proper arrangement for receipt of tenders at scheduled date and time through tinderbox needs to be adopted.
 
Opening of Tenders: Some of the organizations are not opening the tenders in publicize. in presence of the trade representatives. The system of not opening the tenders in public is against the sanctity of tender system, and is a non-transparent method of handling tenders. There could be a possibility of tampering and interpolation of offers in such cases. The rates at times are not quoted in figures and words, cuttings/overwriting are not attested by bidders. Some of the organizations justify such opaqueness in tendering system by making a reference to their manuals. This is not acceptable. The opening of tenders in presence of trade representatives needs to be scrupulously followed. While, opening the tenders by the tender opening officer/committee, each tender should be numbered serially, initialed and dated on the first page. Each page of the tender should also be initialed with date and particularly, the prices, important terms and conditions etc. should be encircled and initialed in red ink by the tender opening officer/committee. Alterations in tenders, if any, made by the firms, should be initialed by legibly to make it perfectly clear that such alterations were present on the tenders at the time of opening. Wherever any arising or cutting is observed, the substituted words should be encircled and initialed and the fact that such erasing/cutting of the original entry was present on the tender at the time of the opening be also recorded. The tender opening officer/committee should also prepare on the spot statement giving details of the quotations received and other particulars like the prices, taxed, duties and EMD etc. as read out during the opening the tenders.
 
Reasonableness of Prices: It has been noticed that the purchases are being made by some of the organizations in an adhoc and arbitrary manner without satisfying the prime requirement of establishing the reasonableness of rates in relation to the estimate rates, last purchase prices or the prevailing market rates.
Advance payment : As per CVC guidelines it has been brought out that payment of mobilization advance should be made only in cases of select works and that the advance should be interest bearing so that the contractor does not draw undue benefit. However, it has been noticed that some the organizations are quite liberal in allowing the advance payments. Even to the extent of 30-40% and that too, totally interest free. In some organizations the payment of advance is being stipulated in the bid document itself. The payment of interest free advance is in contravention of the guidelines issued by CVC.
 
The advance payment need to be generally discouraged except in specific cases, wherever payment of advance is considered unavoidable, the same should be interest-bearing and be allowed after getting an acceptable Bank Guarantee for an equivalent amount with sufficient validity so as to fully protect the Govt. interest. Performance Bank Guarantee: Most of the organizations are not stipulating the requirements of Performance Bank Guarantee while others are stipulating different amount of Security deposit/performance bond. It has been noted that the amount of PBG is too low in comparison to the contract value. The validity of Bank Guarantee is also not being scrupulously monitored and the extension in the Bank Guarantees commensurate with the delivery period extensions is not being sought resulting in loss to the Govt. in the event of non performance of the contract. In order to safeguard the Govt. Interest, it would be appropriate to take reasonable amount of Performance Bank Guarantee valid up to warranty period for due performance of the contract. The validity of the Bank Guarantees needs to be carefully monitored and whenever extension in the delivery period is granted, the validity of Bank Guarantee should also be appropriately extended so as to protect the Govt. interest. The genuineness of the BGs should be checked form the issuing bank.
 
Stipulation of delivery period in the contract : Delivery period is the essence of any contract. It has been observed that in some of the cases, specific delivery period with reference to the terms of delivery is not being incorporated It is noticed that in some cases only the date of offering the equipment for pre-dispatch inspection is stipulated as the delivery period, thought the terms of delivery are on CIF basis/FOR destination basis. In some cases the date of completion of supply of the equipment is stipulated as the delivery period even though the installation and commissioning of the equipment is also to be carried out by the supplier. For installation and commissioning no specific date is mentioned. In absence of any contractual binding in this regard, the suppliers claim the full payment for supplies of equipments and then tend to behave in an irresponsible manner and do not bother to take up timely installation/commissioning resulting in equipment remaining uninstalled for months/years together. The specific delivery period for supply as per the terms of delivery such as FOR station of dispatch/destination and for completion of installation with the necessary provision for Liquidated damages/penalty clause in the event of delay in supplies /installation needs to be incorporated in the contract.
 
Tenders
What are the stages in processing a tender...
There are different stages in processing a tender.
 
1. Preparation of Tender Documents: Tender documents are to be prepared very carefully to avoid disputes with the contractors during the time of execution ofthe contract. As far as possible, standard forms of documents should be prepared for various types of contracts. Wherever required, legal opinion or assistance of consultants should be obtained in drafting tender documents. Tender documents of previous 'successful' contracts of similar nature may be adopted by making suitable amendments / modifications. The tender documents of DGS& D, CGM- TS and the procurement manual of BSNL may be taken as model documents for purchase contracts. Similarly standard documents of CPWD and other construction wings of Government bodies may be consulted for drafting contract documents of works
 
 
1. Notice Inviting Tender
2. Opening of tenders
3. Tender Evaluation and Acceptance
4. Letter of Intent/Advance Purchase orders
5. Agreements, Work orders/ Supply orders
6. Payment of Contractors or Final Bills
 
Tendering Systems:
1. Competitive Bidding
The bidding would be either International Competitive Bidding or Domestic Competitive Bidding.
Tendering in “Domestic competitive Bidding” with reference to procurements will be made
a. Through Advertisement (Open Tender)
b. By Direct invitation to a Limited no. of firms. (Limited Tender)
c. Through Expression of Interest
d. By invitation to only one firm (Single Tender-Proprietary Item)
Tendering Methodology for Procurement
 
a. Through Open Tenders: Open Tenders are to be called for where the total estimated value is more than Rs. 2 lakhs.
b. Limited Tender: The Limited Tender System will ordinarily be adopted in case of all orders, the estimated value of which is less than Rs. 2 lakhs.
c. The Single Tender System may be adopted in case of articles which are specifically certified as of proprietary nature by the indenting Department (and approved by Head of the Dept.) or when it is to the knowledge of the procuring agency than only a particular firm is the manufactures of the stores in demand. An item of stores which is of specialized nature and is being manufactured or stocked by only a particular firm, it is termed as Proprietary item.
d. Through Expression of Interest : In situations where Dept./Organization proposes to induct new technology/equipment/new service and the specifications for such new technology/equipment/new service are not firmed up, the Department may invite Expression of Interest (EOI) from the available vendors of that technology/equipment/new service. Based on the offers received from the bidders who choose to participate in the EOI, the bidders satisfying the terms of EOI will be short-listed.
 
e. By Educational/Development orders: In case where there is a large demand ofa particular type of equipment , but where the supply base is meager and required to be augmented, Educational/Developmental Tendering system is being adopted by some organizations such as BSNL to ensure better competition and to increase the potential base for supply.
 
f. Through Call of Quotations : Small purchases can be made without call of quotations up to certain powers by unit officers. Similarly purchases can also be made with proper quotations up to delegated powers. For this “Notice Inviting Quotations” (NIQ) are to be called for and register of quotations to be maintained for the purpose.
 
Purchase Contracts / Tenders
1. Introduction
The important aspect of purchase by Govt. Organizations is the public accountability in the sense that those who spend public money must be accountable to the public representatives. Therefore, in the case of Govt. purchases, system and procedure have been adopted which try to ensure that all purchases on contract basis are made without any favour and from the most competitive bidders. The very nature of purchase activities places the officials concerned in contact with the suppliers and call for judgment and decision which are very important not only from the point of view of purchasing but also from the fact that the officials concerned have to display the highest sense of fair play.
 
2. Types of Purchase Contracts / Tenders:
 
Fixed Quantity Contract:- This type of contract is generally entered into where firm are called upon to offer for supplying a definite quantity by a specified date.
 
Rate Contract:- These are contracts for the supply of stores at specified rates during the period covered by contract. No fixed quantities are mentioned in the contract and the contractor is bound to accept any order from the purchaser or other parties specified in the contract which may be placed on him at the rates specified within the contract period. The purchaser, however, agrees to place order for a minimum quantity.
 
Running Contract:- These are contracts for the supply of an approximate quantity of stores at a specified price during certain period of time. The approximate requirement of number of parties for the period in question are combined and provision is made in the contract that during its currency such parties may demand their requirements at any time or at specified periods either direct from the contractor or through the purchasing organization which has entered into the contract. In such cases, provisions is generally made to the effect that the purchaser shall have the right to like a certain percentage more or less than the approximate quantity mentioned.
 
Price Agreement:- Price agreement is entered into with a firm for making supplies of certain stores during a given period at agreed rate specifying the monthly rates of supply as a standing offer to the purchaser or meeting any requirements of that store on an ad-hoc basis during that period.
 
Firm Price and Variable Price Contract:- In some cases contracts are also entered into on firm price as well as on variable price basis. Contracts providing for increase on account of increase in the price of raw materials and wages are called variable price contracts.
Lump Sum Contract:- This form, as its name indicates is used for works in which contractors are required to quote a lump sum figures for completing works in accordance with the given specifications, designs, drawings etc. Lump sum contract should be entered into in exceptional cases.
 
Cost Plus Contract:- A “Cost Plus” contract means a contract where in the price payable for supplies or services under the contract is determined on the basis of the actual cost of production of the suppliers or services concerned plus profit either at affixed rate per unit or at a fixed percentage on the actual cost or production.
 
3. Notice Inviting Tenders:
The NIT is not an an offer or proposal. It is in fact an invitation to offer or proposal. It is not addressed to any one in particular an is generally open. It gives the details of the thing for which tenders are invited.
Tenders should be invited in order to obtain adequate competition and to ensure economical purchase.
Being a government undertaking, in order to ensure FAIR PLAY IN ACTION as per  
the constitutional provision a tender notice –
(a) should be given wide publicity so as to enable all eligible persons to submit tenders(b) should give sufficient time to enable the tenderer to submit tenders. Tenders, should be invited in the most open and public manner possible. The Indian Trade Journal published by the Director General of Commercial Intelligence and Statistics, Calcutta which is a Govt. Publication should be regarded as the standard medium of public advertisement in India. Where necessary advertisements may also be inserted in one or more principal newspapers in India (both English and Hindi). Global tenders, wherever practicable and advantageous, should be invited in the case of purchase of plant and machinery and equipment from foreign countries. All the tenders floated by the BSNL units should also be posted on the BSNLweb-site.When it is decided to call for limited tenders the N.I.T. may be issued only to hoseparties who have proved experience in manufacture and supply of such equipment and who have prototype approval and production clearance. For such a limited tender it is a pre-requisite that the reasons for limiting the tenders to certain suppliers need to be brought out in the N.I.T. itself, so that such action would stand justified later. In respect of purchases of small value not exceeding Rs. 2 lakhs limited tenders are called for in BSNL.
 
Contents of N.I.T.:- The N.I.T. in all cases state –
(a) The estimated cost of the work or the quantity of items to be purchased.
 
(b) The place where and the time when the contract documents can be seen, and the blank forms of tender obtained, also the amount , if any, to be paid for such forms of tender.
(c) The place where, the date on which and the time when tenders are to be submitted and are to be opened (in the case of large contracts, this should be at least one month after date of first advertisement or notice).
(d) The amount of earnest money deposit to accompany the tender, and the amount and the nature of security deposit required in the case of the accepted tender.
(e) With whom, or on what authority, the acceptance of the tender will rest.
 
4. Tender Documents:
The tender documents generally specify the following points:
Definition of terms (e.g.) purchaser, supplier, contract, purchase order.
 
Cost of Tender Documents:
The cost of tender document will generally depend on the input cost for preparation  and printing of documents, drawings etc. The sale price of Tender document has been fixed depending estimated cost of tender.
(a) Estimated cost upto Rs. 1 lakh Rs. 150
(b) Estimated cost between Rs. 1 lakh and upto 50 lakhs Rs. 500
(c ) Estimated cost more than Rs. 50 lakhs and upto 2 Cr. Rs. 1000
(d) Estimated cost above Rs. 2 Cr. Rs. 1500
 
Note: Sale price of document is exclusive of Sales Tax. The Sales Tax is to be charged @ 12.25% (present rate) extra and accounted for separately.  The payment of tender document will be accepted in the form of Crossed Demand Draft in any Scheduled Bank. The fee for tender documents may also be paid in Cash.
 
Eligibility for bidding
Nature of work/specification of stores to be supplied with quantity, specification/ schedule of works to be enclosed with the tender documents. Tender submission and date and time of opening.
a.  Mode - depositing in Tender box, Registered post etc.
b. Double cover with inner cover with tender particulars and outer cover containing name and address.
c. Sealing
In respect of procurement of material the Bidders shall submit the following documents in the bid as proof of their eligibility.
 
(a) Proof of successful execution of Education/Commercial orders of DoT ND/CGMTS-CA/CMDs of MTNL/CGMS of Telecom Circles. For this purpose of Inspection .Certificate issued by Q.A is to be enclosed.
(b) Valid and Current Type Approval Certificate/Technical Specification Evaluation Certificate for the tendered item as per Technical Specification mentioned in the Tender Document.
(c ) Bid Security in the form of Bank Guarantee/NSIC registration as applicable.
 
1. Date and Time of opening
• Tenders received after due date and time will not be considered.
• If the date of opening mentioned in the tender happens to be holiday the tender will be opened on the next working day.
 
2. The venue of opening:
At the time of opening of tenders, the tenderers or their authorised representatives will be allowed to attend. Particulars of Documents required to be submitted.
 
The tenderer should accompany the following essential documents
a. Past supply record (Experience certificate)
b. Type approval certificate.
c. Sales tax clearence certificate.
d. Income tax clearence certificate.
e. Trade licence.
f. DG S&D registration certificate and copy of latest approved contract to justify not only registration but also getting regular contract.
g. Registration certificate with SSI, NSSIC, etc.
h. For EMD, Cash receipt or demand draft drawn in favour of Accounts
Officer etc.
 
The tenders received without EMD may not be considered.
EMD:
• Mode of payment
• Submission of documentary evidence
• Rejection of tender if EMD not paid or documentary evidence not submitted.
 
Specifications of Signatory:
• Sole proprietor
• Partnership firm
• Company
Pricing:
The tenderer should quote their rates specifically in case of supply of stores etc. on the
following.
(i) Unit Price/Total Price – Basic rates of stores/equipment
• Taxes ..... Excise duty/sales tax etc.
• Freight/Transportation if any
• Delivery including packing & forwarding changes if any.
(ii) Installation & Training etc.
• Warranty period
• Annual Maintenance contract after expiry of warranty.
    (iii) Instruction regarding writing figure in words.
• Attestation for corrections or over writing
• Instruction regarding discount
• Informatio on statutory Levy.
Validity of offer
• Delivery
• Essence of Contract
• Delivery Period
• Delivery schedule
Payment Terms
• Documents for payment
• Address of the office of payment
• Mode of payment
• On proof of despatch
• Advance payment
• Balance payment
Inspection
• Right of inspection of raw material
• Right of inspection during process
• Right of inspection of finished goods
• Particulars of authority to inspect
• Submission of prototype materials
• Disposal of rejected materials
Packing instructions
The contractor shall ensure that the stores are strongly and adequately packed to ensure safe arrival at destination.
Warranty Clause
Warranty as to quality: The contractor shall warranty that all stores to be supplied shall be new and free from all defects and faults in materials. Workmanship and manufacture shall be of the highest grade. The contractor shall be responsible for any defects that may develop under the conditions (i.e. time period etc.) provided by him and under proper use arising from faulty materials, design or workmanship. Normally the warranty period is 12 months after the stores have been taken by consignee. Replacement under warranty clause shall be made by the supplier free of all charges at site including freight, insurance and other incidental charges. Normally the warranty period is 12 months after the stores have been taken by consignee. Replacement under warranty clause shall be made by the supplier free of all charges at site including freight, insurance and other incidental charges.
 
 
 
Risk Purchase / General Damage
The department is at liberty to recovery any loss sustained for the lapse on the part of a contractor from his bills due to payment on any contract/supply bill.
Liquidated Damages:
Should the supplier fails to deliver the stores or any consignment thereof within theperiod prescribed and agreed for delivery, the purchaser without prejudice to otherremedies available to the purchaser shall be entitled to recover as agreed to the LD perbreach of contract, a sum equivalent to 0.5% of the value of the delayed supply and/orundelivered material supply for each week of delay or part thereof for a period upto10(Ten) weeks and thereafter at the rate of 0.7% of the value of the delayed supplyand/or undelivered material supply for each week of delay or parte thereof for another10(Ten) weeks of delay. The total value of the LD as per this shall be limited to amaximum of 12% (Twelve percent) i.e. L.D shall be levied upto 20 weeks only.The DP extension beyond 20 weeks would not generally allow. In special cases theextension is given beyond 20 weeks subject to following conditions.
(a) 90% of firm prices (approved final prices) will be given as provisional price during extension period.
(b) If any tender is finalized during this period the price finalized as per new tender will be applicable for the extension period of delivery schedule.
(c) The benefit of reduction in taxes during the extended delivery schedule shall be to purchaser account and any increase in taxes will be suppliers account.
 
Arbitration Clause
The disputes arises out of contract with the BSNL and the contractor the case will be referred to arbitrator appointed by the BSNL.
 
Force Majure
If at any time, during continuance of the contract, the work/supply is prevented or delayed by reason of any war, or hostility, acts of public enemy civil commotion, Sabotage, fire, flood explosions, epidemics, quarantine restrictions, strikes, lock-outs, or act of GOD are informed by either party within a period fixed up under tender, no damage can be claimed for non performance or for delay in performance.
 
Security Deposit/Performance Security
• Mode
• Percentage or fixed amount
• Forefeiture condition to be indicated
Miscellaneous Conditions/Right Reserved
• Right to increase or decrease the quantity
• Right to reject any or all the tenders without assigning any reason
• Right to accept full or part quantity
• Right for repeal order
• Binding on Contractor to accept all conditions specified in the tender.
• The purchaser reserves the right to disqualify such bidders who have a record of no meeting the contractual obligations against earlier contracts entered into with the purchaser.
 
5. Earnest Money Deposit
Earnest money has to accompany every tender in order to prevent the tenderer backing out from his offer before the validity period of the tender and once the tender is accepted the tenderer furnishes required security and commence the work without any delay.
 
The amount of earnest money to be deposited should be sufficiently large to be security against loss, in case of the contractor failing to furnish the required security within the appointed time after the acceptance of his tender, or until the sums due tohim form a sufficient guarantee, as the case may be.
 
No earnest money is required to be deposited by –
• Firms which are registered with DG S&D for supply of stores.
• Public Sector Undertakings, which are registered with the department or DG S&D.,
• Small Scale Industries units which are registered with National Small
Scale Industries Corporation and in effect are treated automatically registered with DG S&D under the revised scheme of single point registration.
 
It may also be ensured that the S.S.I. Units are registered with the N.S.I.C. for those particular items for which they have submitted the tenders and the registration is current. If necessary the currency of registration may be got verified directly from N.S.I.C. for procurement of stores the earnest money should ordinarily be 2% of the estimated value of the tender and may not exceed 5%. The exact amount of earnest money may be indicated in the tender. (For tenders of the value of Rs One lakh or less, no earnest money need be insisted upon.)
 
The Earnest Money will be liable to be forfeited, if the tenderer withdraws or amends, impairs or derogates from the tender in any respect within the period of validity of his tender.
 
The Earnest Money of the successful tenderer shall be refunded after the security deposit as required, is furnished. The Earnest Money can be adjusted against the S.D. required to be furnished by the successful tenderer. If the successful tenderer fails to furnish the security deposit as required, then Earnest Money shall be liable to be forfeited by the tenderer.
 
The Earnest Money of all the unsuccessful tenderers will be returned as early as possible after the expiration of the period of the bid-validity but not later than 30 days of the award of contract. The competent authority shall ensure that the Earnest Money is refunded within the stipulated period to avoid any litigation by the unsuccessful tenderers. The tenderers may be advised to send a pre-receipted Chillan along with their bid so that the refund of Earnest Money after the bids have been rejected, is made within the stipulated period.
 
The Bidders (Small Scale Unit) who are registered with National Small Scale Industries Corporation under Single Point Registration Scheme are exempted from payment of Bid Security up to the amount equal to their monetary limit or Rs.50 lakhs whichever is lower.
 
6. Security Deposit
Security Deposit should in all cases be taken for the due fulfillment of a contract, in advance, from a private person or firm contracting with the Govt. organization.
Security to the purchaser for an amount equal to 5% of the value of the purchase order within 14 days from the date of issue of Advance Purchase Order by the purchaser. The following are the exemptions: Firms which are registered with the Director General of Supplies and Disposals for supply of stores, subject to the following conditions: The competent authority, before taking a decision to exempt a firm from furnishing security deposit, should satisfy himself that the firm is registered with the D.G. S&Dfor the supply of the particular stores proposed to be purchased. That the value of stores to be supplied in each individual contract does not exceed the monetary limit, if any, fixed in their cases at the time of registration with D.G. S&D for the particular stores.
 
That it is not merely registered with the D.G. S&D, but continues to receive and execute contracts from the D.G. S&D. Small scale industries units which are registered with the National Small Scale Industries Corporation and in effect are treated as automatically registered with D.G. S&D under the revised scheme of single point registration.
 
"All suppliers (including Small Scale Units who are registered with National Small-scale Industries Corporation under Single Point registration Scheme) shall furnish Performance Security to the purchaser for an amount equal to 5% of the value of the purchase order within 14 days from the date of issue Advance Purchase Order by the purchaser.
 
Public Sector Undertakings which are registered with the department or D.G. S&D.In support of the above, the competent authority should require the firm to submit to him documentary evidence to prove that it is registered and that it has handled and continues to handle contracts from the Directorate General for the stores for which itis registered. The competent authority shall, also in addition, take into account the performance of the firms against his own contracts, if any, awarded to them and may, if he considers necessary, insist on the security deposit notwithstanding the fact that they are registered with the D.G. S&D.
 
The actual amount of the Security Deposit may be decided by the Heads of
Department according to the circumstances of the case, subject to a minimum of 5%
and maximum of 10% of the amount of contract.
 
The Security taken from a contractor shall be in one of the forms given in Rule- 274
of GFR 1963.
(i) Cash
(ii) P.O. Cash certificates/NSC, etc. transferred to the President.
(iii) P.O. S.B. Pass Books.
(iv) Bonds/Deposit receipts of Scheduled Banks.
(v) Fidelity Bonds of Insurance Companies etc.
 
But in DOT/BSNL, the Security Deposit also called Performance Guarantee is in the form of Demand Draft in favour of the DOT/BSNL or Bank Fixed Deposits mortgaged or Bank Guarantees for the entire contract period. Part of Security Deposit may also be in the form of recoveries from Running Account Bills. The Security Deposit will be refunded only after due fulfillment of the contract as per the agreement and all the dues against the contractors are recovered.
 
 
7. Tender Opening:
The bids have to be opened at the prescribed place and time in the presence of those bidders who chose to witness the bid opening. Normally from department side there will be 3 members preferably one from the finance side. The bids received should be signed by all the departmental officers witnessing. Any corrections in the quotations have to be attested and all details of the bids received and rates quotedetc. has to be entered in a tender register and signed by all the members of the opening committee. The rates quoted by the various bidders may be readout to the bidders for their information. However, no queries can be entertained. Comparative statement will be prepared and signed by all the members. The comparative statement and bid documents have to be handed over to the tender evaluation committee.
 
Duties of the officer on opening a tender
 
1. Dated initial of the officer is must on each corrections, conditions and additions in schedule of quantities, schedule of materials to be issued and specification and other essential parts of the contract document and also date and initial on pages of the tendered documents irrespective of fact that they contain or do not contain any corrections or overwriting’s etc.
2. Each of these corrections, additions etc. should be allotted independent numbers serially. The rates should be written a fresh in the hand of the officer opening the tender with proper attestation with date.
3. The total number of such correction, omissions, and overwriting must be already mentioned at the end of each page of schedule attached to the tender paper and properly attested with the date.
4. Any ambiguities in rates quoted by tenders, in words or figures, must be clearly indicated on each page of the schedule with proper dated attestation.
5. In case where the contractor has quoted rates in rupees and no paise is mentioned the word ‘only’ should invariably be added after the words rupees with dated initial.
6. Where the contractors have omitted to quote the rates in figures or in words, the omissions should be recorded by officer opening the tender on each page of the schedule.
7. The Divisional Officer should see that the contractors quote entire rates in words including paise to avoid chances of tempering in rates and if the contractor fails to do so, the tender opening officer should himself write the rates in words and if necessary, initiate action against the contractor.
8. A tender opening register has to be maintained in which name of Tender, Tender Opening date & time, Name of officers and contractors present, number of tenders received with the names of the bidders and amounts quoted have to be entered and signed by the tender opening officer and the witnesses.
 
8. Tender Evaluation and Tender Acceptance
After opening the tenders in presence of the representatives of the bidders it
isnecessary to concentrate on the evaluation of the various offers received from the
bidders.
 
Evaluation of offers are sub-divided into two categories:-
1. Preliminary Evaluation:
Tender Concitions-(i) Fulfilment of eligibility criteria by the bidder & (ii) Fulfilment
of the Bid Security clause.
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The offer of a firm can be declared INVALID if any of the above two basic conditions
are not fulfilled.
The scrutiny of the enclosed documents is also carried out in respect of the Type
Approval Certificate produced by the bidder, the NSIC Registration Certificate, the
Income-Tax Clearence Certificate, Power of Attorney in favour of the authorised
signatory in the Tender and cerfified copy of the Partnership Deed/Memorandum of
Association in case of Private Limited or Public Limited Companies.
The above points are scrutinised basically by a team comprising of one SDE, one DE,
one AO or one CAO. After the scrutiny of the documents, the formal permission for
the Internal Financial Advisor, Deputy General Manager or General Manager
Incharge of procurement & finally Chief General Manager is obtained for putting up
the same for consideration by the Tender Evaluation Committee or Stores Purchase
Committee. The set-up of the Tender Evaluation Committee and the purpose is
discussed below.
The constitution of Stores Committees will be as follows:
a. Telecom Circle:
1. Area Manager or Dy. G.M. of the Telecom Circle/District
2. TDE with Headquarters at the same place
3. One TDE belonging to the same Telecom Circle but not under the same
Area Manager
4. IFA/CAO
b. SSA under GM:
1. Dy. General Manager dealing with the Material Management
2. One Director of Telecom Mtce. or Project Circle or their representative
3. AGM who looks after the Material Management
4. Chief Accounts Officer & IFA/DFA of the SSA
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c. SSA under JAG:
1. Telecom District Manager
2. TDE looking after the Material Management work
3. One more TDE belonging to other SSA
4. Chief Accounts Officer of the SSA
Area Manager or Deputy General Manager or TDM as the case may be, will be the
Chairman whereas in the case of Telecom Circles, these committees may be more
than one depending upon the number of Area Managers in the respect Telecom
Circles/Districts.
If the above conditions are fulfilled, evaluation in detail is carried on for Rates,
Discount, quantum of Excise Duty, Sales Tax (Central/State), Total price payable,
delivery schedule and quantity offered by the firm.
The Evaluation of all bids are done as under:-
1. Preliminary Evaluation
2. Evaluation in detail already discussed in foregoing paras
3. The Technical Evaluation & preparation of comparative statement is to be
carried out by Technical branch representatives of the TEC.
4. The Commercial Evaluation including the check of eligibility criteria is to be
carried out by the Commercial/Financial branch and
5. The vetting of the comparative statement of the bids and commercial
evaluation statement is to be done by the Finance representative of the TEC.
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Recommendation of TEC:
• The TEC should clearly spell out its recommendation in its report about
techbnically acceptable bids, listed in order starting from lowest technically
acceptable bids (L-1) upwards.
• The report should contain complete technical, commercial and financial
appraisal, the logic leading to the recommendations themselves and reasons
for rejecting bids lower than the lowest technically acceptable bids.
• The tender shall be evaluated for the quantities indicated in the schedule of
requirements. In normal purchase procedure, the orders will go in favour of
the lowest acceptable bidder for the full quantity. Apportioning the quantity
may arise due tto certain limitations or considerations. As most of the items
procured by the DOT are specialised products it become sometime necessary
tto sustain multiple vendors suppliers through distribution of quantities.
• All the pages and enclosures of the TEC report should be numbered
consecutively and signed by all the TEC members.
In some of the major contracts where the material and equipment has to meet the
required specifications, the bid evaluation is done in two stages. First and the
preliminary evaluation include the technical evaluation in addition to eligibility of the
bidders. the second stage is financial evaluation. In such cases the technical bids and
financial bids are called for in separate sealed covers and financial bids are opened
only after technical evaluation and short listing of contractors.
2. Tender Acceptance:
The broad guidelines in connection with acceptance of tenders are as
follows :
1. The tender should not be arbitrarily accepted or rejected.
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2. The approach of the authority while considering tenders should not be
irrational and every one should be judged by the same standards.
3. No irrelevent consideration should be enter into consideration.
4. A time schedule for scrunity & disposal of tender has to be prescribed so
as to ensure speedy disposal of the tenders. In case of rare circumstances
where the tenders could not be accepted with in the maximum period of
150 days, action should be taken to get the tender validity period
extended from the tenderers.
5. In case of tender where validity period has already expired, decision to
accept the same should be taken only after validity period is got
extended. Also conditional tenders cannot be accepted ignoring the
conditions.
6. Usually the lowest tender should be accepted unless there is some
objection
• to the capacity of the tenderer,
• to the security offered by the tenderer,
• to his execution of some former works.
7. While deciding the lowest tender the following points may be kept in
view :-
Some contractors are in the habit of stipulating number of conditions
while submitting their tenders. Generally the conditions stipulated by
the tenderers have financial effect which have to be evaluated in an
appropriate manner. The financial effect of all such conditions which
have financial bearings has to be added to the tendered amount while
deciding on the question as who the lowest tenderer is. At that time the
lowest tenderer would be the one whose tendered amount after
adding/substracting the financial effect of all mandatory conditions
which have financial effect (whether such conditions may or may not be
acceptable), is the lowest.
8. When a single tender is received, Rule 441-C of P&T Manual Vol II
stipulates that the heads of Circles and Divisional Officer are required to
obtain prior approval of the next higher authority for acceptance of a
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single tender. The rule further says that it shold however be left to the
discretion of the competent authority to whom local conditions are
known, to call for tenders for second time, in case of receipt of a single
tender.
9. Negotiations:- Rule 426.1 of P&T Manual Vol II prohibits negotiation
with a particular tenderer to modify the terms of his tender in order to
reduce them to the level or below that of any other competitor.
However, there may arise some occasions on which negotiations may
be found necessary. Such negotiations, should however, be restricted
to the lowest tenderer only and with a view to bring down the prices in
respect of only such items for which he quotes unduly high rates
compared to other tenderers. For such negotiations, it is necessary that a
provision should be invariably be made in the tender inquiry from to the
effect that acceptance of all items or any of items mentioned in the
tender would be optional.
Tenders can be accepted by the various authorities who are vested with the powers
under the Schedule of Financial Powers. When it is proposed to accept a bid other
than the lowest, the concerned authority has to submit the roposal to his next higher
authority for acceptance. However, when in the case of CGMs, if the orders are
passed by them personally, they may accept a tender other than the lowest,. However,
they may have to send a report of the same to the Directorate.
When a single responsive bid is received, the concerned authority may use his
descreation and see whether to call fresh bids if there is a reasonable prospect of
securing better response otherwise the proposal for acceptance of a single tender has
to be submitted to the next higher authority with his recommendations.
The guidelines issued by Central Vigilance Commission of Tendering Process-
Negotiations with L-1 are furnished below.
(a) 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
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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 cartel formation. The justification and details of such
negotiations should be duly recorded and documented without any loss of
time.
(b) 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 retender
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 bare minimum
quantity. The balance quantity should however, be procured expeditiously
through a re-tender following the normal tendering process.
(c) 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 and L-2 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.
(d) It is re-iterated that in case L-1 backs-out, there should be a re-tender.
9. Letter of Intent / (Advance Purchase Orders) and Agreements:
After acceptance of tenders for supply of materrials, formally an agreement has to be
entered with the contractor incorporting all terms and conditions of tender, additional
points which have been agreed upon at the time of tender acceptance, schedule of
rates and conditions of payments etc. In some cases a letter called Advance Purchase
Order (APC) is issued by the Tender Accepting Authority to the contractor
incorporting all the conditions of contract. The acceptance of Advance Purchase
Order by the contracor is treated as an agreement.
Letter of Intent or Advance Purchase Order should essentially contain: -
1. equipment/service required with quantities/prices
2. file number & reference
3. commercial conditions governing the contract
4. amount of security deposit in cash/bank guarantee etc.
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5. delivery schedule
6. period within which the bidder has to confirm acceptance of APO along
with SB/BG
The purchaser reserves the right to limit the number of technically and commercially
responsive tenders from the list of such tenderers arranged in ascending order of
evaluated price starting from the lowest for the purpose of ordering against this
tender.
The L-1 bidder will be determined by the purchaser. When it is proposed to distribute
the quantity for more than 1 bidder the ratio to be given to each bidder will be as
follows.