Tender system in Railways

TENDERS.

Tender can be termed as invitation extended to the general public for supply of material or carrying out work in exchange of consideration. Tenders are most effective means to keep the rates at the lowest level. It is the duty of the executive officer to obtain the best value for the money spent hence utmost care should be taken while inviting tenders. Executive may decide not to invite tenders in cases to avoid delay in completion of work or where the cost of work involved is of a small value.

CIRCUMSTANCES WHERE TENDERS NEED NOT BE CALLED FOR

Except where the reasons which should be in the public interest the GM decides that it is not practicable or advantageous to call for tenders or for all contracts over Rs10000/- in value should be placed after tenders have been called for in the most open and public manner possible and with adequate notice. For works contract based on schedules of rates in force in the Railway calling of tenders upto a value of Rs50000/- can be dispensed with by the GM without recording reasons for doing so. In all other cases where the GM decides not to call for tenders the reasons should be recorded and communicated to his FA&CAO.

As an exception to the rule invitation of tenders may be dispensed with and the work can be taken up by invitation of quotations. The powers for invitation of quotations are available under item 1.16 of SOPGEN’2001. Which are as under.

Powers delegated to	Financial powers in individual work	Annual ceiling limit
Senior scale officer	Rs.50000	Rs.2,00,000/-
Junior Administrative Grade	Rs.100000	Rs.500,000/-
Senior Administrative Grade	Rs.200000	Rs.10,00,000/-

In case of invitation of quotations following pre-requisites should be ensured.

Quotations should be invited from minimum three contractors placed on approved list of contractors.
Urgency of work should be established.
Work should not be split to bring the work within these powers.
Annual ceiling limit being strictly enforced.
Prior concurrence from associate finance being obtained.

OPEN TENDER SYSTEM

All tenders for execution of work estimated to cost over Rs.10,000/- in value are finalized under this type of tender system. Tender notice should be published in minimum three news papers i.e. the papers to be selected should be English, Hindi and one news paper in local language. Under this type of tenders minimum thirty days notice is required to be given. The powers for invitation in terms of item 1.19 of SOPGEN’2001 are as under.

LEVEL	INVITING AUTHORITY	FINANCIAL POWERS
H.Q.	P.H.O.D.	FULL
H.Q.	S.A.G	Rs5/- Crores
H.Q./DIVN	SELECTION GRADE	Rs2/- Crores

H.Q./DIVN	J.A.G.	Rs1/- Crores
H.Q./DIVN	SR. SCALE	Rs50/- Lakhs

LIMITED TENDERS

This system may be adopted when it is considered to be advantageous and for works costing up to Rs.20/-lakhs. The invitation should be given to minimum 10 contractors borne on approved list of contractors. In case approved list of contractors is not being maintained by the concerned department and it is proposed to invite reputed firms under this system FA&CAO’S concurrence and G.M.’S sanction will be necessary. Notice period prescribed under this type of tender is minimum 21 days. The following officers may invite limited tenders from contractors borne on approved list up to the limit shown against each in terms of item 1.18 of SOPGEN’2001.

OFFICERS\GRADE	FINANCIAL LIMIT
GM	Rs20/-Lakhs
P.H.O.D.	Rs15/-Lakhs
S.A.G.(DRM/ADRM)	Rs10/-Lakhs
J.A.G. (Sr.DEN)	Rs05/-Lakhs
SR. SCALE (DEN)	Rs01/-Lakh.

SINGLE TENDER

This type of tender is resorted to where only one firm is holding monopoly for supply of material or carrying out a specialized nature of work. Since there is no likely hood of response from any other firm/individual the firm/individual holding monopoly is invited to take up the work under this system.

In addition work can be taken up under this system in case of emergency for restoration of through communication in case of accident or disturbance of communication due to natural calamity.

The powers delegated to various officials and their associate finance officers whose concurrence is to be obtained is as under in terms of item

1.17 of SOPGEN’2001.

Nature of work	Sanctioning Authority.	Financial Authority	Ceiling limit in individual case	Annual ceiling limit.
Monopoly item	GM	FA&CAO	Full powers	Nil
Restoration of	P.H.O.D.	FA&CAO	Rs20/-Lakhs	Rs1/-crore

traffic
Restoration of traffic	S.A.G.(DRM)	SR.D.A.O.	Rs10/-Lakhs	Rs50/-Lakhs

GLOBAL TENDER

This type of tender is resorted to when the work cannot be done indigenously and hence international firms are invited to quote their rates. The powers for invitation have not been re-delegated and the same rest with RAILWAY BOARD.

TENDER NOTICE

Invitation of bids from general public or from contractors borne on approved list is done through tender notice. The following information is given through tender notice.

Name of the work, which includes nature of work as well as the location of work.
Approximate cost of the work.
Earnest money to be submitted along with the tender.
Form of earnest money.
Official from, whom tender documents can be obtained.
Cost of tender booklet.
Date & time up to which tender booklets will be available for sale.
Date, Time and place for submission of tender.
Date, time and place for opening of tender. 10)Period of completion.

TENDERS & CONTRACTS

Once it is decided to execute the work through the agency of contract by calling tenders, the following conditions should be fulfilled.

That the Railway is in a position to hand over the site of work and plans to the contractor.
That the Railway should be ready with full knowledge of contract and spcope of the work.
That Railway is ready with design of work, detailed drawings, schedule of drawing etc.
Soil exploration should have been carried out at site to avoid change in the design of foundation and structure at a latter stage.

That the Railway administration has obtained Boards approval before invitation of tenders where foreign exchange involved is more than Rs.10/-Lakhs.
That tender documents for the said items are ready for issue from the day notified.

A Contract is an agreement enforceable by law that relates to supply of material or execution of work. The following items may be kept in view while framing of contract document.

The terms of contract should be precise and definite. There should be no room for ambiguity or misconstruction. The matter to be agreed upon should include in detail the following.

What the contractor is to do, when, where and to whose satisfaction it is to be done.
1. What the Railway administration is to do and on what terms.
1. What payment is to be made what it is to cover, to whom it is to be made and method and basis of making it.
1. The responsibility of the contractor in respect of adequate supervision, care of government property and the protection of outside interest and those of staff and workmen.
1. The terms on which the variations and modifications if any are to be permitted. The authority competent to order and assess them and occasion and basis of such assessment.
1. The measures to be adopted in the event of breach of the contract by the either party thereto.
1. The method of settling disputes.
As far as possible legal and financial advice should be taken in the drafting of contract before they are finally entered into.
Standard forms of contract should be adopted wherever possible. The terms should be subjected to prior scrutiny.
The terms of contract once entered into should not be materially varied except in consultation with the competent financial and legal authority.
No contract involving an uncertain or indefinite liability or any condition of unusual character should be entered into without the previous consent of the competent legal and financial authority.
Provision should be made for safeguarding government property entrusted to the contractor.
In entering into long term agreements or contracts consideration should be given to the desirability of providing for the Railway administration to have unconditional power to cancel the contract with notice period as desirable.
The power to retain and set off all claims whether arising out of a particular contract or out of any other transaction or claim what so ever

against the contractor should be secured for the Railway administration.

EARNEST MONEY

Earnest money is an amount required to be paid at the time of submission of tender for supply or execution of work. The amount so collected is taken so as to safeguard the interests of Railway administration in the event of contractor refusing to take up the work after acceptance of the tender. The amount of earnest money collected should be sufficiently large to be security against loss to the Railway administration.

The earnest money of the successful tenderer can be adjusted against security deposit or can be refunded to him. Earnest money collected from unsuccessful tenderers is to be refunded to them immediately.

The tenderers should submit the earnest money in one of the following form.

CASH- with Divisional/Chief cashier or StationMaster.
DEMAND DRAFT- drawn in favor of concerned Accounts Officer.
FIXED DEPOSIT RECEIPT-Kept in favor of concerned Accounts Officer.
VIKAS PATRA-these should be pledged in favor of the concerned Accounts Officer.

NOTE: – Acceptance of earnest money in the form of BANK GURANTEE has been discontinued with effect from 08/06/96.

The scale of earnest money to be submitted along with the tender is as follows.

ESTIMATED COST OF WORK	SCALE/AMOUNT OF EARNEST MONEY
For works costing up to Rs5/-Lakhs	2 ½ % Advalorum subject to maximum of Rs10,000/-
For works costing above Rs5/-Lakhs but uptoRs20/-Lakhs	2% Advalorum subject to maximum of Rs20,000/-
For works costing above Rs20/-Lakhs but up to Rs50/-Lakhs	1% Advalorum subject to maximum of Rs35,000/-
For works costing above Rs50/-Lakhs	3/4% Advalorum subject to maximum of Rs50,000/-

STANDING EARNEST MONEY

Standing earnest money is an amount collected from contractors placed on “APPROVED LIST” maintained by the concerned department. The amount is collected in lumpsum and the contractors are allowed to quote the rates for one or more works against the S.E.M. Contractors who have submitted S.E.M. are not required to submit separate earnest money along with individual tender.

The scale of standing earnest money is as follows.

ESTIMATED COST OF WORK	STANDING EARNEST MONEY
For works costing up to Rs5/-Lakhs	Rs10,000/-
For works costing above Rs5/- but up to Rs20/-Lakhs	Rs20,000/-
For works costing above Rs20/-Lakhs but up to Rs50/-Lakhs	Rs50,000/-
For works costing above Rs50/-Lakhs	Rs1,00,000/-

SECURITY DEPOSITS

Security Deposit is an amount submitted by the contractor in token for due fulfillment for contract. It is required to be recovered from the contractor so as to safeguard the Railway’s interest in the event of the contractor stopping the work/non completion of the work as per specifications. The contractor can also be penalized for any laps on his part in execution of the work. The security deposit is refunded to the contractor on expiry of prescribed date as indicated in the contract agreement.

The security deposit can be submitted in the form of :–

Demand Draft- drawn in favor of concerned accounts officer.
Cash- deposited with divisional/chief cashier or any stationmaster.
Fixed deposit receipt- drawn in favor of concerned accounts officer.
Vikas patra- Pledged in favor of concerned accounts officer.
Bank guarantee- issued by nationalized/nominated co-operative banks. Securities can be accepted in this form as Railway Administration is in a position to get the same verified from law officer.

The scale for collection of Security Deposit is as follows: –

Value of contract	Scale of Security Deposit.
For contract up to Rs1/-lakhs.	10% of value of contract
For contracts more than Rs.1/- lakhs but up to Rs.2/- lakhs.	10% of first 1/-lakhs, 7½% of the balance value of contract.
For contracts more than Rs.2/-	10% of first 1/-lakhs, 7½ % of 2^nd 1/-lakhs

lakhs. But up to Rs.2/-crores.	and 5% of the balance value of contract subject to maximum of Rs.3/-lakhs
For contracts above Rs.2/- crores.	5% of value of contract. The value over and above Rs.3/-lakhs to be recovered from the on account bills at the rate of 10% of the bill till it reaches 5% of the value of contract.

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